By Peter H. Smyth – Chairman and Chief Executive Officer of Greater Media, Inc.
I have just returned from New York, where I attended the Borrell Local Online Advertising Conference. This was my first time at this particular get-together and I was both impressed and amazed by what I saw and heard.
Among the nearly 1,000 participants, I was able to count only a literal handful of radio types; that was distressing. But I was equally impressed by the number, quality and determination of the other attendees from television, newspapers and pureplay online companies. If I ever questioned the size and vibrancy of the interactive space, all doubts were eliminated by a look down the roster of attendees. It included companies who are aggressively moving forward with creating and selling new online products to radio’s bread and butter advertisers – local retail advertisers. From online deals, directories and websites to online and social video, these are new and aggressive competitors calling on our clients. If we ever doubted that we are competing as a local media company, this gathering dispelled that doubt.
Some of the most productive time was spent listening to Clayton Christensen of Harvard Business School and author of the “The Innovator’s Dilemma” about his theory of disruptive innovation. His work for years has focused on why smart business people make seemingly dumb decisions. He pointed to the US steel industry, which allowed the mini-mills to take a huge share of their business away. He also commented on US car manufacturers, who made a series of ill-fated decisions when faced with the import challenge.
The obvious question is “why”? These are smart people; why are their decisions so easy to second guess in hindsight? That’s where the disruption comes in. Christensen defines it as a competitor who attracts different customers with a different business model that introduces different performance criteria than those valued by the established market. Think Monster.com instead of print job classifieds; think Hulu.com instead of your local NBC station; think Pandora or Slacker instead of your call letters. Those thoughts should give you pause.
As new competitors emerge, established businesses can tell themselves a whole variety of half truths. They tell themselves the new competitor is only nibbling around the edges of their market, that they are small fish who will never replace them; that to compete in these new arenas will result in nothing but a margin hit. Business leaders tend to focus on the most efficient use of resources and on the research, which – as Christensen aptly pointed out – can only speak about the past, not the future.
In order to survive and thrive in the digital future, I learned that we must change our mindset and realize that our future business is going to look quite different than today’s. We will not adopt the proper long term strategy until we start asking the right questions. We start with figuring out what unmet demand we need to fulfill for our customers, both listeners and advertisers. Those demands are changing around us; have we kept up with our customers’ thinking? Or have they adopted new ways of solving their problems? As Christensen put it, “what is the job the customer hires us to do?”
I was privileged to participate on a panel “What Media Executives Must Do Next” with Christensen and several other executives. In our conversation, I mentioned my strong belief that we need to have the right people in the right places to move forward, and we need to ask ourselves whether we have the resources in place to move ahead. As important as the leadership question is, even more important is the need to educate our employees up and down the entire organization about how we must evolve and what that mandate means for their job. Without an overall understanding of the challenge, we cannot innovate at the pace and depth that the future requires.
As we spoke, Christensen made a comment that I have taken back home with me. He talked about the tendency in business to search for the one big thing that will solve our problem. He disagreed with that idea and challenged the group to think of how people are using our products (I think: radio stations), and ask what the problem is that they are trying to solve by listening to us. He believes that there are many profitable opportunities to solve customer problems for them if we can figure out what those problems are.
And that really is the business that we need to be in: solution providers. Now, how can we get there from here and what do we need to change and learn to get there? These are huge, critically important questions that I cannot answer today, but I will be thinking about them constantly as we make our way through this period of disruptive innovation.
I’d love to her your thoughts about this; drop me a note at askpeter@greatermedia.com.
