Recently, a junior employee in our organisation brought forward a business idea designed to grow the Star Media Group audience penetration in the under-20 crowd. On the surface, the idea has merit. But it is just an idea. Much more information and research is needed before we — or any other organisation — can decide if it is worth pursuing these types of potential growth opportunities.
It's a tough time for newspapers. Advertising revenues continue to decline and print circulation is under severe pressures. At the same time, digital revenues are growing but not fast enough.
Clearly, newspapers must change to survive. To do that, we must get more people engaged in new ventures, new digital ventures in particular. At Star Media Group, we have a mandate to diversify revenues so that we rely less on print advertising revenues over time. That mandate forces us to seek new business ventures and innovative ideas to build new revenue streams. That's why it's critical to have ideas coming forward from all levels across the organisation.
Strategically, it makes sense to have more people involved in the process. Practically, it presents two key problems: First, how do you filter out the good ideas from those that really have not passed even the most basic business principles? And second, how do you do so and not discourage people from proposing other ideas in the future?
One of the greatest ways to ensure you don't discourage people from offering new ideas is to offer them a set of questions they can answer on their own. Often, they will come to their own conclusion on the viability of the idea. If it has merit, you take it to the next step. If not, the idea has been given fair consideration at an early stage.
Here's a simple template to help the originator filter ideas at the source:
- Define the business concept in detail. Considerations should include, but are not limited to:
- What is the product or service?
- What market does it serve?
- Where will the revenue come from?
- Who is the primary market and how will you reach it? Who will the product appeal to? How large is the market and how deep will you penetrate it? What makes you believe your assumptions? Remember that acquiring a small percentage of a large audience is not a business plan. Why and how can you reach the desired volumes? In the end, who will buy the product?
- Does the business concept fit/align with the current business activities? Ideally, an idea needs a strategic advantage to be successful. More often than not, businesses that expand into areas where they have little or no experience end up with poor results. Ask yourself, if your competitor became aware of your idea, could they replicate it easily? If so, the business channel can become saturated quickly, giving little time to grow profits.
- Is the revenue outlook realistic? Consider volume and pricing to give a better sense of the revenue potential. Could there be multiple revenue streams to help diversify risk? Can you ensure there is an element of reality to the revenue streams? Ideally, this would include other successful and similar ventures, market research, input from content matter experts, etc.
- What costs are associated with building out the business? What are the content costs, cost of sales and cost of marketing initiatives? Be specific because cost-creep is a real issue that must be taken into consideration.
- Build out the P&L using a moderate approach to your revenues and an aggressive approach to your costs. Will this concept generate a profit in a reasonable amount of time, such as three years? Is the size of the profit large enough to pursue?
After working through these basic issues, does the idea still make sense? If so, the concept should move to the next step for further study.
There are a number of benefits to utilising a process like this in your organisation. First, it keeps the concept with the originator, rather than having other people evaluate the concept from the very start. Second, it's a learning opportunity for many people inside your organisation. If you keep the review simple enough, most people can take a run at it and learn from the process. Third, if the idea originator kills the concept through the early evaluation process, you don't potentially lower their motivation to give you their next idea, which may be that killer idea we've all been seeking.
Innovation and creativity are the keys. Don't discourage them.