A Scientific Approach to Leadership
and Management Development

"Leadership Matters"
— A Management Newsletter —

Turning Around a Declining Business

Let's say a business within your company has matured, and you must manage its declining circumstances. Revenues are down, and there's enough competition that your products have become mere commodities. Sales are slipping, and new technologies are threatening your business's very existence. What do you do?

This is the scenario faced by many in the newspaper industry, but some managers are taking active steps to turn things around. At one major metropolitan newspaper, we met John Maher, a manager whose marketing group found a way to generate new revenue and cut costs.

Maher saw the writing on the wall, and began thinking a lot about new opportunities. He and his team formulated a plan, and determined a way to execute the plan through effective delegation and structure. When Maher thinks about assigning work to others, he thinks about accountability, authority and resources. "Assigning the work requires all three of these things. Clarity on these things has made all the difference," Maher says.

"I can pay attention to long-term issues without sacrificing short-term results."

The turnaround started when Maher began to focus clearly on what was most important for his department. Specifically, he trained his focus on three things: increasing revenue, increasing circulation and extending the brand. Very simple, but it became a mantra for his group. If an activity does not contribute to at least one of these things, they don't do it.

This clearer focus and more effective direction in assigning the work have given Maher more time to think. "My outlook on time has changed," he says. "I can pay attention to long-term issues without sacrificing short-term results." While he remains focused on present performance, he also pays attention to the longer-term priorities and planning that eventually make all the difference for bottom-line results.

For example, he now looks to see what changes will be coming within a year or two and be prepared when the changes occur. Clearer delegation has given him more time for this; by better focusing people on what is important, he has been able to eliminate unnecessary work.

In addition, he seeks the same kind of clarity on projects that are assigned to him from above, either getting greater clarity or postponing those where the accountability is poorly defined or the authority is too diffused to allow for effective action. This has freed up time for him to focus on higher-impact priorities.

While he has been able to make jobs bigger for his direct reports, he has also been able to decrease payroll cost by eliminating unnecessary or non-value-added activities. His payroll costs declined by 13% through a more efficient staff that is now closer to the work.

So how has Maher's marketing department done in the three target areas? For revenue, Maher helped his group literally transform itself from a cost center supporting circulation to a revenue producer. From zero revenue, the marketing group is expected to drive more than $1,000,000 per year within three years, much at significant margins.

Maher's group conceived new promotional campaigns, and managed them internally rather than outsourcing, significantly impacting both revenue and cost. And many of the projects are aimed at increasing circulation — an important function of his department. A recent promotion drove $500,000 and increased daily single copy sales by 10% during the promotion. Overall, gross copies through marketing promotions increased from 1.68 million to 2.96 in two years, and new home-delivery subscriptions soared.

Extending the brand is also evident. One product promotion substantially enhanced the brand. Data show that 97% of respondents had an improved or unchanged perception of the publication, and perhaps more remarkably, some of the few who were dissatisfied with the promotion actually had an improved perception of the publication.

Maher is quick to assign credit for all this to his staff. Managers in his department say that the bar is set high and that they have more authority and autonomy. They also exhibit more initiative and creativity. One manager asked to collect a rights fee when making a deal to use the newspaper's image on fast food cups. "I was not involved with this," Maher said. "She assumed authority based on what her job was." She turned a brand extension opportunity into a revenue driver.

Maher speculates that his staff is more opportunistic because of the experience they gain by having bigger jobs. "They think of things like rights fees because they are involved in deals where other companies request rights fees on their brands."

Maher has had fun growing his people — while helping them get better results. And their activities have helped a mature, declining business improve its prospects for the future.

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