Most market leading companies, regardless of their industry, have been able to stand still and hold their market position without local competition. In today's fast digitalizing world competition doesn’t know boundaries and it is global. In the rapidly digitalizing world todays market leaders are challenged by start-ups.
Previously it was enough to know your market and make sure no one comes and eats from your pie, but today it can be a start-up from Brazil, Germany or Pakistan that puts you out of business. It’s hard, maybe even impossible to track down whole world for competition, but what you can do, is to think that if you were going to compete against your own company, what would you do?
Again, no matter in what industry you're in, your business is going to be disrupted. Maybe not today or tomorrow but maybe in a week, a month or a year. You need to start preparing for the disruption today, because if someone does it before you, you are already late.
No matter in what industry you're in, your business is going to be disrupted. Maybe not today or tomorrow but maybe in a week, a month or a year.
Are you afraid of cannibalizing your own business?
It feels bad to cannibalize your own business, all the hours and effort you have put in, but guess what? Your competition doesn’t care. Start-ups like ours have the killer spirit. If I think about my own attitude in the businesses I thrive, the motto for my team is: ”I will die to win and I expect the same from you”.
Media company CEOs are in a super hard position where investors expect profits for investments in the short term, and focusing on that the company doesn’t create value for the long term which leads the market value to sink. There are many examples of media players focusing too much on what generates revenue now, instead of focusing on what generates revenue in five or ten years.
I would say in the past five years average media company stock prices have dropped roughly 50%, but at the same time there are companies like Axel Springer and Prosieben that has gone up over 70%. What are these companies doing differently?
Mathias Döpfner, the CEO of Axel Springer, said on his interview in Noah 2014 that one of their keys to success has been: “No fear of self cannibalization because you are going to be cannibalized anyway, so it’s better to be cannibalized by yourself than others.”
There are many examples of media players focusing too much on what generates revenue now, instead of focusing on what generates revenue in five or ten years.
Building new digital business models is not a easy job
It is very challenging to go digital and to create a new digital business. Companies can’t really have a large team just coming up with ideas and, also, resources that turn ideas into businesses are limited. I personally don’t see media companies with the lean approach to innovate new business models. Instead I see that medias have humongous power to scale a business.
My favourite company Rocket Internet from Germany has created a brilliant business model. What Rocket Internet does, is that instead of innovating anything new they copy proven models and use their engine to build a copy and scale it with their execution in markets with no similar solutions.
Media companies already have the consumer reach and trust. Localising proven models "Rocket Internet” style should give a competitive edge to Media gain market share before the start-ups attack the market.
I personally don’t see media companies with the lean approach to innovate new business models. Instead I see that medias have humongous power to scale a business
Choose your battlefields where you can win
The world is full of opportunities and even full of great opportunities, but you have only a certain amount of opportunities you can jump along. That’s why you should make sure that the possibilities you jump on require the key strengths you have to offer.
I think media companies should identify better what are their core strengths and on building new digital business models the core would be similar. If the company is good in generating content and not good with VSB’s I would never reccomend the media company to jump into a business which requires a lot of sales power no matter what the opportunity is.
Media companies should identify better what are their core strengths and on building new digital business models the core would be similar.
In most M&A situations, or even if a media company starts their own start-up team, they should be let to run free without caring about company cultures and let them keep their own culture. Start-ups need to be very lean and straight forward because speed and scale are everything. Mistakes need to happen, but they need to happen fast.
“Big companies tend to buy start-ups and play with the toy until it’s dead.” – Mathias Döpfner
Big companies also tend to think they can change the rules of the game, but there is no elevator to success, you really need to take the stairs. Rocket Internet Oliver Samwer has often in his speeches stated that in order to build a profitable marketplace business it takes five to seven years, but in my opinion businesses should be generating revenue since day one.
Many times media companies have the pressure from the company board to reach short term goals. That pushes the management to make decisions which aim to turn the business profitable faster, but at the same time might kill the long term return.
People is the bottleneck – a team inside a start-up
People often tend to be good in everything, but not great in anything. Normally, when you look at world class people they are phenomenal in one or two areas. You don’t see Cristiano Ronaldo training how to be a goalie or Kimi Räikkönen how to repair an engine, they focus on the one core area and try to be the best at it.
I’ve seen great people in media companies taking over projects which actually require a person with a totally different skillset. A start-up looks for the best people for different positions because there is no other option if you want to be successful.
What in my experience medias tend to do, is to hand over the project to a person who can manage it, but don't look who is actually the best possible person to grow the business bigtime. In my companies I personally like to follow the baker philosophy: bake at night, sell during the day, and count in the end.
A start-up looks for the best people for different positions because there is no other option if you want to be successful.
Push all your free cash in digital business
“I think the smartest thing that legacy media managers can do is plow all their free cash flow into digital products and services. Not a little, not some. Put as much into it as you can afford. Things are changing very quickly, and it’s too late to knit a digital parachute when you’re falling off the cliff.” Says James Dolan a US based well known media investor.
The digital media space is been shared today, if you’re not doing yet you’re already late. Identify your strengths, benchmark what is being done successfully elsewhere and build your own digital story.