Strategy 1, 3, 5 and 10

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January 2015
by Joseph J. Esposito

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I have a friend who is a 10. He takes a dim view of another friend, who is a 3. The 10 sees 3 as limited in outlook and perhaps not possessing “real” intelligence. The 3, on the other hand, sees the 10 as incorrigibly impractical. The 10 just doesn’t see what is actually going on, says the 3; the 3 takes knowing what is going on as his particular area of expertise. I am mostly a 5 myself and spend a certain amount of time mediating between the 3 and the 10. It is a hopeless task, but hope is one of those things that doesn’t discriminate among those at 1, 3, 5, or 10.

The figures refer to years; they denote the span of one’s strategic outlook. A 1 is concerned with what must be done this year. Everything is urgent. Anything that does not satisfy the requirements of this year is a waste of time. For a 1, a three-year outlook is suspect, a five-year outlook a bit foolish, and a ten-year outlook the object of contempt and satire.

A 3, of course, sees the 1 as terribly short sighted. You have to plan ahead, after all, though how far ahead is a matter of debate. The 5 sees the activities of 1 and 3 as things that are pretty much inevitable, since the wheels are already in motion. But the 5 may pull back from the scenarios of the 10. So much can happen between now and then; how can we know?

Before I get into how these differing outlooks pertain to publishing, let’s be clear about the important point that a meaningful span varies considerably industry by industry. Thinking about building a polypropylene plant in South Korea? Even a ten-year outlook is not enough for that kind of capital investment. Intel, ExxonMobil, Dow Chemical: companies of this kind necessarily play a much bigger game when it comes to strategy and planning. A ten-year outlook may seem like forever in the media business, where the biggest investment is a Hollywood feature film, but that is merely a fleeting moment for businesses that deploy large amounts of capital.

It’s worth bearing in mind that so many of the commonplaces of digital publishing—the need for speed, the ability to pivot—mean nothing to an organization that has invested billions to build a plant in the developing world and for which political insurgency is as much a part of the calculations as the marketing plan.

Among the 1s and 3s

Different members of an organization carry different numbers. The sales organization consists of a big collection of 1s, distinguished not by their intelligence but by their uncomplicated view that the meaning of life is determined quarter by quarter. Without an energetic group of 1s, an organization will fail, as the 1s bring in the cash that funds everything else. They know this and resent the fact that some of the money they generate will go toward activities that don’t obviously redound to their benefit.

Nor are 1s unnecessary in pre-revenue start-ups. Even though those companies are not ready for selling anything, they have to work with disciplined plans for product development, recruitment, and the raising of capital. This is not done by the seat of the pants. One thing that professional investors bring to these start-ups is a sense of urgency and the need for clear short-term milestones. We all need 1s and we need them all the time, even if their vision is limited and they are impatient with the longer-term objectives of an organization.

The 3s are largely involved with the introduction of new products to established marketing channels. Editors are almost all 3s; there is not much that they can do in one year.
Most of publishing consists of working to that three-year horizon. Think about it and you will see that it is true. The editor of a journal reaches out to researchers to invite submissions for research that is still ongoing. Submissions come in and work their way through the editorial process. This is even more evident in the book world, where editors are on the lookout for certain kinds of books. The notion that this process is driven by authors is promulgated by people with a willful ignorance of how publishing actually works.

Looking Further Ahead

Sitting out here as a consultant in the land of the five-year forecast can be lonely sometimes. “What’s next?,” you say to the CEO or the board. “How long can you push this string?” A company that is growing by double digits every year will wave away questions like these, but for slower-growing companies and those that are stalled outright (almost everybody in publishing today), the question about what’s next is becoming more pertinent.

To be a 5 means that you tend to work with new ventures. Some of these are start-ups, but many more of them are new operations within an established company. It’s an odd thing, but all the innovations that take place within established companies get overlooked when a disruptive start-up comes along. This doesn’t mean that disruptive innovations don’t exist; it means that most innovations come from established companies seeking to expand the nature of their operations.

Many large companies, however, not having a crew of 5s on board, find that essential innovations have been developed elsewhere. This prompts them to open their checkbooks and acquire the upstarts when the in-house 1s and 3s have taken too much control of strategic thinking. We are going to be seeing more of this in the coming few years, as many established companies assess their positions and conclude that they have missed out on some important developments in digital media. It’s a good time to be an investment banker.

Is there any opportunity to sit down with my friends the 3 and the 10 and get them to engage in a productive conversation? Perhaps if I plied them with a bottle of wine in a cozy spot somewhere—or two bottles or three—the warm fellow-feeling of alcohol would enable them to bridge their differences, see the value of each other’s perspectives. I fear, however, that this would be for naught. In the dehydrated morning, the solitary consciousness would once again see the world as it has always seen it. It’s not just that some perspectives differ from others, the reflective mind insists, but some perspectives are superior to others.

Organizations need all these perspectives and, if they are well managed, they know that difference does not imply superiority. This is why the team-building approaches of so many companies are a waste of time; 3s and 10s, not to mention 1s and 10s, cannot be made to dance together. Indeed, team building is even worse than that, as it can lead to the great downfall of any organization, management by consensus.

The process of achieving consensus inevitably leads a company to join hands around the outlook of the 1s and 3s, and this is to abort the future. CEOs and executive directors are put in place to lead, not to take a survey of the troops. The art of management is to be able to get people to make large contributions for endeavors they do not fully understand.

So I will continue to share a drink privately with my friend the 3 and to do likewise with my friend the 10. I admire them both.


Joseph J. Esposito is president of Processed Media, an independent management consultancy providing strategic advice, operating analysis, and interim management in the area of digital media to publishing and software companies in the for-profit and not-for-profit sectors. He writes extensively on digital media and has been awarded research grants from the Hewlett, MacArthur, and Mellon Foundations.

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