Strategic Transformation

Transcription

1 Strategic Transformation James S. Gold Senior Vice-President and Chief Marketing Officer New York Times Regional Media Group PANPA Queensland, Australia September 10, 2008

2 Today s Agenda: The NYTCO Brand Portfolio Current US Media Landscape Strategic Transformation Balanced Management Approach: The Ambidextrous Organization Triad Management Principle Transformational NYTRMG 2

3 The New York Times Company Major Brand Portfolio Regional Media Group D: 2.5 million c S: 3.0 million c O: 47.2 million u (11 th ) 3

4 The Growth Imperative: Challenges US Circulation/Penetration Number in Millions Source: Editor and Publisher Yearbook data; U.S. Census Bureau While US Households continue to grow, paid circulation and penetration falls. Increasingly, a once powerful mass medium appears to be evolving into an ageing niche player. Source: NAA 4

5 The Growth Imperative: Challenges US Newspaper Print Ad Revenue Trend Billions Total Print (National, Retail & Classified) Advertising growth remained strong through the advent of the Internet. While recent troubles are both cyclical and secular, how deep is the secular change? Source: NAA 5

6 The Growth Imperative: Challenges US Classified Revenue Trend Billions Classifieds, now under siege from online players, is the site of much of the revenue erosion. Automotive revenue has declined for 15 consecutive quarters. Source: NAA 6

7 The Growth Imperative: Challenges Print & Digital: Crossing The Chasm The Migration of Print to Digital The Outlook: Print s decline, even with digital growth, will drive revenues and earnings downward for years Source: Concept from Crossing the Chasm, The Life and Death Threat that Newspapers face in Transitioning from Print to Online-And what they can do to Survive. Copyright 2007 by Mark Potts. Data from Newspaper Association of America, Mark Potts projection 7

8 The Growth Imperative: Challenges US Newspaper Stocks: With years to go before digital growth will balance print declines, investors see little opportunity Source: Yahoo Finance, Merrill Lynch research 2008 INMA Outlook 8

9 The Growth Imperative: Solutions Radical Reorganization Long-term success inevitably requires that leaders reallocate resources away from mature and declining businesses toward emerging growth opportunities. The key to sustained, profitable growth is the ability to recombine and reconfigure assets and organizational structures as markets and technologies change. -Teece, Explicating Dynamic Capabilities: The nature and micro foundations of (sustainable) enterprise performance (2006) 9

10 The Growth Imperative: Solutions Radical Re-Organization: Ambidextrous Management Asset orchestration is how organizations evolve to maintain ecological fitness. Exploitation is about efficiency, increasing productivity, control certainty and variance reduction. Exploration is about search, discovery, autonomy, innovation and embracing variation. Ambidexterity is about doing both. -O Reilly III & Tushman, Ambidexterity as a Dynamic Capability: Resolving the Innovator s Dilemma (2007) 10

11 Strategic Transformational Change Ambidextrous Management Principles Simultaneously pursue immediate & sustained growth The ability to simultaneously exploit and explore. To configure and reconfigure organizational resources. To simultaneously pursue mature and emerging strategies. To gain greater efficiencies in the mature business. To sharpen the organization s ability to innovate. Based on Ambidexterity as a Dynamic Capability: Resolving the Innovator s Dilemma. (O Reilly III and Tushman, Harvard Business School, 2007) 11

12 Consumer Advertising Strategic Transformation Re-Engineering the Organization for Immediate and Sustained Growth 12

13 Strategic Transformational Change Re-Engineering The Organization: Triad Management Principle Shared Resources Open Technology Local Management Strategic Partnerships A new management approach allocates traditional and key emerging expertise and resources to maximize return, encourage innovation and accelerate growth 13

14 Strategic Transformational Change Triad: Circulation Management Key Strategic & Operational Issues (Circa: 2003) Traditional Group Management: Independent Islands. No Group Synergy or Scale Heavily Reliant on Primitive Sequential Mass Telemarketing DNC Looming No Analytical Metrics or Performance Management, Low New Start Retention Brand and Distribution Management Combined, Poor Branding Quality Call Center Management Issues (Abandonment) No CRM Strategy, Technology or Practices No Knowledge or Expertise in Emerging Digital Marketing or CRM Practices 14

15 Strategic Transformational Change Triad: Circulation >Audience Development Shared Resources Strategic Planning, Analytics, Campaign Management, CRM Strategy Open Technology Distribution, Single Copy Sales Local Management Strategic Partnerships Call Center, , Direct Mail, Telemarketing, Technology, Data Management Distribution and single copy sales remain a local management responsibility. Subscriber acquisition & retention management and overall strategic planning is centralized. Call center management is outsourced. Clerical and administrative tasks are automated and provide resource to hire new talent required going forward. Costs are reduced and the organization gains momentum for moving toward total audience management. 15

16 Strategic Transformation Circulation Audience/Development Digital CRM, E-Marketing 2003 Consolidate & Outsource Call Center Migrate Call Center to Philippines 2009 Build Total HH Database Add Demographics to Database Multi-market DM, TM, EM Campaign Calendar Audience Management for Brand Portfolio Provide DBM/DM Services Develop Campaign Mgmt. & Analytics Automate Admin & Clerical, Centralize Strategy, Budgets, Planning & Implementation, Consolidate Vendors Add PRIZM Lifestage Data 16

17 Strategic Transformational Change Circulation > Audience Development Immediate Growth Impact: 2008 vs Annualized Source Savings Exceeds $1 Million (> 20%) Reduction in Discount Investment of 30% Increase Revenue/Subscriber of 8.4% 17

18 Strategic Transformational Change: Brand/Audience Portfolio Map Younger Years 31% of Market 0% 20% 40% 60% 80% 100% Segment Penetration Family Life 10% of Market Mature Years 59% of Market Daily Newspaper Magazines Weekly Newspapers Online Source: NYTRMG Marketing Consumer Marketing expertise broadens to include entire print and digital brand portfolio 18

19 Advertising Strategic Transformation Re-Engineering the Organization for Immediate and Sustained Growth 19

20 Strategic Transformational Change Triad: Advertising Management Key Strategic & Operational Issues (Circa: 2006) Management Islands Duplication of Creative Services Little Resource Share or Best Practice Development Little Rep or Management Visibility into Account History or Prospects No Continuity (Attrition and Absences) Only 20% Time in Sales. Travel, Administration & Clerical Dominates Day Questionable SMB Account Profitability Little NBD (Creative or Prospecting): Only 20% Market Penetration Low Consultative Sales Approach Little Digital Expertise 20

21 Strategic Transformational Change Triad: Advertising Management Shared Resources Strategic Planning, Analytics, Campaign Management, National/Regional Account Management, Creative Services and CRM Strategy Open Technology Select Mid- Major Account Management Local Management Strategic Partnerships Call Center/SMB Management, Self-Serve Ad Production and Select Creative Services Major Retail & Classified accounts are managed locally or centralized. Classified Transient and SMB accounts are outsourced. Creative Services are centralized with some work outsourced to India. Marginally profitable accounts are migrated to self-serve technology or call center. 21

22 Strategic Transformation Advertising Management CRM 2006 CRM due diligence Digital Sales Development 2009 Strategy Formula: NBD + LCV + Ops E = EG 2007 Call Center Migration Self-Serve Pilots Sales Channel Strategy Creative Tech Due Diligence Complete Business Database Interactive SFDC Rollout/Ops Efficiency 13 markets in 18 months E Campaign Management/Lead Gen Test India Outsourced Creative Creative Centralization 2008 Profitability Analysis SuperSite in Tuscaloosa Iterative Creative Rollout 22

23 Strategic Transformational Change Networked Advertising Management Research Data COO Sales Presentations Publisher CMO CFO Ad Director Controller Creative Services Biz Office Reporting Local Creative Group Creative Spec Ad Database Offshore Creative Advertising & Marketing Managers Local Sales Call Center Campaign Management Ad Rep Ad Rep EM Wireless Connectivity Ad Rep Business Continuity Ad Rep DM Ad Rep Ad Rep TM Web-based CRM connects each rep and all customers to a global network of support 23

24 Strategic Transformational Change NYTRMG Marketing Assets & Strategic Partners Circulation Call Center Manila, Philippines Marketing Database Denver, CO Classified Call Center Green Bay, WI Sales Management Madison, WI Creative Services Tuscaloosa, AL Strategic Sourcing Norfolk, VA Creative Services Gurgaon, India Acquisition Call Center Phoenix, AZ NYTRMG Financial Lakeland, FL NYTRMG Marketing Tampa, FL 24

25 Strategic Transformational Change Summary & Recommendations: Strategic: Growth requires clear vision and strategic organizational transformation Gain efficiencies in mature business & sharpen innovation capability in emerging business Develop Triad perspective. Centralize and/or Outsource. Keep Local only what must be Local Identify key expertise and positions going forward Develop 3 year Strategic Roadmap, financials and major earnings initiatives Insist on accountability In all things, think & act: Transformational, not Incremental Tactical: Strong change leaders & project management coordination to orchestrate the Roadmap Transformation will be full time employment for many for years. Standardize and simplify before you Centralize or Outsource Out of sight is not out of mind. Learn Virtual management Leave no stone unturned, no sacred cows. 25

26 Thank you. James S. Gold, SVP/CMO, New York Times Regional Media Group 26