One of the hardest things for leaders to do is recognize market shifts. The tendency to remain focused on Defending & Extending what was always does is so great that market shifts which demand change are overlooked in the urge to improve what was always done – even as results fade.
An obvious example is Playboy enterprises. "Playboy denies report of $300M price tag" was a Chicago Crain's headline, as rumors that the company (now publicly valued at only $90M) was being shopped for a new owner. Playboy was founded as a "lifestyle" media company intended to meet the emerging needs of "sophisticated" adult males in the 1960s. To the surprise of many publishers and government leaders, Playboy became a huge success. Its magazines outsold expectations. The company grew by opening clubs in major cities where businessmen entertained. Even resorts were founded as vacation destinations. As the company expanded it moved its headquarters from Chicago, where government officials disliked the hometown anomaly, to LA. And the company acquired a 727 as the corporate jet. As revenues and profits expanded, the company went public. As recently as 2000 the company was worth nearly $1.2billion (chart here).
But, the market changed. Women entered the workforce as one primary contributor to the clubs becoming passe, leading to their close. Likewise, the resorts closed as competitors – clubs catering to young men and couples, such as Club Med – did a better job of meeting their needs. The magazine became less and less viable as market shifts led to a split between pornography magazines for those who wanted photos and serious mens journals ranging from Stereophile and Autoweek to GQ. Market shifts ranging from America's attitudes about how to treat women, to what was needed in a serious current events or hobbyist journal, left the company's products less and less interesting. As the founder aged, the company lost track of its primary target and failed to identify a new target market. And the new CEO, the founder's daughter, was unable to develop future scenarios identifying a viable direction – or products – to keep the company growing.
At this point, Playboy has no clear market, has suffered from decades of declining revenue and profits, and investors have no reason to expect an improved return on investment. Why anyone should want to buy the company, especially as we observe that all print journalism is shrinking dramatically, is unclear. Playboy is at the vanguard again – but this time of demonstrating the end of print media and the losses capable from ignoring market shifts. Had Playboy long ago dropped the salatious pictures and moved itself toward a growing readership – providing insights to men's lifestyle issues in sports, fashion, electronics, autos or any number of topics – it had a chance of maintaining its success. But now the brand represents a complete out-of-synch with market needs and is more likely a negative than a positive; of no value. Playboy leadership should take the money and run, distributing what it can to investors, from whatever fool is willing to throw away its money on an acquisition.
Meanwhile, a recent Wall Street Journal Blog was titled "Skype Gets the Oprah Treatment". The WSJ blooger seemed perplexed that Oprah Winfrey's show would choose to run an entire episode by interviewing people on Skype. His implication was strongly that the episode was some sort of technology endorsement in disguise.
But, to the contrary, we can see where Ms. Winfrey and her producers are much smarter than her media CEO counterpart at Playboy. This episode gave viewers a firsthand experience with new technology which is available and usable by her target audience. People were able to recognize how the technology works, and why you would use it to communicate with others – possibly in remote locations.
Although Ms. Winfrey is "50ish" her company is keeping her product very current. Her audience is learning how to use new technology that will help them be better connected to family or business associates. And save money doing so, compared to traditional telephonic tools. Ms. Winfrey and her leadership team could continue to do what they always did, but this kind of new show helps them keep Harpo Enterprises and one of its products – The Oprah Show – in the forefront of competitivesness. That's why Harpo can lay claim to reaching even more people in Asia and Europe than in the USA! Thus Harpo keeps viewer numbers high, and advertisers willing to foot the bill.
Harpo Productions and Ms. Winfrey are demonstrating their willingness to shift with the marketplace. They are trying new things, and are willing to branch out with changes to stay connected to markets as they shift. Doing so is a requirement in lifestyle products, like media. She benefits her customers by willingly shifting with the market, and those lucky enough to work for Harpo or supply the company, will benefit by its willingness to remain connected to changing markets – by staying on the forefront.
Many CEOs and their leadership teams would do well to understand the failure of remaining Locked-in, like Playboy did. And to recognize the value of remaining abreast of market shifts and keeping products current with changing market requirements, like Harpo Productions and is famous CEO. Sometimes being criticized for being too avant garde is a good thing, because it shows you aren't afraid to change in the pursuit of keeping current with market shifts.
