I’m working with a magazine CEO who has seen revenues fall 45% over the last five years. Until last year, she didn’t think she had a problem because she cut costs enough to keep profits flat. Then last year, the bottom fell out. Now, the company is at risk of going bankrupt.
While it’s important to keep lean cost structures in our industry, let’s not forget that cost cutting is not a long-term strategy! The only truly long-term growth strategy includes innovation and new product development.
New products are the lifeblood of an organization. If you don’t innovate, you will die. Don’t believe me? Out of the companies that were in the Fortune 500 in 1955, only 61 are still on the list. What are you doing to grow your top-line?
Many companies think they have launched a new product by putting a pdf version of the print product online, or because they created an iPad digital edition of their magazine. I hate to break it to you, but this isn’t good enough.
Content-based Product Best Practices
I am passionate about the topic of New Product Development (“NPD”) and developed a proven methodology. Here are some best practices when creating new content-based products:
1. The Board and CEO commit to investing in New Product Development
You need a board and leadership team that can resist the urge to focus solely on short-term earnings. Visualize the long-term.
2. NPD goals link to a strategy
According to a study by Dr. Christopher Bart of the DeGroote School of Business in Ontario, Canada, there is a positive correlation between using a strategic mission statement for NPD and success of new products.
3. The team tracks progress toward a set of measurable goals
Set some targets from the beginning and progress movement toward them. Metrics might include: revenue, profit, traffic, email sign-ups, new business conversion, renewal rate. Some leaders resist setting targets, because “they are often inaccurate.” I do agree that targets are often inaccurate, but the purpose is not to tell the future for the sake of telling the future. The purpose is to diagnose where things are working and where they aren’t.
4. The firm uses critical go/no-go decision points to reduce risk
When we link to a strategy and have measurement mechanisms in place, we can make sure we place the right bets, at the right time, on the right initiatives. While it is essential that leadership fully commits capital to NPD projects, it is not essential that the company spends the money all at once. Investment should be made gradually as experiments yield favorable results.
5. Leadership injects marketplace feedback across the process
I cringe when people tell me they do not use consumer research because “Steve Jobs didn’t do focus groups.” He may have disliked focus groups, but Jobs was grounded in being empathetic with the customer and envisioned products they would want. The good news is you don’t need to be the creative genius that Steve Jobs was to do so. There are proven quantitative and qualitative tools that can be used to solicit feedback during the NPD process.
New Product Development is a Must – and It’s Fun
New Product Development is risky and complex – it’s also vital to long-term success and fun! It’s a mix of left brain analytics and right brain creativity.
The challenge is breaking through the natural resistance to change that permeates many industries, including media and publishing. Companies who refuse to change and try new things will join the 439 companies who fell off the Fortune 500.
Editor’s note: Want to learn more from Rob? He’ll be speaking at the Niche Digital Conference September 19-21.
Rob Ristagno is the CEO and Founder of The Sterling Woods Group, a firm that builds new revenue streams for media companies and publishers. He is an expert in direct monetization of content. Prior to creating The Sterling Woods Group, Rob served as a senior executive for several niche media and e-commerce companies. He most recently was the Chief Operating Officer of America’s Test Kitchen, considered to be the gold standard in the niche media world for building diversified – and often digital – revenue streams.
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