From the Editor: Did You Cut Costs in the Wrong Places?
"We have found that most companies, when confronting cost reduction, tend to make cuts across the board. I believe most executives know that that's not quite right, but they resort to that." So said Cesare Mainardi—managing director of Booz & Co.'s North American business, and co-author of "Cut Costs, Grow Stronger: A Strategic Approach to What to Cut and What to Keep"—in a Harvard Business Publishing video interview exploring how to cut costs—strategically.
There are effective and ineffective ways to reduce organizational costs, and, as Mainardi suggests, the difference can mean the success or failure of your business.
"… The activity of expense reduction is really a strategic choice," he said. "And, in fact, there is no time like that to make some very sharp decisions about what's important, what is strategic, and to make decisions around cost in that context."
Mainardi suggests that if companies focus their expense on their "capabilities"—the activities that, he says, "make a real difference in terms of winning in the market—then great things happen. Not only are they able to cut costs where things matter less, but they're able to invest in the areas of the business that will cause them to thrive and to grow, even as an economy returns, for instance."
He defines "capabilities" as "a combination of know-how, people, expertise, processes, all that happens in the business that allows that business to out-execute competition." To evaluate cost-cutting strategies, a company (or department) should consider, "What is it that they do that is not essential to [those capabilities]?" he said. "The key is to figure out what is essential to the success, and then what is just required to keep the lights on …, [and then] triage the two and invest in the activities that cause success, relative to competition, and then to be as lean as possible in everything else."
Hmm. Isn't content the key capability in virtually all publishing? Merriam-Webster defines publishing as: "the business or profession of the commercial production and issuance of literature, information, musical scores or sometimes recordings, or art"—in other words, content.
It perplexes me that journalists' job losses have excelled at a monthly rate almost three times (22 percent) that of the general job market (8 percent), according to a recent study by Unity: Journalists of Color ("2009 Layoff Tracker Report").
Almost every publishing executive I talk with says that their editorial freelance budgets have been cut, many by vast amounts, some entirely. Chief editors have been laid off, as have research staff, proofreaders and fact checkers, writers—you name it. Sure, everyone is looking for immediate cost-cutting measures, but is this not like cutting big slivers from your heart? You can have the greatest technology in the world, but if your content stinks, what good will your technology do you? You can push to grow your revenue online, but if you don't invest in the content resources to do so, how, exactly, do you expect to grow?
I would guess that if more companies followed Mainardi's advice, cost-cutting in editorial would be far less than it is now, and rather, this is where more companies would be investing. Check out his interview here—reading his book would probably be a good idea, too—and think about this.
In this issue's Guest Column, Sheila Robinson, founder and publisher of Diversity Woman, poses essentially the same question: Have publishers, in their search for a magic bullet to save publishing, lost sight of the very thing that drives their business (the relationship between the publication/brand and the reader)?
In his column , Bob Sacks writes: "For years, we all have been scrambling for a new business model, one that takes into consideration all the technology of the present rather than the flawed, inefficient systems of the past. Perhaps we have been looking in the wrong place for improvement. … When you clear away the smoke and mirrors of our various publishing platforms, you are left with people reading what writers write."
In this issue alone, three articles profile publishers who are succeeding: Hoffman Media, Food Network Magazine and Fader Media. The primary driver behind their success? Content—whether in print, online or at live events.
Of course, the marketplace and what content we are publishing in which media are changing, and the economic recession has strained even the most intelligent businesses. But great content is what draws a captive audience—and a captive audience is what draws advertisers. Content truly is the heart of our business. Is weakening your heart such a good idea?