Friday, February 27, 2009

Recessions Can Spawn the Best Ideas

Too bad the wrong folks are getting bailed out (and axed). Reforecast this!

Thomas Friedman really nailed it in his recent New York Times Op-Ed piece “Start Up the Risk-Takers.”

Like Friedman, I bet you're disgusted that the nation’s largest “wealth destroying machines” (GM, Chrysler, AIG, Citigroup, etc.) are strong-arming taxpayers into bailouts while deserving early-stage companies (with huge job creation potential) can’t get funding. Why? Because the old guard claims their funerals will cost us more than keeping them on life support will.

They keep selling it. We’re not buying it. And hopefully Washington isn’t either.

“That is not how we got rich as a country, and it’s not how we’ll get out of the crisis,” notes Friedman. “Some of our best companies, such as Intel, were started in recessions, when necessity makes innovators even more inventive and risk-takers more daring.”

While you don’t normally associate “inventiveness” and “risk-taking” with old line manufacturing and financial services companies, we media types think of ourselves as a little more daring. We like to hang with the technology stars at big conferences. We "whiteboard it" out of the box. But unlike our technology brethren, who really have the stones to reinvent their business models as market conditions change, we can’t quite walk the walk after talking the talk.

B2B media leaders talk about innovation, but tend to skulk back to what they know best when the chips are down. That means protecting their longstanding investments in print media, direct mail and face to face events – and the people behind them – while slashing resources devoted to new media and cross-media platforms. That’s a cowardly approach that will come back to haunt many of you when the economy rebounds.

Tech companies know that now is the time to double down on R&D so you’re poised for growth when conditions improve. Unfortunately, too many B2B media leaders are bailing out version 1.0 these days, when they should be focusing on version 3.0. This simply gets you from one quarter to the next, where you'll spend half your time reforecasting instead of generating new business.

Print, direct mail and face-to-face events still deserve a seat at the table, but they no longer drive innovation, profit margins or enterprise value. And never will again.

As Friedman advises: “Let’s make sure all the losers clamoring for help don’t drown out the potential winners who could lift us out of this.” Words to live by whether you’re selling cars, banking services, insurance policies or advertising space. It’s all about measurable ROI.

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