2011 operating mantra: new value creation

Which road to we choose?It’s budgeting time for media companies, so most of us are thinking about the future. We have choices to make, each of us.

Seth Godin has come along and offered a helpful glimpse at the four road options we have when facing choices in both business and life. The looping road, the indecisive new roads, the wrong road, and, of course, the right road. As a media observer and strategist for new media, the first two — and especially the first one, the looping road — are of most interest to me:

You might be stuck because you pick the wrong fork on a looping road. You keep getting better at the route you cover, but it doesn’t go anywhere, you just keep doing it over and over.

This is where I find most media companies in the new media space today. We’re getting better and better at running brand-extension websites and squeezing value out of them, but we’re not really going anywhere. Energy and resources spent serving this beast, therefore, are more costly than energy and resources spent creating new business models, yet most folks are stuck on the boosting brand road, because that’s all we know. Resources it takes to produce a dollar that’s standing still aren’t worth as much as those that produce a dollar that has exponential growth potential.

Another reason we’re stuck on this road is fear of the second:

You might be impatient or unable to stick to your decision to take this particular road, and thus you’re always starting on a new road. Since the new road is always strange to you, you rarely get any better at getting where you’re going.

Here, we’re presented with a suitable choice for tomorrow, but we’re unable or unwilling to give it the long runway it needs to get to a position of self-sustenance and beyond. We say we’re going to stick with it, but we give it a year and then move on to something else with the same results. Maybe that’s the right call, but one of the problems here is that our definition of “what works” is old school and usually built upon a traditional profit and loss statement. That’s because media is manager-driven, and managers need to see the processes delineated before pronouncing their blessing, and even then, the rug can be pulled out from underneath at any time, if the performance doesn’t live up to the projections. Position that against the tech industry that is eating our lunch, and you’ll find a different formula in place. Sure there’s a P&L, but there’s also a willingness to set it aside at any point when the model turns this way or that. Why is that? Because the vision drives the processes, not the other way around. Investor-supported businesses are, by necessity, run by visionaries who drive toward the goal, whether the processes are there or not. Managers? Perhaps. Leaders? Definitely.

I sense a growing willingness by companies to try new things, much more so than just a few years ago, and I think that’s positive. 2010 has certainly been a better year than 2009, and we hope that businesses will make the tough decisions about spending some of that money to invest in tomorrow instead of simply passing it along to shareholders. Wall Street media analyst James M. Marsh with Piper Jaffray told me last week that “the street” recognizes that media stocks are in an era of restructuring, which will likely continue for several years. 2011 is going to be rough, he thinks, and we would certainly agree. The bright spot, however, is where smaller numbers are headed north, where we need to dedicate resources that are producing new value.

That’s because new value creation is the operating mantra of media in 2011.

(Originally posted in AR&D’s Media 2.0 Intel Newsletter)

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