Diversify revenue: Measures of success and tracking progress in closing the gaps

This is an excerpt from “Table Stakes: A Manual for Getting in the Game of News,” published Nov. 14, 2017. Read more excerpts here.

Monitoring progress against the overall cash picture

Your metro, local or regional news enterprise must put together a picture – or, if you will, a model – that portrays a small number of scenarios for where, when and how you’ll generate the cash needed to be financially sustainable and/or attractive. The key measures in this picture relate to trend lines – and the rates of change – for cash coming in from key sources, cash going out to pay for major categories of expense, and the cash needed for ongoing innovation and change.

Essentially, your senior management must project the rate of change for:

• Print subscriptions
• Print advertising
• Digital subscriptions
• Digital advertising
• Major expenses categories (e.g. the newsroom and other key functions)
• A pool for investment in innovation and change

You can include any profit expectations – or, you can look at the implications of the above cash picture first and layer in profit expectations after that.

The trick in all this relates to what rates of change you’ll project – what assumptions you’ll make for shifts in the amount of cash coming in and going out. Don’t drive yourselves nuts with too many scenarios and so forth. Even a ‘best case’, ‘worst case’ and ‘most likely case’ set of assumptions will illuminate just how long and under what circumstances your news enterprise must get to and monetize Table Stakes.

Converting uncertainty into certainty

The measures for monitoring uncertainty and risk are qualitative judgments that get tested with intentional actions. Consider, for example, ways your news enterprise might partner with Meetup to establish and grow local connectedness – connectedness informed and enhanced by the information and news you cover.

To illustrate, imagine your focus is on folks who wish to connect with one another to better understand where and how to plan for retirement. To work, such an innovative service must build successfully on a number of assumptions (here, all described as things we will do successfully):

• We can identify discrete retirement based needs/problems.
• We can conceive of solutions to these problems.
• We have the technology, tools and capabilities to deliver these solutions.
• We can use membership as the vehicle for participation.
• We can charge a membership fee.
• We can attract enough folks to pay the fee and regularly participate.
• We can partner with MeetUp to use its technology in ways that get us into this game sooner and better.

Each of these assumptions must play out well if the new retirement service/business is to succeed. Yet, in all likelihood, the folks leading the effort at your news enterprise will have a range of confidence about each of these assumptions. For some they’ll be certain or near certain. For others, they’ll be quite uncertain.

By asking the team to evaluate their level of confidence – from certainty to uncertainty – the team is then in a position to test all of the aspects and especially those for which they are least confident.

Scorecard for revenue diversity

Use the Table for different revenue types (see above) as a scorecard for monitoring the diversity of approaches as well as shifting actual amounts and share of total revenues your enterprise uses.

A product/service/business whole P&L

It’s essential to increase the number of folks across your enterprise using a ‘whole business/whole enterprise/general management’ perspective. This cannot be over emphasized. The absence of a deep bench of general managers is one of the most crippling legacies of the print era’s church/state division. Just when the tsunami wave of digital disintermediation hit news enterprises broadly – just when those legacy enterprises most needed leaders who could ‘see’ across the enterprise and embark on innovative strategies accordingly – there often was but one such leader: the publisher. This is why, for example, Table Stake #7 emphasizes mini-publishers.

A product, service or business whole P&L need not be complex. What’s key is that it include revenues generated by the product, service, or business along with costs directly incurred related to those revenues.