WASHINGTON -- At long last, this year's annual newspaper industry convention got down to blunt talk about the broadest dimension of the industry's business problem -- reliance on a once strong product beginning a fast fade.
The ingenious angle of attack on the issue was to invite CEOs of non-newspaper businesses -- Procter & Gamble, Dow Corning and Kodak -- to discuss the successful transformation of their businesses over the last seven years.
CEO
Phil Faraci's Kodak story had particular resonance. The company has had roughly flat revenues of $10.5 billion for four years, Faraci said, but now film and throwaway instant cameras, which at the turn of the century were contributing nearly all the revenues, have faded to a $750 million business.
Kodak made up the slack by aggressively growing a variety of new products, most of them components of digital imaging. Along the way it closed factories and cut employment from 70,000 to 20,000 (taking care to spin off many redundant operations into freestanding companies).
Faraci came from the outside (Hewlett Packard) in 2004. The old film business had recorded a modest gain in 2000, buoying unrealistic hopes. Losses in 2001 and 2002 were blamed on a recession and cutbacks in travel after 9-11. Then in 2003, the film division fell 30% in a single year (not unlike the 2007 and 2008 performance of print classified).
Obsessing over profits and losses during this sort of crisis is the wrong focus, Faraci said. "You need to begin to manage the balance sheet," and that may mean "exiting good businesses that no longer fit."
Stephanie Burns, CEO of Dow Corning, found after intense surveying of customers that the maker of glass and plastic products was "not targeting pure price buyers, who wanted a sort of Sam's Club." Her solution was to create quickly a separate scaled-down system in which orders were placed and shipments managed electronically with no added human service.
"We were disrupting ourselves, and some might say that quality was lower," she added. That bucked a corporate culture in which people were proud of Dow Corning's association with high-level science. But customer demands trumped cultural comfort.
Similarly
A.G. Lafley of Procter & Gamble said that the company's long history of success and strong corporate culture stood in the way of needed change. For a "brutally realistic view of where you are," some consultants from the outside may be needed, he said.
The session was put together and moderated by Scott Anthony, one of the consultants behind the American Press Institute's
Newspaper Next study. He opened with a survey of more than 400 executives: 83% said their companies recognized the need for transformational change; 65% said their companies had committed to transformational change; but only 42 % said that they were doing an above average job of it. When he asked the same set of questions to 100 newspaper executives, their responses were nearly identical.
The point: what the newspaper industry is going through now is much more the rule than the exception for American businesses.
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With Sen. Hillary Clinton's luncheon speech today, the editors and publishing execs got to look over all three presidential candidates in just over 24 hours.
Frankly, they are all pretty damn impressive, and fine on their feet (if a little protracted) in answering questions.
The surprise for me was the charm of McCain, who led with the theory of the "straight-talk express" -- back of the bus press availabilities that continue pretty much 'til the reporters run out of questions. Though he and they make the occasional mistake, McCain said, it produces better understanding than tightly controlled on-message sound bites (like those of you-know-who and who). Also, when asked the inevitable age question, he did a great job of pretending to be dead or dozing.
