Monday, October 6, 2014

The Washington Post, the News Industry, Jeff Bezos, Martin Baron and Innovation in News- Driving Change in a Changing World




Executive Summary: The Washington Post is neither an Amazon nor a Buzzfeed. Below are some elements of building a distinctive news organization that Jeff Bezos, Martin Baron and the news leadership would likely have considered at The Washington Post. They are structured as a framework, and presented with a parallel between building such a news organization and with managing innovation in fast paced industries. The metrics and insights that you may develop from these go a step beyond what the conventional audience, digital and social media metrics can do for you. No industry jargon was harmed or involved in the making of this quick essay. From the desk of A-Fine-Balance-between-High-Risk-Objectives-and-Metrics-For-Key-Results. 

Since Jeff Bezos bought The Washington Post last year, there has been a lot of media conversation here (Businessweek) and here (Politico) about the news organization's personnel changes and also about its direction.

The most recent and highly cited one has been an article by David Carr of the New York Times (See link: http://www.nytimes.com/2014/10/06/business/media/the-washington-post-regains-its-place-at-the-table.html ). The Washington Post, driven by Martin Baron and the leadership team, can take many paths towards building a distinctive news organization. For more about how New York Times handled its change, see here: http://goo.gl/7eSsQV

Let's address the elephant in the room.

What did Jeff Bezos gain by buying The Washington Post?

Digital is here.
Digital is not going away.
Digital will grow without Jeff Bezos' involvement.
Regardless of any potentially larger, altruistic reasons to own the newspaper that Jeff Bezos may share with the previous owners, The Washington Post offers Jeff Bezos a digital insight into minds on the Internet operating slightly higher up on Maslow's Hierarchy of Needs, compared to other websites. (Note: Maslow's Hierarchy is mentioned here only for simplicity- for a branding context, please feel free to refer to David Aaker's work here on the brand loyalty pyramid and Jennifer Aaker's work here on building innovative brands).

Additionally, while book publishing is a different animal from news, building a distinctive news organization that thrives in a digital world offers some transferable insights.

The Framework.

The framework below is one way to think about the trade offs involved in building a distinctive news organization. It offers a pathway to out-of-the-box metrics and potential key results the new organization's leadership could develop to manage a driven, aligned and responsive (towards stated objectives, not reactive) organization. I list a few dimensions of this framework to serve as guardrails.

The Objective.

Let's set a broad goal/ initial objective of this thought exercise for the Washington Post:
To build a widely read newspaper that has the sort of cache in the mind of the reader that Apple has relative to its competitors. It becomes a leader in an ecosystem for driving awareness, engagement and change, based on news elements, for the reader.

How's that for a start?

You will note that the objective explicitly sets the Washington Post a little higher on Maslow's Hierarchy of Needs than a content farm. (Note again: Maslow's Hierarchy is mentioned here only for simplicity- for a branding context, please feel free to refer to David Aaker's work here on the brand loyalty pyramid and Jennifer Aaker's work here on building innovative brands).

The Dimensions

A few iterations through the structure below should yield some quantifiable objectives as well.

Dimension 1: Reader Impact Zones.

In terms of the reader, let's define how news may impact the reader in the scope of his or her daily life. We shall describe these as concentric circles.

Immediate Zone: The Giants winning the Superbowl is an Immediate Zone impact. So is news of a regulation cutting your taxes in half.

Near Network Zone: News about quicker or easier access to drugs for a sick relative would be a Near Network Zone impact.

Overarching/ Distant Network Zone: Immigration reform that does not affect you directly, but is important to you as an issue, would have an Overarching/ Distant Network Zone impact.

Dimension 2: Type Reader Network Effect.

What kind of a reader network effect can a news story have? We can draw from our experience of current metrics covering news, digital and social media here.

Awareness: This would go beyond just how many readers have read the news item on a topic (i.e. not just CPM as a sample metric).

Engagement: This is not just sharing on social media. This may involve the number of thought leaders engaged in the conversation in and around the news coverage. The news organization's leadership in facilitating conversation across the ecosystem on the news topic.

Change: Is there a change in the readership's views due to this news topic coverage (if that is important? If not, why not?) A change in law, as a direct effect of the new organization's leadership in news coverage, would be an example of the change effect.

Dimension 3: Timeline.

How long does the news coverage and its impact last.

Thinsliced: Commentary on cat videos is an example.
Short: From one to a few news cycles.
Medium: May require sustained effort towards engagement and may lead to change.
Long: Policy decisions that may change the nature of society.

Dimension 4: Originating, Curating and Funneling News Items (a la Innovation).

Just as organizations realize that the next great disruptive innovation may not arise in-house, news organizations would understand that they may not always be at the center of the next 'greatest news story ever'. How you manage origination, curation and funneling (you may replace funneling with acceleration of news ideas, if you like) of news stories is important. What percentage of ‘impactful’ stories would The Washington Post like to break?

Dimension 5: Distribution.

Top two on this list would be partners, along with cross medium, multichannel content and promotions.

Investigation into civil forfeiture and also posting a John Oliver video on the same topic is a great example of partner and cross medium thinking. See link: http://www.washingtonpost.com/blogs/style-blog/wp/2014/10/06/watch-john-oliver-explain-civil-forfeiture-aggressive-police-procedures-on-last-week-tonight/

Evaluate The Framework So Far

We can come up with a few more dimensions, however, let's pause here. How does this help the editor and publisher? Here are questions worth thinking about:

How many news items can the news organization run in a year that string together into a medium term topic, which impact user views on the topic, engage 50%+ of the thought leaders on the topic and lead to an actual change in the life (say via a change in law) of the reader?
What is a sustainable frequency for these efforts?
Does a higher frequency of such efforts lead to increased subscriptions and greater reader retention?
Does a reduction of thinslicing type of content (say commentary on cat videos) lead to a reduction in traffic and hence a reduction in audience engagement?
Can this reduction in audience engagement be offset by pushing content through partners and other channels?

Conclusion.

Building a distinctive news organization requires and understanding of, and a sustained effort towards, the level of Maslow's Hierarchy of Needs the employees, the readers, the industry and the news organization as a whole, wants to operate at. Going by kudos from readers and media watchers (David Carr at the New York Times), the leadership is showing success at this. The dimensions and the framework shed light on some of the challenges they deal with on a daily basis.

What do you think?








Wednesday, January 15, 2014

Pecan in Your Pie? Market Mechanics, Economics and Globalization


Executive Summary: Pecan pie is not quite apple pie, but it is as American as it comes. The humble pecan in your pecan pie may have a very interesting story to tell of growing up in a hot climate across the border, making it over in crowded containers, and finding its way to your plate through an oligopsony. An interesting tale about globalization. From the desk of A-Great-Story-From-2013-Is-Better-Told-Than-Never. Also, from the desk of Not-Quite-Bourdain-But-It-Will-Do.

Introduction

Pecan pie is American. Pecans are also American. Mostly. The U.S. is the world's largest pecan producer. A significant quantity of pecans are also grown in Mexico though- in 2012, Mexican pecans were 70% of all U.S. pecan imports by dollar value. Bet you didn't know that. Why would someone in Mexico care to grow pecans?

What follows is a structured account of a perception altering, freewheeling conversation about the humble pecan in your pecan pie:
Where? A random rooftop bar in NYC on a Friday evening.
Who? A friendly Mexican pecan farmer in town, with his brother, to soak in the U.S. Open.

These insights (highlighted below in italics) into pecans from Mexico and the global pecan industry, covering markets, demand, supply, buyers, global trade, a decade long product horizon and a multi-decade pricing perspective, are from a random conversation with a Mexican farmer. Specific annual data points have been added to confirm insights from the one time conversation. Of course, not all aspects of the conversation made it to the blog.

Climate

Pecans need hot and dry conditions to grow. They can be grown in regions approximating USDA hardiness zones 5 to 9, provided summers are also hot and humid. Depending on the variety, pecan trees require 205 to 233 frost-free days for the nuts to reach maturity, thus restricting pecan production to southern states in the U.S. Jimenez, Chihuahua in Mexico has the right conditions for it, and is close enough to America for Mexican farmers to nurture a source of revenue in the desert environment.

Other countries producing pecans include Australia, Brazil, Israel, Peru, and South Africa.

Local Operating Conditions and Conditions

Water is key to pecan farming. However, digging wells in the Mexican desert requires licenses. These local conditions and regulation, has directed Mexican farmers toward developing advanced irrigation systems.

Insight: Mexican irrigation systems thus need to be more advanced than those in the U.S.

Jimenez, Chihuahua in Mexico is about 200 miles from the U.S. border in Mexico and also contends with some of the socio-economic problems and strife seen at the U.S.- Mexico border.

Competitive Space

Insight: In 2012, Georgia led the U.S. in pecan production, with production for all pecans (improved varieties and native and seedling). 


Georgia's production reached 100 million pounds, followed by New Mexico at 65 million pounds, Texas at 55 million pounds, Oklahoma at 25 million pounds and Arizona at 20 million pounds. Production was up in each of these states except Georgia.  (NASS 2013)

Insight: China is emerging as a strong buyer of pecans globally and seeks to develop local supply. Mexican farmers were not concerned about potential Chinese supply impacting global suppliers in the medium term, primarily due to the time it takes for pecan trees to mature. 

Insight: Grafted trees reach maturity by the seventh year (seedling trees require another 2-3 years), and most cultivars remain productive for decades when properly managed.

Buyers

Insight: There are five major buyers in America for pecans in the U.S., who exchange information on pecan supply, quality and pricing. This enhances their buying power in most situations.

In 2012, the United States imported pecans valued at $282.0 million, down slightly from $286.8 million during 2011. Mexico remained the dominant supplier, providing shelled pecans, in-shell pecans and pecan products valued at $200.8 million.

Variability in U.S. production, not U.S. demand, impacts buying power. From 1970 to 1999, imports (shelled basis) ranged from a low of 0.2% (1981) of total U.S. production that year, to a high of 52% (1986).

Insight: Chinese buyers have attempted to gain greater control of the buying process and sought to trade directly with Mexico. However, with the U.S. as the largest market and the largest grower of pecans, the Chinese have not been successful so far. U.S. continues to export significant quantities of pecans to China.

U.S. pecan exports were valued at $486.9 million in 2012, up 30 percent from 2011. Hong Kong remained the primary destination for U.S. in-shell pecan exports, with sales reaching $165.4 million, a 69 percent jump from 2011. Vietnam was the second largest in-shell pecan market, purchasing pecans valued at $67.9 million, a whopping 115 percent increase. Mexican purchases declined in 2012, falling to $34.2 million.  (FAS 2012)

Demand, Market and Price Elasticity

Of tree nut consumption in the United States, pecans rank third behind almonds and English walnuts. Pecan per capita availability has held nearly constant over the past several decades, ranging from 0.38 pounds in 1968 to 0.47 pounds consumed per person in 2010.

Insight: Walnuts and even peanuts function as effective pecan substitutes. This constant demand and access to substitutes creates a narrow price range. At the time of the conversation with the Mexican pecan farmers, suppliers were getting prices at the higher end of a 100 year time frame.

Growing Chinese market demand, continued U.S. buying power and favorable U.S. food export programs have combined to provide the U.S. pecan industry with access to expanding new markets.

2012 data is a great illustration of price elasticity. The 2012 U.S. pecan crop totaled 302.8 million pounds or 151,400 tons, a 12 percent increase from 2011. The value of the 2012 pecan crop decreased 27 percent to $476.8 million. Total crop value declined as grower prices fell, partly because of increased crop size.  (ERS 2013, NASS 2013)

In 2011, average pecan prices dropped to $1.57 per pound, down from 2010 average prices of $2.43 per pound. Average prices also dipped for each of the five major pecan-producing states.  (NASS 2013)

From 1970 to 1999, U.S. average pecan prices ranged from a low of 29.8 cents (1971) per in-shell pound to a high of $1.14 (1992) per in-shell pound for native pecans, and from 35.4 cents (1971) to $1.57 (1992) per in-shell pound for improved pecans. During this same period, U.S. improved pecans averaged 78.2 cents per pound, while native or seedling pecans averaged 49.7 cents per pound an average price difference of 28.5 cents per pound. Caveat- differences in prices from state to state reflect national and local difference in supply and demand, as well as differences in quality, nut meats obtained, and market outlets.

Next time you look at a pecan, and find a wild look in its eye, you can safely assume there is a story to tell.


What do you think?




References:
http://www.agmrc.org/commodities__products/nuts/pecans/
http://aces.nmsu.edu/pubs/_z/Z501/
http://www.wherefoodcomesfrom.com/article/303-2942/Pecan-Production-By-State-In-Order-Of-Production#.UtWX3PtZuio

Tuesday, January 14, 2014

Success with Disruptive Innovation and Acquistions and Integration- More Than A Short Term Play?

Executive Summary: Literature on acquisitions to manage disruptive change often focuses on the art and science of the acquisition deal and the short term post-merger acquisition program. For the acquirer, are other organizational factors which must be in place for sustained longer term success? Are both success in the acquisition deal and success at the 180 day mark into post-acquisition integration just first steps in transforming an organization to align with disruptive change? If so, what boundaries, hand offs and interplay must exist between the organizational structures and related processes and the acquisition and integration effort? From the Desk of Objects-In-The-Rearview-Mirror-And-In-A-Firefight-Suffer-From-Short-term-Bias.

Flesh Out the Problem to Build A Solution

There are several approaches to handling disruptive change, however, let's drill down on one specific question:
For organizations which leverage acquisitions and integration ("and" is key) programs to handle disruptive change, success in the acquisition deal and success at the 180 day milestone into post-acquisition integration all they need for sustained success with disruptive change?

For simplicity, we consider a scenario where the acquirer needs to make just one acquisition in its inorganic deal strategy, even thought his thought process can be applied to multiple acquisitions in the inorganic change program.

Disruptive innovation is Tough for Organizations

After a certain size and scale, organizations have challenges in nurturing and sustaining paradigm shifts.

Size is a good first pick as a proxy for organizational inertia in accepting disruptive change. In The Innovator's Dilemma, Clayton Christiansen highlights the disk drive industry and how companies were not able to transform with technologically driven business paradigm shifts. On the other hand, experience with digital startups will tell you that they will go through some changes in strategic direction and the successful ones navigate these nimbly.

Also, let's pick span of disruption as another factor in considering the impact of disruptive change. In an industry where sales channels are commoditized and thin, and operations as well as operational efficiencies are key, a disruptive shift in operations would be a tougher challenge compared to a technological product shift, with a long gestation period and long sales cycle that can easily be plugged into an existing industry ecosystem.

Specific Factors Which Make Disruption Tough

Companies in specific categories of size and scale, in specific markets, have unique challenges with, and have unique (organic and inorganic) solutions for, handling disruptive change. Smaller startups may find it easier to change direction and compete head to head in their new space, compared to larger organizations.

Would you pick more factors to identify a unique set of challenges and solutions for disruptive innovation?

Rate of change in the market?
Investments (not just money) required in addressing disruptive change?
Rate of adoption of disruptive change in the market?
Ratio of investments for disruptive change versus run of business size and scale of operations?

Any other factors you would consider?

While I have listed just a few factors, especially those that are external to the organization, this line of thought would help us structure the distinct categories of challenges and solutions for specific data sets.

Driving the common understanding of its common challenges and solutions through an organization would be invaluable for more effective decisions in finance, corporate development and business development roles. This would be an important internal factor in handling and managing disruptive change.

As we delve into this list, you will find that the challenges and solutions set may vary at the sector, sub-sector, company and even the business problem level.

Acquisitions and Disruptive Change

A company with a sustained, successful acquisition strategy for disruptive change is an outlier.

There are examples from the Pharmaceutical and Technology industries, in outlier companies like EMC and Cisco, around their solutions to the "acquisition and integration" of disruptive innovation. Some thoughts are here:
http://reflectionsblog.emc.com/2012/06/explaining-emcs-success-in-ma.html

Questions Illuminate the Problem

Given the broader challenges in assimilating disruptive change, would you tailor your acquisition and integration strategy to the unique challenges and solutions set at the sector, sub sector, company and business problem level?

What factors would you pick to identify a unique set of challenges and solutions for "acquisition and integration" for disruptive innovation?

Is the "acquisition and integration strategy" for disruptive innovation a subset of the overarching problem of handling disruptive change in an organization?

If not, what would be time horizon for the "acquisition and integration strategy" to play out for the acquisition to be deemed a success? In this case, would success really be measured by how the company has handled disruptive change?

If so, what boundaries, hand offs and interplay must exist between the organizational structures and related processes and the acquisition and integration effort?

 Magic Bullets?

In this case, one approach could be to promote a federated organizational structure, set up functions as services to different units, and tailor unit performance monitoring and corporate services to its set of challenges and solutions. Is that a magic bullet, or does that need some further thought and tailoring?



What do you think?