Strategic Imperative: Refocusing on Profitability
The robots are here but it’s us humans that are still the most important resource in your organisation. Why do people still matter most in Media? Well, because content is ultimately a human consumable, centred in human sensory experience, human creativity and human connection. Generative AI has made content production easy but to produce, promote and monetise quality, engaging, relevant and original content is vastly harder, more subjective and ‘instinctively’ human - an art, not merely a science.
Steve Jobs at Apple was not, by all accounts, a ‘people-person’ but he understood the importance of art and the consumer, focusing on the seamless integration of user-centric technologies through pleasing, human-centred design. Similarly, the most successful media companies are those that seamlessly integrate the quality creative output of the Editorial function with the user experience (UX) of Product and the engagement/monetisation of Commercial. It goes almost without saying, therefore, that the structure, skills and ways of working are central to the effectiveness and efficiency of your organisation.
Moreover, building on my first blog post on FT Strategies’ Path to Profitability (P2P) offering, I would argue that improving employee efficiency and organisational structure has become even more crucial for media organisations to achieve sustainable profitability in the face of digital disruption, evolving consumer preferences, and financial pressures. This article focuses on two key people-related issues, namely, enhancing workforce productivity and effectiveness; and optimising organisational structures. In both cases, I will discuss key strategies and benefits for putting your people front and centre on your path to profitability.
FT Strategies' Path to Profitability offering is a comprehensive framework designed to enhance the profitability of media organisations through targeted cost reductions and efficiency improvements.
Enhancing Workforce Productivity and Effectiveness
Ensuring that employees are working efficiently is crucial for the overall health of the business. Strategies to improve workforce productivity include:
- Skills Development and Training: By identifying skills gaps and providing targeted training programmes, employees can enhance their competencies, leading to better performance. Upskilling staff in areas such as digital media, data analytics, and new content creation tools can drive innovation and efficiency.
- Agile Cross-functional Methodologies: Adopting agile methodologies can transform how teams collaborate and deliver projects. Agile practices encourage iterative work processes, continuous feedback, and flexibility, which can significantly enhance productivity and responsiveness to market changes.
- Streamlined Workflows: Simplifying and optimising workflows can eliminate bottlenecks and reduce unnecessary steps. Implementing project management tools and clear communication channels can ensure that teams work more cohesively and efficiently.
Key Benefits
Some of the key benefits of this approach include:
- Refined Skill Sets and Training: Investing in the development of employees’ skills leads to a more competent and productive workforce. Regular training and development programmes ensure that employees stay updated with industry trends and technologies.
- Team Adaptability and Collaboration: Encouraging agile practices and fostering a culture of collaboration enhances team adaptability. This flexibility allows teams to respond swiftly to market changes and new opportunities, driving overall productivity.
- Reduced Skills Gaps: Identifying and addressing skills gaps through continuous learning and development reduces operational inefficiencies. A well-trained workforce is more capable of handling complex tasks and delivering high-quality outcomes.
Organisational Restructuring
Redesigning the organisational structure is another critical step towards improving efficiency and reducing costs. This process can involve:
- Flattening Hierarchies: Reducing the number of management layers can speed up decision-making and improve communication. A flatter organisational structure empowers employees, fosters innovation, and enhances responsiveness to changes.
- Eliminating Redundant Positions: Conducting a thorough review of job roles and responsibilities can help identify and eliminate redundancies. This not only reduces costs but also ensures that each team member's role aligns with the company's strategic goals.
- Strategic Alignment: Aligning staff more closely with the company's strategic objectives ensures that everyone is working towards common goals. This alignment can be achieved through clear communication of the company’s vision, mission, and values, and by setting measurable performance indicators.
Key Benefits
Some of the key benefits of this approach include:
- Reduced Workforce Redundancy: By eliminating overlapping roles and responsibilities, media organisations can achieve significant cost savings. A streamlined workforce ensures that resources are allocated efficiently and effectively.
- Enhanced Alignment with Strategic Goals: When employees understand and are aligned with the company’s strategic objectives, they can work more purposefully and efficiently. This alignment can lead to better decision-making and more targeted use of resources.
- Improved Decision-Making Speed and Efficiency: A streamlined organisational structure facilitates quicker decision-making processes. This agility is crucial in the fast-paced media industry, where timely decisions can make the difference between seizing opportunities and missing them.
Case Study: The Financial Times' Successful Organisational Restructure and Change in Ways of Working through its North Star Methodology
Background
By the early 2010s, the FT recognised that its traditional business model was unsustainable. The decline in print circulation and advertising revenue, coupled with the competition from free online news sources, threatened its profitability. The FT needed to pivot towards a digital-first strategy to ensure long-term viability.
Implementation of the North Star Methodology
- Defining the North Star Metric: The FT identified its North Star Metric (NSM) as the number of engaged digital subscribers. This metric was chosen because it directly correlated with long-term revenue and customer loyalty. Engaged subscribers were defined as those who actively consumed content and interacted with the platform regularly.
- Organisational Alignment: The FT restructured its teams around this NSM. Every department, from editorial to marketing and product development, was aligned towards increasing the number of engaged digital subscribers. This alignment ensured that all initiatives and KPIs across the organisation supported the overarching goal.
- Data-Driven Decision Making: The FT invested heavily in data analytics to understand subscriber behaviour. By leveraging data, they could identify what content resonated most with readers, which features enhanced user experience, and what marketing strategies were most effective. Data became the backbone of decision-making processes.
- Product Innovation: The FT launched several digital products and features to enhance user engagement. This included personalised content recommendations, improved mobile apps, and interactive tools for financial analysis.
- Cultural Shift: A significant cultural shift was necessary to embrace the digital-first strategy. The FT fostered a culture of innovation and agility, encouraging cross-functional collaboration and continuous learning. Employees were trained to use new tools and technologies to better understand and serve their audience.
Results
The implementation of the North Star Methodology led to remarkable improvements in the FT's performance. Key metrics and outcomes include:
- Subscriber Growth:
Digital subscribers grew from 286k in 2015 to over 1m by 2020, a compound annual growth rate (CAGR) of approximately 30%. - Revenue Shift:
Digital revenues surpassed print revenues for the first time in 2017. By 2020, digital subscriptions accounted for 70% of the FT's total revenue, compared to 40% in 2015. - Engagement Metrics:
The average number of articles read per subscriber increased by 50% over five years, indicating higher engagement levels.
The FT's Net Promoter Score (NPS) improved by 15 points, reflecting increased customer satisfaction and loyalty. - Profitability:
The FT achieved a record operating profit of £25 million in 2019, compared to £15m in 2015, driven by the growth in digital subscriptions and cost efficiencies. - Operational Efficiency:
The FT streamlined its operations, reducing costs by 20% through process efficiencies and automation.
Conclusion
Improving employee efficiency and organisational structure is essential for media organisations to thrive in today's dynamic landscape. By enhancing workforce skills and ways of working and streamlining and aligning organisational structures media companies can boost productivity and reduce costs to achieve sustainable profitability. Embracing these strategies will enable media organisations to adapt swiftly to industry changes, retain talent, meet audience demands, and maintain a competitive edge.
About the authors
George Adelman, Principal
George has over 15 years of experience in strategy consulting and in-house advisory. Leading strategy development, service design and digital transformation teams, he has advised senior leadership across both the public and private sectors. He has an ACII and a Masters from the London School of Economics.
