The digitization of media presents both enormous opportunities and great challenges for media companies. On one hand, digital technologies offer endless new business possibilities and the opportunity to reach a vast audience. But media companies also are navigating numerous challenges: protecting and managing intellectual property rights; repurposing and creating content for new technologies; connecting to consumers whose preferences change rapidly; and identifying new revenue sources and business models, while, in some cases, preserving traditional, profitable businesses.
As the media marketplace becomes increasingly digital, how are the talent needs of media companies evolving, and what organizational issues must they address? To learn more, consultants in the firm’s Technology, Communications & Media Practice interviewed media executives about the talent implications of media’s evolution to digital.
Leadership in transition
In the past, observed David Eun, vice president of content partnerships for Google and former chief of staff of Time Warner’s Media and Communications Group, leading a media company was similar to captaining a large battleship. Media company leadership required strong management, precision in execution, a uniform message and clear marching orders designed to align employees throughout vast organizations. Major strategic decisions often were the result of years of examination, discussion and careful analysis of historical data.
Challenges such as the fragmentation of the media marketplace and changing consumer preferences about where and how to access media content are changing the way media companies operate. As they increasingly adopt digital strategies, media companies must make decisions about which technologies and business models to invest in. They must devise new partnership strategies and develop symbiotic relationships with new partners — sometimes current or former competitors — aimed at increasing their share of the Internet audience. They must identify new distribution opportunities for traditional content, develop new types of content and collaborate with consumers to encourage the creation of user-produced content. With little historical data and few battle-tested business models to emulate, managing a media company in the current environment requires speed and flexibility, and a keen understanding of evolving customer preferences.
“When dealing with cutting-edge technology and businesses, you have to be able to make quick decisions with less data. You can’t rely on precedent and comparables available in more
established businesses, where the momentum of established deals, relationships and business models provide comfort and guidance. You have to get comfortable with ambiguity,” Eun said.
“Secondly, you can’t focus too much on having precise movements across very large teams. You’re much more likely to be working with very small, independent teams that will be working in slightly different directions at different paces. If you do it right, there will be a lot more output, creativity and innovation, although not all of it will stick.”
In this fast-paced environment, what are the skillsets and leadership requirements that senior media executives must possess? During our discussions with media company leaders, a
number of themes emerged about the experience, mindset and skills required to succeed in the digital business.
Strategic and analytical
One of the primary responsibilities of media leaders today is to identify and implement new digital business models that produce incremental revenue and minimize the cannibalization of
traditional revenue sources. Traditionally, media companies have developed long-term plans with plenty of lead time — and were able to draw on significant resources. Companies that are
competing in the digital space must continually innovate, trying many new things and dropping ideas that do not resonate with consumers. In this environment, media leaders need to be open minded and strategic, serve as an agent for change and be conversant in new technology.
“Because of the endless opportunities presented by digital, the need for leaders — department heads and business leaders — to think strategically is more important than ever before. Media
companies need leaders who understand the importance of strategy for the business and who are open to learning about how technology can drive their business growth,” said Frederick
Huntsberry, chief operating officer of Paramount Motion Picture Group. “You need leaders who are willing to pursue these new business models and to complement their organizations by hiring the right people to then sit down and figure out how to make one plus one equal three between the old and new markets.”
Making strategic decisions in this environment, in which executives have little or no historical data to draw on, requires leaders who are comfortable with risk and ambiguity and able to learn and adapt quickly. “What I’ve had to adjust to is that there really aren’t established models or ‘playbooks’ per se for most of the things that I’m doing now. So I rely on our internal information and project where the market is likely to go. We do this by trying our best to understand consumer behavior and technology development,” Eun said. “One of the most critical skills to succeed today is being able to think analytically through a problem, without as much data as you’d like, and being comfortable and decisive about the direction you decide to take. Leaders today may make decisions and end up having to course-correct later, but those who innovate and want to win today must be willing and able to make the tough calls much more quickly. It’s much easier to cite all the reasons not to do something, to seek more data and to just wait for clarity. These all seem reasonable for rational leaders to seek. But those that do that in digital media today are likely to be left behind.”
Customer orientation
With so many choices available to consumers on the Internet, media companies must have a clear understanding of their value to customers, consistently deliver on that value proposition and stay on top of evolving customer expectations, media executives said.
“Media leadership must be able to keep consumers right in the center of their world,” said Jodi Kahn, president of the digital business for Reader’s Digest. “The difference in running a
digital business is you really do have to get into execution. It’s very different. Digital is a live medium and it’s so public. It’s also much more executionally oriented. There are big tradeoffs in
leveraging technology and leveraging opportunities, and leaders have to be very adept at multiple business models.”
In addition, the marketing function is more important in media companies today, and it is more closely tied to the product function. “Your competition is always one click away. You have to have a very clear view of what you are, why you’re differentiated and why people come to you as opposed to the other guy who’s one click away,” said Martin A. Nisenholtz, senior vice president of digital for The New York Times Company. “You have to have a very clear picture of not only your core purpose, but the way the mission translates to the consumer proposition in all aspects of the business. Everything has to align from the core purpose right through to the product definition and its implementation. Unless it’s just about perfect, you lose to the competition.”
Collaborative
Historically, media companies have tended to be hierarchical; everyone knew his or her role in the business and different departments operated in their own silos. As companies respond to
changing market realities and consumer demands, however, collaboration is the key to quickly developing new products and services.
“The death of an Internet business is silos,” Nisenholtz said. “Traditionally, newspapers have had a tall church/state wall between the news and business sides of the newspaper, and obviously that still has to be applied. When we integrated the Times business, we took a very bold step by including not just the editorial people in the newsroom, but also the software people, the application development people, the interface design people, the information architecture people and the product development people. So, now, sitting around the table are all the folks who have responsibility for the product.”
In this context, media companies are looking for leaders able to work collaboratively with people throughout the organization. “If you’re someone who feels compelled to prove that you are the smartest person in every meeting you attend, it’s not going to work for you,” Eun said, “The corporate antibodies will likely reject you like a virus.”
Traditional media experience still important
Even as media companies increasingly recruit executives with specific digital experience and other skill-sets required for leading a media organization today, over the long term media
companies will have to cultivate leaders who are adept at both traditional and new media models, executives said. Operating experience, in particular, will become increasingly important to organizations in the new media space as they grow larger and there is a need for greater operating discipline.
“What is a big challenge when bringing in people with a purely online background is that they don’t naturally have P&Ls,” Kahn said. “Traditional media companies are much better at that. What I’m trying to do is recruit people who can do real P&L work, yet work in a matrixed organization.”
As they grow and emerge as the new battleships, successful digital media businesses will see the benefit of having the kind of deliberate, disciplined management approaches of traditional
media companies, Eun said. “These companies are going to value executives with so-called traditional media experience because the skills are so different than the ones needed in a startup environment,” he said. “The skills you need to manage a startup are not the same as those you need to run a 40,000-person company. There has to be some level of battleship-like management because, if you’re successful, the startup should be scaling. The critical question is whether digital media businesses can mature and take on the disciplined management approaches of traditional media while retaining the culture and approaches to innovation and rapid execution of startups. This will rely on the talent they have at the helm.”
To integrate or not
As they build their capabilities in digital technologies, newspapers, film studios, music companies and other media organizations must continue to serve the large audiences of their legacy businesses. An ongoing challenge for media companies is to evolve their organizational structures to respond most effectively to digital opportunities.
“A traditional company is really trying to figure out how to embrace digital, but not in a way that it ends up in the corner office on the sixth floor. By that I mean that the challenge is to permeate
digital throughout every part of the operating business in order to transform these businesses — asking questions such as: what does digital media do that can help our consumers interact
with our products? What can it allow us to do differently?” Kahn observed.
Some companies have created a specific digital media group or named a corporate media executive in charge of all digital businesses separate from the traditional business. Others have
blended traditional media and online teams to develop and distribute content for all outlets. Still others have established hybrid approaches, such as having a corporate executive in charge of digital strategy and also placing authority for digital strategies within the business units.
Late last year, The New York Times Company integrated the advertising sales and news departments of The New York Times and The Boston Globe with the staffs of their respective web sites. “We did that so the power of the whole staff could be exercised against the web site,” Nisenholtz said. “The organization has to be culturally ready to do that, but the benefit is that now we have an integrated newsroom. Over time, you will see more newsroom folks create content exclusively for the web site — whether it’s original reporting, early reporting or multimedia content that obviously can’t appear in print. The goal is to go from a handful of people on the Internet news side to 1,200 people on the integrated side. If we can achieve that kind of scalability inside of the Times newsroom, no organization on the planet will be able to match our ability to create content for the web. Of course, the same is true for the advertising organization, where we are now tapping the power of the whole staff there, as well.”
At Readers’ Digest, all facets of the company’s web business report to Kahn, including ad sales, content development, licensing, revenues and expenses. “We have a vertical and horizontal structure. This allows us to be very close to the business units, but still use our resources in the most effective way to drive growth quickly,” Kahn said.
Such organizational decisions depend in part on which areas of the business are being affected by digital and the degree to which digital is changing the business, according to Huntsberry. For
example, digital clearly has influenced the way films are promoted. “Marketing departments need to establish a new media group with individuals who understand how to promote the franchise using every angle of the Internet today,” he said.
“Those departments will actually expand in the months and years to come because advertising dollars will continue to shift from traditional media to new media.”
Media companies are transforming themselves into multiplatform content companies, requiring them to devise and implement new strategies and approaches to manage intellectual property rights, repurpose and develop content for new technologies, identify new revenue sources and appeal to consumers whose consumption habits change rapidly. To compete in this environment, media companies require savvy executives who can lead their company’s strategies for the Internet and other digital platforms, and manage flatter, more matrixed organizations than existed in the past.
In many ways, observed Huntsberry, media companies today require the same leadership skill-sets that they always have needed when confronting market-changing forces: the ability to
recognize and respond to those changes. “Leadership is about identifying the need to pursue new business models and hiring the right people who have the necessary skill-sets. It requires someone who is broad-minded, open-minded about how technology is changing the business, and is willing to embrace what’s new,” Huntsberry said. “Good leaders make the right decisions. That’s no different than it was 10 years ago.”
Note
This article is included in
Converge Issue 2, 2007
For information about copying, distributing and displaying this work, contact permissions@spencerstuart.com