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Out of the Box

Recognising when cutting resources has gone too far

13 March 2011 · By Kylie Davis

When cost-cutting efforts have gone so far that business quality is affected, it's time to re-evaluate the business model.

Journalism is not brain surgery. Yet increasingly, determining ways to make money out of the business of publishing is doing our heads in. And there are issues we’re not seeing that are about to give us a hell of a smack around the ears if we don’t wake up fast.

The glory days of newspapers being monopoly news suppliers allowed us to evolve into fat and resource-rich organisations with enormous brand power, depth of talent and a faith in our own genius talents. In reality, we were just on the fabulous part of a cyclical curve and the happy recipients of circumstance.

Since competition got tougher with multiple options for news and information created through the Internet and mobile devices, our ability to monetise has weakened — mainly because our desperate efforts to reengineer our businesses have focused more on cutting our costs than they have on developing new revenue streams, supporting sales infrastructure and simplifying customer interactions.

For the past decade or more, number crunchers have pulled costs out of newspaper businesses in much needed blood lettings that have made us mean, lean and relatively efficient. Early on, this was an exercise akin to shooting fish in a barrel. Nowadays the hunting is not so great.

There are many who would argue that at too many newspapers, the result of too extensive cost-cutting has been to leave us not so much efficient as simply companies with a lean, mean and downright nasty attitude — especially in what we want and expect and demand from staff. Take that a step further and ask yourself how much stressed out and overworked employees impact on your readers and advertisers?

Now I hate waste as much as the average Joe, and have long lived in a world where “running off the smell of an oily rag” has been replaced with “running off the memory that an oil rag worth sniffing once existed.” But there does come a time when cuts start to go to the bone. And as an old HR colleague of mine used to say “when you cut into bone, it takes forever to heal.”

Clever business practice in newspapers is not about looking at a bottom line number and taking 10% or 20% off it because you think everyone can just cope and you want to win kudos with your board for being tough. People that think that way should be sacked immediately. They will be the death of our industry.

Clever business practice in newspapers is about understanding the magic connection of the resources-to-business-result equation. And that equation is:

For the most part, resources are people. You need enough people on the ground to relate to the people you want to reach both as advertisers and readers. Resources spent on not making a connection are wasted resources.

If you’re a local newspaper, you need journalists and sales people who have time in their week to get out in their communities, walk past (and into) the businesses and people they sell to and get stories from. They need the time to have coffee or lunch with — and get sales and story leads unexpectedly from — contacts. They need time to observe and notice changes in their community and to spot stories that aren’t announced with a press release.

If your team is chained to a desk in a centralised office, eating sandwiches over keyboards and frantically pushing content through production, dealing with everyone externally over the phone or e-mail because there are just not enough hours in the day, you have a recipe for newspaper failure that cutting staff further will only speed up. The best newspapers hold mirrors up to their communities and reflect back the positive and negative with a soft eye of understanding that comes from belonging. Newspapers that judge from afar simply lose readers and die.

Efficiency nuts claim that if you let people out of your sight, they will slack off and take advantage. But newspapers with their deadlines and production are the easiest businesses in the world to manage — it’s easy to see how much a sales person has done by checking their activity to their budgets. Equally, journalists are measured by byline and story quality.

So the next time you look at your newspaper and think the content is sub-standard and the sales results are poor, ask yourself how your business model is faring — really.

If you have cut so hard that your staff is no longer in a position to make a connection with the people they’re serving through their newspaper, then really, you need your head examined. It’s time to start hiring.

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About this blog

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.


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