September 28, 2005
It’s like a scene from The Godfather – the staccato, serial elimination of the enemy’s key players in a single moment. Only, according to the Columbia Journalism Review, the enemy are journalists and those doing the firing are their media bosses.
In less than two months of carnage in the newsroom, media companies have put big numbers of journalists out on the street: 45 at The New York Times, 35 at The Boston Globe, 25 at The Philadelphia Daily News, 75 at The Philadelphia Inquirer, 52 at The San Jose Mercury News, and 100 at Newsday. Similar efforts are apparently underway at The Los Angeles Times and San Francisco Chronicle.
Jon Friedman at Dow Jones’ MarketWatch writes, “This is a scary time to be a journalist.”
Not to mention other employees – hundreds of them are also getting pink slips along with the journalists.
Friedman says Wall Street is to blame – claiming that media companies’ fear of failure to achieve profit expectations drive the cost cutting moves. Susie Madrak atSuburban Guerilla agrees and also adds that a serious decline in professionalism and the quality of the product explain the mass layoffs.
In other words, these events at newspapers across the nation are raising questions about performance – what does it mean, who benefits from it, and what are the best strategies and approaches for delivering it.
We have a deep problem in this country. With the predictability of Pavlov’s dog, we equate performance with the bottom line – with profits and shareholder value and winning. When, in a business context, we say “performance’, this is what we mean: financial performance and only financial performance.
Yes, over the past few decades, popular frameworks like the balanced scorecard have taught us to quickly mention other constituencies beyond top management and shareholders: customers, employees, communities and so forth. But, as actually practiced, the Balanced Scorecard is not balanced. It is an important contribution for which we all should be thankful. But it has become a deeply flawed approach that, when all is said and done, merely reinforces our maniacal obsession with profits and shareholder value. Customers? Yes. Pay attention to them. Why? Because they are the means to deliver profits and shareholder value. Employees? Yes. Pay attention to them. Why? Because they are the means to delivering good customer experiences that deliver profits and shareholder value.
Profits and shareholder value are essential to success in a market economy. No one can argue with that. But – and here’s what’s leading to the mass firings of employees at newspapers – when businesses make shareholder value the “be all/end all” of everything they do, they undercut the very value they mistakenly think they’re creating.
Simple math explains this. How much profits are enough? Answer in our capital markets: No profit margin is too high. How many consecutive periods of compounded profit growth is enough. Answer in our capital markets: There’s no such thing as too many.
Well, start with whatever level of profits you want. Now, to satisfy the endless demand for shareholder value (not to mention management compensation and reward) make the profit margin higher and higher and higher. Now, pick an actually number. Say, $10 million in annual profits. And grow it at some rate every accounting period into the endless future.
You can’t. But the pressures to do this very thing lead to many observable phenomena. When performance means profits and shareholder value exclusively, performance itself is not tethered by any other dimension of reality. If floats, like a helium balloon – only no one is actually holding a string. It’s an illusion.
In newspapers, the untethered drive for profits to satisfy shareholders produce editorial practices that, to cut costs and curry favor, print the press releases of those they are supposedly monitoring and call it ‘reporting’, journalists who, to advance careers, stop questioning and challenging those with power in our society, and advertising and circulation folks who push beyond the edge of the envelope in ethical practices.
When it comes to the ‘news’ in ‘newspapers’, the product is cheapened, thinned out, spun dry. The strategy for news becomes what business gurus call ‘cost focused’ instead of ‘value focused’. And, that’s a death knell – at least for news. Because, while technology and other factors can help papers manage costs, reporting, fact checking, gathering multiple sources, weighing wisdom and judgment and all that goes into ethical and professional journalism is not, at the end of the day, a cost-driven business.
Media companies and newspapers have other lines of business that might lend themselves to cost-driven approaches (although, most strategists agree that both cost and value are always part of the equation). The New York Times, for example, recently described multiple strategies for growth.
But newspapers seem to have herded themselves to cost-focused strategies when it comes to the news. And, a close reading of the Times’ strategy presentation reveals the damage: ‘circulation is soft’. Why? Because as long as they call themselves newspapers, these offerings must deliver news as part of the product.
The last few months have been brutal on journalists and other employees. But the carnage won’t stop until the journalists and their colleagues from top to bottom figure out how to articulate and pursue performance that matters to all they serve in sustainable and reinforcing ways. The Godfather’s carnage is the tale of turf wars between rival organizations. It’s about serial homicide and assassination. What’s happening in America’s leading papers, though, is a tale of organizations at war with themselves. It’s not homicide.