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Turnaround Tactics

The 10 Questions You Should Never Stop Asking

Marc Kramer, 11.20.09, 05:01 PM EST

Companies run aground for the same basket of reasons, so don't forget the fundamentals.

In the early 1990s, I was brought in as an interim president/CEO of two regional monthly magazines. Both are now out of business. It was a trying time--and also one of the great learning experiences of my life.

One magazine focused on business, and the other on the arts. What the two had in common were the investors, who forced them into a shotgun wedding and put them under one roof. These geniuses (including your intrepid columnist) thought they could squeeze pennies and boost margins by merging the back offices and the sales teams. The editorial staffs couldn't be combined because they required different expertise.

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The only magazine experience the holding company's board members had was reading the publications. I knew the newspaper business, but as any media veteran knows, newspapers and magazines (especially monthly magazines) are entirely different beasts--and not just in terms of the physical products. (Just one example: Magazine ad revenue is booked earlier but collected much later; meanwhile, overhead gobbles cash.)

Smart, experienced, highly connected people were involved in this deal. It didn't matter. Why? No one bothered to examine the fundamental realities of the business; no one asked the right questions. Instead, everyone was consumed with generating revenue.

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Here are the 10 questions we should have been asking--the same questions that any business owner should continue to ask, year in and year out:

What is our purpose for existing? A lot of businesses had a purpose when they started, but over time their product, service and market changed. The arts magazine was created to give the Philadelphia area its first publication that focused solely on the arts--theater, opera, ballet and the orchestra.

The business magazine was competing against a variety of daily and weekly business publications, so its purpose was unclear. Was it a local Forbes covering large companies? Was it a local Inc. highlighting small businesses? The editor decided it would be a combination of both approaches--and readers weren't sure what to make of it.

Who is our target customer? We knew the readers of the business magazine were business leaders because we bought lists and sent the magazine for free to C-suite executives--the audience that our advertisers wanted to reach.

Our arts magazine partnered with the local public broadcast station and used its listener base as the profile for its readers. Still, we hadn't truly pegged the age and income of the readers, and thus had a hard time convincing advertisers to support it. Needless to say, it's a lot easier to come up with great ideas and convince people to buy into them if it is clear who is purchasing your product, and why.

Why does anyone need what we're selling? All too often we fall into the trap that people want something because we like it. This is the road to perdition. In our case, there was never a formal survey done to determine if anyone cared whether our magazines existed. We never asked readers/potential readers what they wanted to read. In my 25 years of experience, I have rarely seen a company fail if management literally spoke to customers and gave them what they want.

If there is a need, is it enough to support a profitable business? Although Philadelphia has an orchestra, ballet, theaters, jazz clubs, etc, Philadelphians weren't interested in a magazine that just focused on the arts. When our agreement ended with public broadcast station, there wasn't enough reader interest to attract advertisers.

What were our competitors up to? If we had formally analyzed our competition, we would have seen that one competitor of the business magazine had come up with interesting advertising vehicles, such as paid-for question-and-answer series with profiles of accountants, lawyers and business consultants. These featured professionals were more than happy to pay for the privilege of raising their visibility. Whether you are selling a product or a service, you have to be constantly innovating.

Can you reduce expenses--without harming the product? I found out about six weeks after my arrival that if you lowered the weight of the paper and took the shine off the magazine, you could save a bucket-load of money. Of course, those moves also lowered the quality of the product. When I began my search for a new sales manager, one of the candidates asked me if I had spoken with our printers about ways to reduce costs. Amazingly, our vendors had lots of ideas on how to reduce cost without sacrificing quality, but no one had asked them.

Do we have the right leadership? As companies mature, they require managers with different skill sets. One of our publishers was very experienced at running start-ups at large, well-financed publishing companies; he wasn't used to running on a shoe string. The other publisher, who had never run a company, was used to selling air time, not space in a magazine; when she did sell air, it was for a top-rated established station, not a start-up. (We ended up replacing both publishers.)

Do we have the right employees? There are employees who know how to bring new products and services to life, while others know how to nurture an existing line. We had sales people who were very experienced at selling established publications, but none who had ever launched a title or worked with a small publication. Big mismatch.

How will we continue to drive revenue? The management and board never held a down-and-dirty strategic planning session. We never went to a bar and tossed around ideas with employees. We never invited readers to tell us what we could do better. Companies can't live in vacuums. Chances are, what works today won't work tomorrow--just ask anyone in the media business.

How are your employees holding up? I was so obsessed with finding ways to fix the business that I would walk by everyone as if they were pieces of furniture. I didn't observe their body language or solicit their input, even though was I playing around with their future. I was in my own little world and I didn't notice the anxiety they were dealing with. You have to check the temperature of your employees, let them vent and encourage their honest feedback. These stakeholders are the key to pleasing your customers--and your shareholders.

Marc Kramer is president of Kramer Communications, author of five books and instructor at the Wharton School at the University of Pennsylvania and the National University of Singapore. He can be reached at marc@kramercommunications.com.

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