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March 29, 2017

What Are They Thinking? Mark Thompson's Strategic Detour Provides Surprising Exec Re-org

Sometimes, corporate decision-making is all grand strategy, expensive consultants, well-used whiteboards and intricate roadmaps. Other times, one thing just leads to another.

New York Times C.E.O. Mark Thompson completed his own strategy detour last week. He picked Meredith Kopit Levien (Capital: “The Times unifies its revenue strategy under Meredith Kopit Levien”), whom he had plucked from Forbes just 22 months before, to become the Times’ first chief revenue officer. That appointment followed by just three weeks his choice of Kinsey Wilson (Capital: “Mark Thompson makes Kinsey Wilson the Times’ top digital guy”) to become the Times’ first executive vice president for product and technology. That announcement came just weeks after Wilson had joined the Times after career stops at NPR and USA Today.

Both Levien and Wilson fit a certain profile. They are outsiders at the Times, where legacy promotion has sometimes stymied innovation. Importantly, both are media people, drawn from the world of East Coast publishing. As with the appointment of Wilson, the choice of Levien signals a decision to move quickly on, putting highly competent executives in place—and stop searching for a white knight to save the business.

We can find a wider meaning in these moves, given the major reorganization plans Mark Thompson announced last fall. The Times is coming to the conclusion that lots of news organizations are coming to: There may be no new magic-bullet solution to the no-growth spiral they’ve been caught in for years. If there’s no likely magic bullet, then, the search for a magician to put it in place is likely to be fruitless.

 

First published at Capital New York

Follow Newsonomics on Twitter @kdoctor

 

Importantly here, The Times has already shown that it can create new digital revenue from its relationships with its loyal audience. The next big questions: how much more revenue can it create from current customers, and how much from new ones?

Fundamentally, the answers to those two questions require a much deeper understanding of audiences than most news companies have yet mastered. In an interview Friday with both Mark Thompson and Meredith Levien, they emphasized the gating factor of that deep understanding—and how they had as many questions as answers. They want consumer data to drive product development and marketing strategies, and, ultimately, produce needed growth. First, though, Thompson thought theTimes required top executive reorganization.

In October, when Thompson bid adieu to longtime Times executive Denise Warren, who had headed digital and advertising before that, he had quite a different reorganization in mind. Since starting on the job at the end of 2012, he had diagnosed his company’s ailments and sought two key hires: a chief digital officer and a chief marketing officer. Thompson’s former BBC associate Erik Huggers turned down the C.D.O. job in January. That threw a wrench in the re-envisioning of the Times’ leadership, and ultimately led to the new top structure, now complete.

Thompson explained his hiring journey to me, painting a picture of a fast evolving cultural change at his company, one that he opportunistically acted upon. What was it that led to Thompson’s turnaround on the reorganization?

Thompson points first to the replacement of top editor Jill Abramson with Dean Baquet not quite a year ago. He told me it started with “the rate of cultural change and the rate of improvement between the newsroom of the New York Times and business side of the New York Times. This is good news and positive news. It’s taken everyone by surprise.”

“The Innovation Report and the appointment of Dean Baquet as executive editor are key parts of this story,” he continued. “It’s been breathtaking, the embracing of audience engagement in the newsroom and the sense which became crystallized when Kinsey Wilson actually arrived in the building [in January]. Kinsey was commanding very rapidly the complete support of his colleagues in the newsroom and also was, because of his background in product and technology [at NPR], it turned out that we had under our noses an option.

“This began in February, with the very rapid acceptance of Kinsey and the fact that he was on the ground and had the experience and the mastery to bring to the task. It seemed like we had a new opportunity. Really that thought, led to a second thought, which was around simplification. … What was in front of me was the dramatic simplification … to simplify to the point where you’ve got one clear leader for the revenue side of the business and one clear leader for digital development across the business.

That became a compelling solution … A bolder structure became possible. “

Levien’s rise has been almostas fast as Kinsey Wilson’s. When she was hired almost two years ago from Forbes, some observers turned up their nose, wondering what the prestigious Times was doing hiring an ad director from the page-spinning, line-blurringForbes. In her Times tenure, though, she’s shown herself fairly deft.

She was the innovator of Paid Posts, a Times-acceptable solution for native ads, and has forced genuine change in the sales operation (Capital: “Going native at the New York Times”). Most importantly, her digital formula is working well, with two straight quarterly double-digit gains, going into its next financial report on April 30.

The big question for the new C.R.O., of course, is how the Times will find that new revenue. What will be its new priorities?

On her first day on the new job, Levien’s answer is a sensibly wide one.

“I am going to give you a very broad answer. The first order of work is how do we answer for the highest-order problems first, the biggest questions first … of how to advance this business to consumers.”

Given that NYT Now’s gone from free to paid, NYT Opinion died a quick death and Cooking looks to be a free product, one big product/revenue question. Taking the question, Thompson offers another broad answer. “We’re exploring other verticals.”

He then expanded on his thinking.

“I certainly am sanguine that we can derive significant revenue from niche products, and we may well derive consumer revenue and in some cases that may be straightforward subscriptions or add-on subscriptions. But I think it’s fair to say, we’ve got some bigger questions to answer about our audience first, before we can replicate our current subscription model.”

In other words, the lack of sufficient audience understanding led to the NYT Now and other missteps, and the effort to now better understand customers remains in frontof theTimes. There may well be projects secreted away, but the company does sound like it is closer to the beginning of figuring out new “plus” revenue schemes than in the midst of them.

Both Thompson and Levien use the word that clearly rises to top-of-mind at the Times today: simplification.

“The really big lesson last year was the limit of complexity,” said Thompson. “In 2011, the Times launched its digital subscription offer. From day one, it was a complicated offer, three main bundles. Last year we tried building some more complexity into the offer [with NYT Now and NYT Opinion] and that confused subscribers. In a weird way, the lessons were around simplicity of offer more than the whys and wherefore of individual products.”

Levien added: “We learned a big lesson around habituation around Cooking.” The big consumer habits takeaway: Don’t expect consumers to pay for something new without a long period of free sampling. Or to borrow from the non-legacy digital world: Build audience first, revenue second. And, of course, make it simpler.

I‘ve called Thompson’s appointment of Kinsey Wilson executive improvisation, and the phrase fits for his elevation of Levien as well.

With external candidates wanting, and the clock ticking, he opted for relatively known quantities so the Times can hit the ground running for the rest of 2015, rather than wait for new executives to move into place, do their rounds and then set 2016 strategy. One likely gain: faster time to market on whatever new content and ad products and services can be decided upon.

With Wilson’s appointment, I’d noted: “While Monday’s announcements begin to answer the strategic imperative of the Times’quest for new teamwork, the revenue question is one that lingers in the air.” That question still hangs. We now know the who—Meredith Levien—of revenue, but have no idea of the how, as the new team forms and does its homework

Levien’s promotion, and Wilson’s, introduce that larger question.

What indeed is the Times’—and for that matter the newspaper industry’s—potential to find a newbrilliant business model? Nothing is going to replace the classifieds diaspora or unending print ad turndown, but it would nice if a light bulb could go on for the Times, and others, that could generate an additional five percent of revenue and similar margin.

The Times did capture lightning in a bottle with its digital subscription program, which should count one million digital-only subscribers by year-end. It’s a lot to ask for a second similar idea, but that is what Thompson may need. So far, with all the innovations of the past two years, the Times struggles to barely grow revenue year over year, and saw reduced profit in 2014 as well.

As Thompson told me, “There isn’t a model out there to take [digital subscription] to the next step of two, three, four and five million.”

We’d have to see the appointments of Levien and Wilson as a vote for smart incrementalism over out-of-the-box invention. Perhaps, publishing companies’ destinies are forever tied to their success in adapting their long-standing circulation and advertising models to the digital world. That may be enough, though it hasn’t yet proven so for the Times or its peers. Perhaps, there just isn’t enough new under the sun—after all the high-flying digital world is itself driven mainly by newly fangled advertising. Certainly, the Times search for a brilliant new strategist shows us how hard it is to find the thinker and thinking that will cause people to slam their foreheads one day soon, and say, “Why didn’t we think of that?”

For now, though, those global questions will wait. Job one started Friday as Wilson and Levien, with their colleagues, began meeting on new plans. The two executives must now form a different kind of working relationship.

Take audience and analytics, for instance, which everyone acknowledges needs to be the driver of the new business.

The newsroom’s own team grows, in the shadow of the Times innovation report. Meanwhile, the Customer Insight Group—the business side analytics team—will now report to Levien. How will the two fit together?

“How do we coordinate these efforts? Kinsey is looking at it and you can expect to hear something in the next couple of weeks,” said Thompson.

“In essence, it is built upon the same data set. The ad business is a hugely important business, but a derivative business of the consumer business,” added Levien.

There are sure to be similar “who does what” and “who takes the lead” questions given the new senior product team reporting to Kinsey Wilson, which is charged with creating the products that Levien must find ways to monetize.

There is then the question of “marketing” itself. The Times’ own post mortem of its failed Paywalls 2.0 products pointed to marketing as one of the culprits, and contributed to Denise Warren’s departure. (There is a touch of irony in Levien’s ascendance. Denise Warren has been the Times’ successful digital ad exec when she added the digital business to her portfolio. Now, after her departure, another ad head gets the wider digital portfolio. Of course, they are different people and this is a different time.)

Levien has led a forceful cultural change for Times ad sales, building on a quite successful career in advertising at Forbes and theAtlantic. That resume, though, hasn’t been focused on marketing, the strange art—how do we sell ourselves?—on which most publishers stumble. In fact, it’s often as hard to find significant dollars for marketing expenses in newspaper company budgets, as it is to find one for R & D. One first priority of business for Levien: assessing what the company now does, what it needs to do, and who needs to be in place to do it, in marketing.

With the search now over, Mark Thompson sees a new role for himself.

How would his job change? I asked him. Mark Thompson aims for a maestro’s touch.

“I can work with Dean, Andy [Rosenthal, the Times’ editorial page editor], our pure creative leaders, and with Kinsey and Meredith to try to grapple with the fundamental strategic questions. … There’s quite a significant role for the conductor in the orchestra.”