Tag Archives: Steve Denning

My 100th Blog Post

40Today is a milestone of sorts for me. It marks my 100th blog post since beginning my blog. Also notable since my blog has long passed the threshold of four months, the period of time most new bloggers quit blogging.

What Have I Learned So Far

Reflecting on my blogging journey on the way to my 100th post, I learned that running out of material to blog about was not my biggest problem, but rather having files of ideas and issues I wanted to address and not having the time to develop them due to more pressing issues bursting onto the scene.

I learned that blogging was more about organizing my own thoughts than if anyone else read them or reacted to them.

I learned that blogging connects you with incredibly talented people all over the world that you never would have met other than by doing a weekly blog.

I learned that blogging is fun.

My Biggest Hits

Two blog posts in particular standout as being noteworthy. It’s funny, because they are not the ones I might have thought would have gone viral.

The first one was me venting my spleen about the loss of great air personalities in my post entitled “We Never Called It Content.” What troubled me was the “forced retirement” of some iconic air personalities and that the radio industry wasn’t valuing the relationships that such personalities owned with their audiences. That short-term revenue gains due to expense reduction were at the peril of longer term audience erosion.

As the old farmers used to say “Anyone can tear down a barn, but it takes a craftsman to build one.”

The other blog post that would see over 3,700 reads in a single day was “The Day the ‘Dumbest Idea’ Invaded the Radio Industry.” This post grew from an article in Forbes I had read by Steve Denning. The “dumbest idea” was that of increasing shareholder value. What I realized was that when the Telcom Act of 1996 was signed into law by President William Jefferson Clinton it opened the doors of the radio industry to Wall Street. Wall Street would bring their philosophy of “increasing shareholder value” to broadcasting. The effects of this modus operandi would be as devastating to radio as it had been to every other industry it was used in. Sadly it doesn’t have to be that way and we see that privately held radio companies avoid this metric and as a result are doing well by both their stakeholders as well as the communities they are licensed to serve.

What’s Next?

So next week, I will begin my next one hundred blog posts. I have lots of ideas about what’s going on in our media world to reflect on, research and share with you.

The commercial radio industry is only about three and half years away from celebrating its 100th birthday in 2020. The year 2020 should prove to be interesting for so many reasons beyond just radio, TV or media, for the prognosticators are envisioning so many changes in all aspects of our world.

So I will end my 100th blog post much like the singing group The Statler Brothers used to say at the end of their television show….

“Don’t go anywhere, because we ain’t even started yet.”

8 Comments

Filed under Education, Mentor, Radio, Sales, Uncategorized

The Day the “Dumbest Idea” Invaded the Radio Industry

shareholder valueLast week I wrote about killing the goose that lays the golden eggs. It was my way of comparing the Aesop fable to the world of American radio. It got a lot of discussion. But I felt that while I touched on how radio operators twenty years ago wanted to harvest all the golden eggs immediately versus waiting to get one each day, by virtue of a last minute insertion into the Telcom Act of 1996 that basically removed the ownership caps on radio, there was – as Paul Harvey used to intone – ‘the rest of the story’ to be told.

The rest of the story involves “the dumbest idea.” I grew up about a decade after World War Two ended. This was the period when America enjoyed an extended period of economic growth and a shared prosperity. By “shared prosperity” I mean it was a time when the workers who produced a product or service shared in the profits produced by the company. Managers and workers would see their income grow together. As everyone’s pay increased, there was more discretionary income to spend. This was the rise of the middle class in America. All boats were rising with the economic tide.

In 1968, I started on-the-air at one of my hometown radio stations while in the 10th grade in high school. I was paid the minimum wage; $1.60 per hour. Did you know that 1968 was the year when someone making the minimum wage had the most buying power for that rate of pay? The equivalent in 2012 dollars is $10.34 per hour. So what happened?

Somewhere in the 1970s things changed. Firms began to focus on themselves. The productivity gains produced by the workers were no longer shared with the workers. Since no one complained, this new way of doing business continued.

The 1980s really saw this new operational style take hold. And as it did, incomes for the middle class stagnated. When the middle class incomes stop growing, the ramifications on the rest of the economy are magnified. Workers no longer have discretionary income to spend. This was initially covered up by women entering the workforce producing two wage-earner incomes. Then when that ran its course, credit cards, second mortgages would keep the party going under false pretenses.

Today we are in a vicious cycle of decline.

What changed in the 1970s was a new idea about what metric should be used to measure the success of a business. Before this new idea was born, Peter Drucker’s measure was the rule. The purpose of a business, said Drucker, was to create a customer. But that went out with leisure suits, the new crop of business wizards would proclaim. What replaced it was something that even GE’s Jack Welch has called “the dumbest idea in the world.”

What was this dumb idea? Increasing shareholder value.

In an effort to offset declining profits and performance, a new operating modus operandi was conceived that the purpose of a corporation is to maximize shareholder value. To make sure the captains of industry got the message, boards of directors would change their compensation packages to cause these business leaders to focus on increasing the company’s stock price. What could possibly go wrong?

Everything!

The concept was embraced by both America’s business schools as well as industry. Unfortunately, the new policy not only didn’t solve the problem it was supposed to address but by unintended consequences created a myriad of new problems no one foresaw.

Tell me if any of these “unintended consequences” sound familiar to you: short-term decision making, relentless cost cutting, staff reductions (RIFs), less investment in the business, virtually no innovation, low workforce morale, no raises in pay, reduced benefits, non-stop mergers, increased debt, lost ability to compete, declining R.O.I., and economic stagnation. I’m sure you can add to this list based on your own experiences. For a more detailed look at this, you should read Steve Denning’s “Why ‘The System’ Is Rigged And The U.S. Electorate Is Angry,” the inspiration behind today’s blog post.

So twenty years ago, in 1996, President Bill Clinton signed into law the Telcom Act of 1996. This would bring “the dumbest idea in the world” to the radio industry. Wall Street jumped into the new shiny investment opportunity; radio. Everything that every other industry was experiencing from this new operational style was now rearing its ugly head in the broadcasting industry. All with the same negative impacts.

Not all organizations adopted this dumb idea of operating. They stuck with Drucker’s rule. And it’s the same with the radio industry. The smaller radio operations do operate differently. Their success has others sitting up and taking notice.

However, most organizations – and not just in broadcasting – are still in denial. The evaporating middle class is not good for an industry that lives off of advertising. Advertising is pitched to the masses who are the consumers that drive over seventy percent of the American economy. I wrote about the future of ad supported media last year after I read Thomas Piketty’s book “Capital in the 21st Century.” You can read that blog post here.

Based on the tumultuous presidential election season we’ve seen so far, it would appear that the American society has awakened and is now “as mad as hell and not going to take it anymore.” Cue Howard Beal here.

Steve Denning writes: “We are now at an ‘emperor has no clothes’ moment.” It’s now clear that this way is not working and is not only leading to systemic value destruction but an economy that no longer works for the middle class.

If we’ve ever needed real leadership in America, it’s now — and from all directions.

26 Comments

Filed under Education, Mentor, Radio, Sales, Uncategorized

What if…

I had the opportunity to sit in on a webinar on “The Creative Economy” that is considered to be the direction the future of business is headed in compared to the traditional business methods of the past. What is meant by the term “The Creative Economy?” It’s one where business revolves around the customer versus the past where the customer revolved around the business.

The Creative Economy also breaks from tradition in the sense that it means the goal of a company is no longer about making money for the stakeholders but about delighting customers. But, you ask, isn’t “maximizing shareholder value” the mantra of Wall Street? Good question. Listen to what these CEOs have to say about that mantra:

            Jack Welch former CEO of GE: “the dumbest idea in the world”

            Vinci Group Chairman/CEO Xavier Hulliard: “totally idiotic”

            Paul Polman, CEO of Unilever: (has denounced) “the cult of shareholder value”

            Marc Benioff, CEO of Salesforce declared this still-pervasive business theory “wrong”

I guess it’s quickly losing favor with those who should know.

The Internet and “The Cloud” are enabling “The Creative Economy.”

Which brings me back to my initial question, “What if…”. What if radio stations were supposed to be small operations? What if the radio industry wasn’t meant to scale?

When I entered the radio business, companies were limited in the total number of radio stations they could own; in the entire USA. It was known as the 7-7-7 rule. A single company could own not more than 7 AM, 7 FM and 7 TV stations in all of America.

What this created was competition between owners of radio stations in a market. Each station was a team of people working as hard as they could to win the audience in that market. The focus was all about the listener or the viewer. Win the most listeners/viewers and advertisers would soon follow to showcase their wares on that radio or TV station’s airwaves.

Hearing “The Creative Economy” described on this webinar was like radio déjà vu.

In 1996, President William Jefferson Clinton signed the Telcom Act of 1996 into law. That was the moment that the “land rush” for broadcast properties began and Wall Street became heavily invested in the radio industry. Wall Street would bring its “maximize shareholder value” mantra to broadcasting.

This point was really brought home to me in 1999 when my stations were sold to a large radio consolidator. The head of this “big box” radio operator told us that we needed to “sell, sell, sell” that it was all about making money for the company and “maximizing shareholder value.”

This “pump up the troops” speech left me cold. I was brought up in a radio world that was about operating “in the public interest, convenience and/or necessity.” I was brought up in a world where if we treated the members of our team well, our team focused on delighting the listener, the advertisers would flock to our station and the owners would be rewarded for doing everything right. That view of life served me well my entire radio career.

Needless to say, I opted not to remain with this new company.

However, I would find myself playing “musical chairs” going forward as it was getting impossible to not be working for a company that hadn’t adopted this modus operandi.

Steve Denning, who writes for Forbes, lead this webinar and pointed out that economics was driving the change for companies worldwide. He told us that no company is doing it all right. Companies like Apple, Amazon, Google and Salesforce are moving in the right direction. In fact, Tim Cook is better at navigating the change to this style of management than Steve Jobs ever was and it no doubt is contributing to Apple being the most valuable company in the world. To give you an example of what it means to focus on the customer first, consider Tim Cook telling an investor in Apple this:

“If you want me to do things only for ROI reasons, you should get out of this stock.”

That was kind of radio world I grew up in. We always tried to do the right thing for our employees, our listeners, our advertisers and the money would follow.

I’m encouraged that radio people who sold out when Wall Street was buying, are now getting back into the radio business with that same ethic, spirit and sense of innovation that seduced me into a four decade long radio career. They understand the concept of “The Creative Economy” because that’s how they built their radio companies the first time around. They also understand that today, radio is more of a concept of operation than a method of delivery.

I’m excited to be working with the next generation of radio broadcasters at my university knowing that radio’s future has never been brighter.

7 Comments

Filed under Education, Mentor, Radio, Sales

Remember When Radio Was Agile?

Have you heard about the latest management movement?  It’s called “Agile” (but it can also be called “Scrum”).

Actually, to be more accurate, there’s “management” and then there’s “Agile.”  They are not one in the same.  Another way to picture them is one is a vertical style of management and the other is a horizontal style of operating.

The vertical style is familiar to anyone working in one of today’s highly consolidated public radio companies that own hundreds of stations.  The top of the management pyramid says “jump” and the troops respond with “how high?”  You may also find that the company circulates a “Best Practices” manual and wants every station to implement it even though a person on the front lines may wonder if these are “best practices” in their particular case.

The military model was the genesis of the vertical style of management.  New York City’s tall vertical skyscrapers are literal structures of top-down management.

Then I started reading about Agile.  Agile is a horizontal mindset.  Everyone in a company is working towards the same goals and on an equal plane.  The planning and execution is a shared endeavor all designed with one goal in mine and that is to delight a customer.

While both vertical and horizontal styles are business models and the purpose of a business is to create a customer (and ultimately a profit), the radical difference is vertical puts that profit goal front and center and has everyone focused on achieving that goal.  The horizontal style says if we delight our customers, then the profits will follow.  The customer is front and center and the focus of everyone who works at the company.

I’ve worked with couple of the big consolidators and I’ve heard the CEO’s message of how much the stakeholders had invested in the company and how we all needed to be focused on reaching or exceeding our goals.

But that’s not the style of radio I entered.  Back in my early days, the radio station; often owned by folks who lived and were active in the community, the focus was on our listeners and our advertisers.  Everyone in the radio station worked towards the same goals of delighting our two constituencies.

We didn’t call it “Agile” or “Scrum” but doing GREAT radio and operating in the public interest, convenience and/or necessity.  OK, not to get too Pollyanna, there was a vertical structure of sorts – a GM, PD, SM – but we all worked side-by-side in the same building and everyone did whatever was needed to be done to delight our customers.  It was a team effort.  It was a horizontal style of operating.

What changed was the Telcom Act of 1996.  That new law would change the face of radio through massive consolidation of radio stations.  All of these little horizontal operating enterprises would be stacked one on top of another until we had a vertical style of operating.  Now a group of folks would declare they were “the adults in the room” and start passing out thumb drives filled with spreadsheets full of revenue goals.

Nowhere were there discussions of delighting the customers.

Tim Cook, CEO of Apple, has made it abundantly clear that Apple is not always going to do things that simply fatten the bottom line and that if you are an investor in Apple that doesn’t like that way of operating, maybe you should invest your money someplace else.  Apple is going to delight the customer  – as Steve Jobs so simply stated – by making insanely great products.

How’s that focus on the customer working out for Apple?  Very well, thank you.  Apple has posted the largest net quarterly profit in history. Not in just Apple’s history but in the history of the world.

Radio is a fabulous business!  Radio entertains, informs and is there in times of emergencies to hold a community together.  But radio performs best when it is operated horizontally and not vertically.

Mary Meeker in her most recent “Internet Trends report at Re/Code” had a slide in her 180-slide deck that spoke most passionately I think to this concept of operating horizontally.  That slide was titled “Diversity Matters….It’s Just Good Business” and here is what the body copy of the slide said:

            “One of the things I have learned about effective decision making is that the best decisions are often made by diverse groups of people.

Saying or hearing these words is magic…..

‘That’s really interesting.  I had never thought of that way before.  Thank you.’”

That sure sounds to me like Mary was making a plea for companies to re-think how they operate and level the playing field by moving to a horizontal style of operating.

The reason the radio industry was so attractive to Wall Street investors was because it was a high cash flowing business that appeared easy to operate.

My roller skating coach used to tell me “Dick when you make it look easy, then you’re doing it right.”  Radio used to be doing it right.  It’s really a lot harder than it looks.  It’s time to go back to that way of operating.

OR – you can continue doing things the way you did last year and watch “flat revenue growth be the new up.”  Doesn’t sound like the radio industry has much to lose by changing their ways.

The good news is there are radio operators who are returning to the business that see the opportunities in the horizontal approach to radio station operations.  It’s a movement that will not only be good for the radio industry but the listeners and advertisers served by the industry.

It’s called Win-Win-Win.

3 Comments

Filed under Education, Mentor, Radio, Sales