12 May 2015 category: strategy & business planning
The majority of companies appear to develop a strategy and then keep at it in perpetuity, hoping to make it work, despite all the evidence to the contrary.
This is not a good idea!
The art of developing a strategy for business was a concept taken from military. If you are fighting a war, you may start with a strategy, but when circumstances change or your enemy doesn’t react as you thought they would, it is time to adjust your strategy. As the boxer Mike Tyson famously said “Everyone has a strategy until they are punched in the face”.
If you are in business you should consider adjusting your strategy to cope with current circumstances. There are plenty of good examples of changing strategy in traditional media. For example, when the London Evening Standard switched to being a free newspaper, not only did it achieve the obvious effect of increasing its circulation, it also dramatically increased its revenue from advertisers, who were now able to reach considerably more readers.
Research also revealed that previously people had taken their papers home because they had paid for them. When the paper was circulated free of charge, readers were inclined to leave them on the train so that other people could read them.
Free circulation meant that people could pick up their paper as they rushed to a train station, whereas they would previously have had to stop and find change to pay for them. This simple change of behaviour meant that the readership was boosted dramatically.
There are signs that commercial (non-subscriber) TV companies are going through a similar change in strategy. With the advent of subscriber-only TV channels, ITV (the largest free-to-air TV company in the UK) has seen its audiences fall over the years – there was a drop of 3% in the last year alone. Nevertheless, they still provide audiences with an opportunity to reach more than 5 million households.
They now appear to have a strategy of developing original drama series that are compelling and hold audiences for a 4 to 6 week period. Since these series are for a limited period, they retain audiences, in contrast to other types of programme that people can “dip in and out of”.
The result is that advertisers can pay a premium rate for advertisements that appear in virtually every break in the programme. This has resulted in an 11% increase in advertising sales at a time that the average audience has fallen by 3%.
If ITV can do it under adverse conditions, what can you do to adjust your business strategy?