At a time of breathtaking transformative change, the media industry needs to test out bold new initiatives. But in the rush to “fail fast,” failure should be neither an option or a goal.
News companies have been urged to “try new ideas and fail fast” to inject entrepreneurial thinking and flexibility into our traditionally conservative management cultures.
The belief has been that, at a time of declining revenues, there is no such thing as a bad idea, and the only thing really holding us back is a fear of punishment for getting it wrong.
But the mantra is at risk of being abused in those instances where the need for urgent action to address declining revenues is being misinterpreted as “try anything, quickly, for the love of God, throw something – anything – at it.”
When we give ourselves permission to fail, it should NOT mean that failure is our ambition. And as we seek to fix our current predicament, we should not confuse the idea that a stupid action is better than no action at all.
In business development, there ARE such things as bad ideas. And in an industry facing unprecedented transformative change, there IS a need to recognise that being bold enough to try something new and fail fast is different than setting yourself up for failure.
Here’s my guide to assessing business opportunities to maximise their chance of success:
Understand the value. Newspaper people, i.e. those exposed only to the news industry, frequently assume that if an idea seems good for readers, it will automatically be valuable to the business. In its truest sense, however, value adds dollars to your bottom line. And in these straightened times, the projects we need to be testing should have a genuine dollar benefit attached, not just a feel-good factor.
There are only two ways something can add value: It can either increase your buyers’ willingness to pay, thereby increasing what you can charge for your product; or it can decrease how much it costs to produce your product, making it more affordable to do what you do.
If your cover price is fixed, the ability for a new idea to increase your customer’s willingness to pay is limited. So you need to get creative about how the value is added. This might include looking for an advertising sponsor for a new initiative, or building a new audience altogether that can be monetised.
Consider who you are trying to impress. Does your idea meet a customer need that is not currently being addressed? Or are you frantically brainstorming to impress your boss and prove yourself to be an ideas person? As a general rule, business ideas have longevity – and success – when your customers can’t wait to pay to get their hands on them.
That will really impress your boss, but don’t go down the “emperor’s new clothes” route. You know how that ended.
Determine if it’s a good use of your resources. The cost of a business idea can often be measured by asking a question: “What would we have to stop doing to direct existing resources into this new idea?”
If the answer is “some journalists currently making four stories seem like a full working week,” it’s probably a good use of resources. If, however, the answer is “we need to get our sales people to stop seeing clients, jeopardising half a million dollars of existing revenue to run a heap of reports to build a business case for an additional $100,000,” you probably need to revise.
The resource question can also be put in a more compelling way: If the only way you could get this project up was to close/shut down another, what would that be? What is your worst performer? Is the potential value of this new idea stronger than what the worst performer is doing? Understanding if you’re prepared to do that is a good litmus test to understand how passionate you are REALLY about the idea.
Devise a business plan. Panic not. I’m not advocating a 37-page PowerPoint, complete with global market analysis and 15-page addendum of scary spreadsheets. You just need a simple profit and loss (P&L) statement. Journalists and editors reading this, please stay with me).
What are your hard costs? What are your variable costs? What profit do you want to make/sacrifice? You then can work out how much revenue is needed and, therefore, what and how you are going to charge for it.
The really cool thing about a P&L is that you can put into it the resources you need to ensure it flies long term (see next point), but don’t get greedy.
Ask yourself: Is it sustainable? Following from the resource question, how long can your team produce this? If the only way the idea can be realised for launch is for children to be left alone at home to eat two-minute noodles, blood being sweated, and fisticuffs unfolding in the bathrooms from lack of sleep, you might want to rethink whether the idea is sustainable in the long term.
Most new ideas fail not with a bang, but with a fizzle and a whimper, as everyone just loses enthusiasm, due to poor resourcing and a ridiculous workload that burns everyone out before the idea really takes off.
Consider if the idea can be tested small/flexibly first. Mention a new business idea to a team of editors and most will insist they need the company to make seven new permanent hires at salaries of $80,000 to $120,000 each to realise the dream.
Look at ways you can support your existing resources and their workload for a trial period that can be undone quickly if needed. Can you move work around to other teams? Use a small freelance budget? Bring in graduates and pay them in pizza and beer?
Putting a time frame on trials – say three months – also makes what is proposed seem more manageable, because there is the discipline of an assessment at the end and light at the end of the tunnel for the extreme workloads of launch.
Small trials also should be done with mindfulness of scale. If this works, how will you be able to scale the project up quickly and affordably? If the small trial can only get seven times larger by increasing costs and resources by a factor of seven or eight (or more), call it out as a failure right now.
Kylie Davis is the head of real estate solutions, Australia and New Zealand, at CoreLogic, the world’s largest provider of property data. She was previously the network editor of real estate at News Corp Australia, managing editor of business development at Fairfax, and founder of The Village Voice group of newspapers. Follow her @kyliecdavis.