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Panpa Bulletin : May 2010
WHAT kind of leaders will take news- papers profitably into the future? There are three kinds of leaders ac- cording to W. Glenn Rowe in the arti- cle, Creating wealth in organisations: The role of strategic leadership. This management thinking, pub- lished in Academy of Management Executive 2001, argues that there are three kinds of leaders: managerial leaders, visionary leaders and strate- gic leaders. Only one kind, however, can truly grow a business profitably into the future, and Mr Rowe's expla- nations offer some interesting insights when applied to newspapers. "Managerial leaders view work as a process that enables (a) combination of ideas and people to interact to es- tablish strategies and make decisions. They negotiate, bargain and use rewards, punishment or other forms of coercion," he writes. They adopt "impersonal, passive attitudes towards goals. Goals arise out of necessities rather than desires and dreams, are based on where the organisation has come from." Visionary leaders go to the other extreme. Visionary leaders are con- cerned with "insuring the future of an organisation through the develop- ment and management of people. Visionaries embed themselves in complexity, ambiguity and informa- tion overload." While visionaries are inspiring and motivational, dynamic and engaging, it is often the managerial leaders that "get things done". Visionary leaders want to change everything yesterday -- and God knows, we've all worked under editors like that. Managerial leaders believe there is a process, a steady as she goes and not rocking the boat. There are problems with both these kinds of leadership styles however, and it's not that one is boring and the other on speed. Both management styles are actu- ally rubbish when it comes to making money. "It is possible that too many or- ganisations are led by managerial leaders and that managerial leaders do not create wealth," writes Rowe. "They will at best maintain wealth that has been created and may even be a source of wealth destruc- tion in the long term if they are the predominant leadership type in their organisation." Why? Managerial leaders focus too much on avoiding change, on leaving it too late, on watching the short term financial stability at the expense of the long term innovation that enhances wealth. They are frogs in slowly boiling water, who haven't twigged that someone's turned up the heat. On the other hand, visionaries in their worst incarnations are loose cannons. "Visionary leaders are willing to risk all and in doing so may create wealth. However, visionaries may also invest more in their vision than the returns warrant." Visionaries overspend on the per- fect solution, not realising when to take a reality check. The vision often does not include paying attention to a bottom line. Visionaries die of brain explosions. There is however, salvation for industries and companies mature enough to understand that what they really need is a strategic leader. Strategic leaders combine the qual- ities of a manager and a visionary. They enhance long term viability and maintain short term financial stabil- ity. Strategic leaders "formulate and implement strategies for immediate impact and the preservation of long- term goals to enhance organisational growth, survival and viability." And this is my favourite bit: "A stra- tegic leader creates chaos, makes mis- takes, occasionally gets rapped on the knuckles by bosses and subordinates. But the rewards are worth it as those with whom the leader works become energised and more productive." Strategic leaders are very, very rare -- unless we decide to grow them ourselves. What kind of leaders will take news- papers profitably into the future? It will be leaders who see the current world of constant change as an unprecedented opportunity to develop new business strategies that monetise content sensibly, now and exponentially into the future. Managerial leaders who worry only about what the newspaper of tomorrow will look like, who only want to improve print and cut costs until we scrape through to the next economic upturn -- and visionar- ies who think the latest technology should be built now with the money coming later -- are simply leading us round in circles. Strategic leadership will get us out of the loop. Kylie Davis Chief of staff of the Sun-Herald newspaper in Sydney Are you with me? www.panpa.org.au Hugh Martin General Manager, Online, at APN News & Media THE McKinsey Quarterly April issue carried an article titled "A glimmer of hope for newspapers". It showed the internet is driving increased consumption of news, particularly among younger age groups, and that newspaper brands are the most trusted news providers. At a stretch, this is consistent with recent Newspaper Works research that promotes the combined strength of print and online newspaper brands. However, print consumption is still being held up by older readers who continue to be the main buyers of newspapers. Not much new there. The critical finding, which again is not news to anyone who has observed online publishing income over recent years, is that despite the need for diversified and innovative revenue models for online content, these won't be a silver bullet. There is clearly some potential to increase online revenue but it won't be sufficient to offset the decline of print revenue. US new media commentator Clay Shirky describes this as a phenomenon he terms "the collapse of complex business models". Mr Shirky developed this thesis in response to a question from a group of television executives wanting to know when online video would generate enough money to cover their current cost structures. According to Mr Shirky, the simple answer is: never. But his explanation is thought provoking and points to a number of opportunities for publishers consistent with McKinsey's assertions. Using historian Joseph Tainter's 1990 publication The Collapse of Complex Societies as a framework, Mr Shirky points out that the law of diminishing returns applies equally to business models as it does to whole societies. At its heart is a tension between complexity and simplicity. Increasing complexity ultimately no longer delivers increasing returns, but the alternative flight to simplicity can lead to annihilation if not properly managed. Mr Shirky writes that in the future "some methods of producing video for the web will become as complex, with as many details to attend to, as television has today, and people will doubtless make pots of money on those forms of production." But, he says, while this may be true maintaining the status quo as a response will simply not work. To the irritation of television execs everywhere, the most watched YouTube video from the last five years shows a baby biting his brother's finger. That video has been watched by more people than have viewed Masterchef, Dancing With The Stars, and the last five AFL Grand Finals combined (174 million views and counting). Mr Shirky acknowledges that some video still has to be complex to be valuable but says "the logic of the old media ecosystem, where video had to be complex simply to be video, is broken. Expensive bits of video made in complex ways now compete with cheap bits made in simple ways. "'Charlie Bit My Finger' was made by amateurs, in one take, with a lousy camera. "No professionals were involved in selecting or editing or distributing it. "Not one dime changed hands between creator, host and viewers. "A world in which that is the kind of thing that just happens from time to time is a world where complexity is neither an absolute requirement nor an automatic advantage." Joseph Tainter's model described the collapse and disappearance of complex and sophisticated cultures, such as the Mayans and Romans. Mr Shirky, in turn, applies the same logic to media institutions and argues that when inflexible institutions collapse, the staff move on, trying new things and making their living in different ways than they used to. In Mr Shirky's logic, it's easy to see how a collapse to simplicity can destroy shareholder value. It's a dire warning. But it's only change; it's not the end of the world. His argument is that "when the ecosystem stops rewarding complexity, it is the people who figure out how to work simply, not the people who mastered the complexities of the past, who get to say what happens in the future". McKinsey, in its own way, reaches a similar conclusion: "To survive in the digital age, newspapers will need to develop deeper skills -- for example in managing advertiser relationships and gaining customer insights -- and they must walk a fine line to retain editorial independence and quality to capture these opportunities." That glimmer of hope lies in recognising the current situation and acting swiftly. Collapse of complexity 22 | The PANPA Bulletin | MAY 2010 Did you miss it? WSJ Pro $US49 AT $US49 a month, the Wall Street Journal launched its Professional Edition, combining its own journalism with Dow Jones News- wires and licensed content from its Factiva business information service. Readers who already buy access to the general web edition get a small discount. The Journal is focusing on niche areas for the professional edition, including finance, com- pany profiles, health care, energy, media & marketing and technology. Newspaper club THE Newspaper Club in London allows anybody to print their own 12-page news- paper utilising the printing presses of large UK papers such as The Sun and Daily Tel- egraph when they are idle during the day. Its first clients were the BBC, Wired UK, and Penguin. But it has also been used by smaller groups such as bloggers, football fanatics and literary groups. It has even been used by a wedding couple who wanted a newspaper wrap-up of their wedding which included photos, speeches and tweet from guests. The Newspaper Club is now heading to Austin, Texas, to start a US operation. News in bad taste CARICATURES of victims from the Russian metro train bombing published in a South Korean newspaper has caused outrage. The Russian Embassy has demanded an explanation from senior staff at Ko- rea Times. Opinion Ruins ... Commentator Clay Shirky compares the fall of societies like the Romans to the collapse of complex media businesses. Image: crucially, Creative Commons 3.0 What kind of leaders will take newspapers profitably into the future" "