History has shown that simply appointing new “Chiefs” has not been very successful.

Most media companies are busy building their digital teams. They believe that digital represents a key part of their growth strategy. And that would be exactly the right strategy… if the year was 2005. However, it’s 2015 and media companies that are betting their growth on digital, or even mobile, are not just late to the game. They are playing the wrong sport.

 

Digital is not the future. It is the past.

For a media company, digital should not be a ‘key corporate initiative’ to tout in press releases and annual reports. Digital should already be part of the company’s DNA, their business as usual, and their standard operating procedures.

Any company hiring a Chief Digital Officer (CDO) is making a loud public statement that says “we don’t trust our existing managers and executives to deliver (much less understand) digital, so we created another layer of management and bureaucracy to oversee our digital efforts”. While there are undoubtedly good intentions behind the hiring of CDOs, in most cases it’s just a new-jerk reaction. Like a young child who demands a toy because all their friends have one… many CEOs and BoDs have demanded Chief Digital Officers because it has become the fashionable thing to do.

Don’t blame the CDOs. Many of the CDOs I know are brilliant executives who struggle every day on a Quixotic mission. These CDOs are often surrounded by resentful employees making feckless attempts to be helpful. Most CDOs are doomed before they ever show up for their first day of work.

Media companies should continue to work on their digital activities and better integrate them into their business but they shouldn’t bet their entire company’s future on them. They most definitely should not hang their hopes and future growth prospects on one individual with a fancy title. If the combination of CEO, COO, CFO, CTO, CIO, CMO and countless operating executives could not advance a company’s digital agenda why would they think that adding another “C” to the executive suite will produce dramatically different results?

In speaking with executives at a number of media companies, very few can even clearly articulate what their CDO actually does. Last year, a Wired article(written by a CDO at a brand strategy firm) quoted a senior executive that described the role of the CDO as someone who will: “…drive the digital functional excellence from strategy to infrastructure and ensure that we have the right competence and capabilities to support and leverage the business from a digital perspective.” HR-speak with lots of hot buzzwords, but curiously lacking the words that matter… accountability, results, impact, or measurable outcomes.

History has shown that simply appointing new “chiefs” has not been very successful. Most people who have been in business a while remember that just 15 years ago companies were rushing to hire Chief Internet Officers. Today, having Chief Internet Officer on a business card is as embarrassing as showing up to a Board Meeting wearing a leisure suite or a Members Only jacket.

{Don’t even get me started on the emerging fad of hiring Chief Data Officers, Chief Media Officers, Chief Risk Officers, Chief Privacy Officers, Chief Social Responsibility Officers, and most insidious… Chief Innovation Officers.  However, that’s a topic for another missive.}

 

So what SHOULD media companies do?

The answer: exploit new business models.

This is not a revolutionary concept. Countless books, articles, and research reports have been written on the topic of why companies should expand into non-core businesses and how to make diversification an effective business strategy. A cottage industry of consulting firms and “innovation studios” has even popped up to help large companies “ideate”, “conceptualize”, and “envision” transformative new growth businesses.

{It’s interesting to point out that there isn’t a cottage industry of firms that actually “execute” new growth businesses and deliver measurable results… but that’s also a topic for another day.}

The reality is that small incremental changes are not going to enable a media company to overcome the massive decline of their traditional business. Taking content and simply finding new ways to push it out digitally is the equivalent of treating a compound fracture with an Aspirin. It may mask some symptoms, but is very far from being a cure. Media companies in the digital age need to embrace radical diversification if they have any hope of thriving in the emerging media landscape.

 

Radical diversification requires more than exploring adjacent businesses.

A TV network that specializes in food-related programming might create new cooking shows, recipe apps, and diet websites. These efforts are all cute but they are not even remotely innovative. These efforts are just examples of a media company simply creating content and peddling it through existing linear and digital channels.

Imagine instead if this network became an active participant in the home food delivery business. Building a respected national food brand and attracting a loyal audience is extremely difficult and very costly. How much easier would it be if you happen to be a network with a food-related TV franchise that enjoys access to world-class chefs & restaurants, thousands of amazing recipes, decades of brand loyalty, and millions of loyal fans?

This is just one scenario of how a media company could evaluate and exploit its advantages and assets in creative new ways. The real asset in this scenario is not the content but the unique combination of brand, access to customers, distribution, and scale. Companies like Plated, HelloFresh, Blue Apron, Munchery, Sprig, and others have raised hundreds of millions of dollars to build brand, access customers, gain distribution, and develop scale. These food delivery startups are raising capital to quickly buy the advantages media companies have built over decades.

 

Media companies are sitting on tremendous assets and taking them for granted.

Media companies should take a hard look at all of their assets on a clean sheet of paper and then ask themselves this:

  • If I handed these assets to a startup, what kind of business would it build?
  • How can these assets create an unfair advantage?

Assets in the media industry are not fixed, and don’t require substantial investments like building factories or acquiring expensive equipment with a long depreciation. For a media company, the assets what matter include customers, distribution, access to talent, and content development capabilities. Some of these assets have substantial value in the near term. But that value will quickly erode, so the time to leverage them is now. New YouTube channels are already getting more viewers in a few weeks than a network TV show can generate with substantial advertising and months of promotion. A large and loyal customer base has value, certainly, but it’s far from being a unique or inimitable asset.

Media companies face threats from two dimensions — obsolescence of their assets and structural instability of their entire industry. The activities that have historically generated profits for the industry are all threatened while the resources, knowledge, and brand capital that have historically made each company unique no longer generate the value they once did.

For media companies facing declining economic value of both their business model and their assets, the opportunity costs to not embracing radical innovation immediately are enormous.

The advantages large media companies have are tremendous… but they won’t last.

Tomorrow’s media companies may look very different than what we see today. Successful media companies in the future will not only create and distribute content but they will also make and sell a variety of goods, deliver unique experiences (travel, events, etc.), and offer compelling new services. In the future media will not be the end product but a valuable raw material that will enable companies to build (and sell) far more valuable goods and services. Achieving this type of radical diversification will require much more than just the hiring of a Chief Digital Officer.

Perhaps instead of hiring more Chief Digital Officers, media companies should hire a person responsible for creating transformative new business ventures. If it makes them feel better, they can even call this person a “Chief Transformative New Business Venture Creation Officer”. CTNBVCO is certainly a mouthful but it’s no sillier than a CDO. At least CTNBVCO clearly describes the value someone is expected to create in an organization. Whether they call someone a CTNBVCO or not, media companies should make the choice that if they are going to add someone to the executive suite, the individual should be responsible (and held accountable) for more than just rearranging the deck chairs on the Titanic.