This article is one in a series reporting on key sessions at LMA Fest 2022, Aug. 16-18 in Chicago. Here we report highlights of the session on how to navigate “dual transformation” — innovating your core business while investing in future business models with Todd Handy.
One thing that never changes is the need for transformation. As long as audiences and business relationships are on the move, media companies must be, too. Experienced transformation executive and “dual transformation” pro Todd Handy expertly navigated the basics of the still-relevant approach for the session attendees.
Students of the concepts of “transformation A” and “transformation B” know that the concepts are more than a decade old. (In fact, LMA conducted sessions on this very topic with Harvard Business School and Innosight great Scott Anthony more than a decade ago.)
Truth is, most local media companies were not willing or able to execute at the time these concepts first emerged. Things have changed dramatically since then – and yet, the need for successful models for transformation is greater than ever, increasing with the pace of market behavior. So, the only thing crazier than keeping pace with the need for change is — to paraphrase Einstein — to keep doing what you’ve always done and continue to expect different results.
“There will always be a ‘next,’” said Handy, referring to how quickly audiences have moved from one social media platform to the next emerging one at record speed (think: evolution from MySpace through TikTok).
“I have one thing to sell: my audience. So where my audience goes I have to be there. Advertising is a working model as long as you follow the audience,” he said.
Following the audience, however, means the media are often in a reactive position, making it hard to plan and set a developmental destination proactively. Or as media expert Thomas Baekdal recently stated in reference to President John F. Kennedy’s inspirational speech about space exploration, “Media has no moon. No defined direction.”
It doesn’t mean that media aren’t innovative; it means that there is no clear, desired destination. In fact, with nomadic audiences we’re continuously required to innovate, adding to the challenge. Even framed that way, however, dual transformation is a model that can be applied. It is more effective if you can answer the question – even in the short term: What’s your “moon”?
So what does it mean to pursue dual transformation, and how does an organization pursue it? For the transformation to be “dual,” there needs to be an A and a B. A is the current business, which needs to be optimized and protected so that its success can help pay for the evolution and development of B (which is separate innovation, crucial for survival).
Optimizing A for today means:
- Knowing the job to be done by the product(s)
- Basic innovation
- Determining and tracking new metrics
- Continuous, aggressive implementation
Building and optimizing B for tomorrow means:
- Identifying a constrained problem in the marketplace
- Breaking down the barriers to consumption that keep cheaper solutions out of reach. (Literally, develop the new model required to serve the new market, e.g. where the audience has gone, to power the future.)
- Using and leveraging partnerships, acquisitions, and new hires to succeed against the new competitive set. (Hiring for B does not mean hiring talent from the A set, it means hiring talent specifically for what’s needed to make B successful.)
When implemented successfully, a “C” can evolve from the catalyzed successes of the prior two which can be utilized strategically.
Handy identified indicators signaling disruption is afoot and transformation is required to maintain or improve business health, including changing customer habits and reduced loyalty, an increase of venture investment, pressure on profit margins, and new, successful models entering the ecosystem.
One of the greatest challenges for leadership is being strategically smart about the allocation of resources. The A business needs to be fed, and to thrive to support the B business, but without feeding, the B business runs the risk of shriveling on the vine. To that end the most helpful principles for success are the wise use of resources (knowing when to say yes or no), and ensuring the talent is able to bridge the link from the company of today to the growth leader of tomorrow.
In short: stock selectively, manage strategically, and arbitrate actively. Dual transformation is not for the faint of heart. It requires courage, clarity, commitment, and the conviction to persevere.
Companies who have committed to dual transformation, working hard to actualize the approach, have gone on to great success. All research indications are that the money and opportunity are available in our markets. The single greatest challenges continue to offer the biggest opportunity.