All businesses need growth. Growth requires a strategy; and the backbone to any business strategy is a good market analysis.
Even a brilliant strategy based on a superficial market analysis will still fail. The trouble for many is that after a few years of working in the same market we think we know every inch of it and we forget to approach it with “fresh eyes”. The fact is, over time all markets change and assumptions that held true for decades start to crumble meaning businesses need to rethink their value proposition. When times get tough, the trap that managers can easily fall into is to start thinking in a defeatist way believing they can do little to stop the slide.
In 2000 the Wall Street Journal, the most profitable business unit of Dow Jones, was heading for trouble. On-line media services were the presumed way of the future. Formerly loyal customers were bolting and the newspaper seemed unable to attract the young readers advertisers are hunting for. As the managers of the Wall Street Journal looked around they saw many of their peer newspapers throwing in the towel; cutting costs, slashing investment and being managed purely for cash.
Initially, the Wall Street Journal managers fell into this same mindset arguing to their parent holding company that the newspaper could never be expected to grow in light of the digital media onslaught. Success, they contended, would be to manage the decline in core circulation! Fortunately for the Wall Street Journal, Rich Zannino, the head of Dow Jones, wasn’t buying their arguments – he had other ideas!
Pushed by Zannino, the Wall Street Journal did their market homework. Of course they determined that their market had changed but then, their falling circulation had already told them that. What no one knew was what changes were happening other than digital media had arrived. There was speculation that young people were only interested in Hollywood gossip and sports as provided by Google news and Microsoft’s Bing. A little more digging, however, determined that young people aren’t quite that shallow. Young people, just like their parents, do crave quality information but unlike their parents they want that information presented in a modern way! The research also showed there was a significant number of these young people who had not formed loyalties to any type of news media – digital or otherwise.
Armed with this information the Wall Street Journal set a strategy to focus on this segment of young people “with no formed loyalties to any news media”. They modernized the paper’s look, introducing lifestyle and general interest sections and adding entertainment pieces. To increase circulation and revenue they bolted on a Saturday edition entirely focused on their target young customer. In a declining industry where competitors were shutting their doors, the Wall Street Journal achieved double digit growth and transformed itself into a National Newspaper competing head to head with the New York Times.
Growth comes from three areas:
- Taking old products to new markets
- Taking new products to old markets
- Taking new products to new markets
The Wall Street journal, as you have seen, restyled their old product to a new younger market but no matter which of these options you choose, do your homework. Do your market assessment actively hunting for new opportunities. They are almost always there, ready to be found by those who dig hard enough! Too often we accept the old “been there, done that, know this market inside out” excuse. The Wall Street Journal didn’t accept that excuse and neither should you. Look again with eyes that see and grow your business!
For the full story see Favaro, Meer & Sharma; HBR Creating an Organic Growth Machine May 2012 PP97 – 106