Conde Naste is rebalancing its portfolio, with consulting firm McKinsey & Company at its side. The global strategy-guru firms (McKinsey, Bain & Company, etc.) are like the Big 8 (now 4 and counting) accounting firms that bring “credibility” to management’s decisions. If the esteemed McKinsey & Company said to get rid of Gourmet Magazine, it must make sense. But does it>
A Business Model Framework Out of Step with the Times
Some context: The Conde Naste business model is failing on the profit front for two reasons. First, Web 2.0 and now Web 3.0 is revolutionizing media. More important, the recession is shrinking advertising pages. Conde Naste’s strategy is to reduce brands in each content category, with the larger circulation brands surviving as they offer, at least in today’s dollars, more advertising revenue. So we will have fewer bridal magazines and one less cooking/travel magazine.
As a business model strategist, I think Conde Naste is forgetting the sage advice of Wayne Gretzky, the famous hockey player, “I go where the puck is going.”
The media “print and internet” business model will shift to a multi-channel information and experience business model. The winning companies will have brands that audiences are deeply attached to and almost dependent upon for the audience member’s joy/success, brands experienced in print products, movies, TV and radio broadcasts, webcasts, products, on-line content, trips/experiences with the brand, Tweets, and whatever new forms of communication have yet to be discovered.
If my projection is true, cutting Gourmet back to books and maybe a TV show is a huge mistake. Commitment matters more than numbers in a multi-channel platform world as any one brand lover will connect many more times than a minimally attached consumer. My read (albeit I am not an expert) is that the die-hards lined up with Gourmet Magazine. They are the Harley-riders and Nascar lovers of the kitchen.
The decision on the bridal magazines is smart on the other hand – women read bridal magazines once in their life so the attachment is short albeit sweet. (Divorced people thankfully know there are other things more important than the dress and event second time around, or at least I do!)
There are other reasons to question Conde Naste’s decision.
- The decline in high-end advertising may be temporary.
- Bon Appetite has many competitors. There was only one Gourmet.
- As the baby boom retires (many to become much wealthier as the largest generational shift in wealth occurs when baby boomers inherit their parents’ assets), Gourmet-style trips and food will likely gain in popularity.
- Reductions in subscriptions were in part induced by a failure to live up to the historic promise of Gourmet Magazine, more than by a lack of interest in food and travel, high end.
- Changes in Gourmet Magazine might have helped it better segment the Bon Appetite and Gourmet advertisers to maintain both brands.
Profits can be deceiving indicators. In my book they are lagging indicators. Make business model and product decisions on potential and relevancy vis a vis emerging trends, not just what today’s numbers reveal.
For insight on business model innovation and business model strategy, read my recently released book, Beyond Price.