The Manager's View

An MBA student asked me not long ago, if I knew of companies that developed or updated strategies on a regular basis. He went on to say that he was in charge of providing IT support for his organization and when asking for the strategic direction of the company he was told “to increase profit by X% in the next operating period.” This was clearly not a strategy but an operational goal. Operational goals are almost always addressed with tactical solutions. The longer an organization has been in existence, the less likely a regular strategic planning process will exist. Leadership will recognize changes in the environment, new financial goals, changes in operation procedures, new challenges and competition. Almost always tactical plans are developed to address the market changes and financial goals.   Tactical plans will include pricing structure changes, development of new products, new human resource programs and new operational procedures. These pl...

  I teach both undergraduates and MBA students at the University of Houston. Both groups have been assigned a Harvard Business case studying the Paywall at the New York Times. This is an interesting case and shows the challenges faced by newspapers that are trying to survive in a digital media world. Interestingly, the case focuses on the rate charged for the print form of the newspaper vs. the digital edition. The digital edition is less expensive and the print plus the digital edition is less than the print only newspaper. The case also focuses on the penetrability of the Paywall. Some social networking sites have access to NYT content free. Finally, the case looks at the challenges to transition from print to digital and perhaps most importantly the value created by the newspaper. As I have watched newspapers address these challenges, it seems that almost universally there has been little attention paid to the value created by newspapers and newspaper j...

Here are some more thoughts on why newspapers may still be a wise investment and how they may find ways to develop a stable of print and digital products that complement each other. Virtually all newspapers have websites that look good and have great functionality. So why aren't they all producing acceptable amounts of profit? The question probably should be asked differently, "What do consumers and advertisers expect from newspapers?" Then ask, "What do they expect from the Internet?"  The answers are different but there is overlap. The area of overlap is the area of opportunity for creating a business that is needed by consumers and advertisers and capable of creating value that translates into profits. To determine the real value of the website it is useful to measure the total advertiser dollars spent on a website only ad buy versus those being bundled with a newspaper or distribution ad buy. These stand-alone purchases might give so...

Interesting news that the Boston Globe sold for $70 million and the Washington Post sold for $250 million. These newspapers would have commanded at least 5 times that selling price a decade ago. This is further evidence that print media is in trouble. The question is if the trouble is truly from the presence of digital products or from management’s inability to change the business model of newspapers. By selling to owners in other fields of business, perhaps newspapers will find a way to succeed. Selling the Washington Post to the founder of Amazon.com, Jeff Bezos may provide some new innovative solutions. Selling the Chicago Tribune to a private investment firm did not provide a favorable outcome. I would say that the Amazon.com approach to building customer relationships has a better chance of success than most. I would also say that the owner of the Boston Red Sox, John Henry, has a better idea of how to engage an audience than most. I have spent a lot of t...

One of the most satisfying experiences I have had is building a workforce that is focused on achieving and exceeding organizational goals. I have found that taking five steps can have significant impact on this process. The six steps are: ·       Design the organization and workforce structure around the goals of the organization. This is more easily accomplished if you are starting a new business and more difficult for older and more established businesses. As I have mentioned in past posts, it is helpful to envision an organization successfully meeting its goals and think about the structure and employees driving that organization. Those goals can be making a certain level of profit, reaching a certain market segment, being a market leader, providing a certain level of service and so on. Many businesses may have all of the above and more as stated goals.   With these goals in mind it is important then to look at the organ...

When introducing a new product or service to the market a key, and often critical, consideration is the price for this offering. I have seen folks simply take the cost of production and use a percent mark up as a pricing model. This is the simplest model and it provides a good example for the need to consider other pricing model options. Here are 10 things to consider before setting a price for your product or service: ·       Mark up Based on Cost Vs Retail . In the opening paragraph I gave the example of a model being used that marked up a product by a percent over the cost. The cost used here is generally direct cost or labor and materials. If someone wants a 30% of the asking price to be the mark up, then using 30% of cost won’t provide the desired outcome. Simply put, it is the wrong math. If something costs $1 to make and it is marked up by 30% for a selling price of $1.30 then the profit of based on the asking price...