Saturday, June 13, 2009

Channel Searching

Yesterday marked the end of an era, as the last day of analog television broadcasts in the United States came to a close. After 12:30pm, the VHF and UHF airwaves that carried the early pops and clicks from Sarnoff’s labs at RCA, JFK’s fateful ride through Dallas and Neal Armstrong’s ghostly image from another world (as well as decades of mind-numbing entertainment) once again fell silent, to the relief of tens of Radio Astronomers. Indeed, somewhere out in the cosmos, alien civilizations might observe in their distant futures, a momentary 80-year stream of our analog TV transmissions. We’ll appear for a brief time as a non-Planckian energy source with an exceptionally high energy density in the VHF/UHF bands. It’s certainly something they will have not likely seen before, and we may never see again.

The transition to digital television hasn’t been easy. It is estimated that there are still 2 or 3 million households in the United States (most in remote locations) that have not converted to the new digital standard. The delay has been in part is due to understandable resistance to changes that are being forced upon individuals, at their own expense.

Sometimes, change is inevitable. We may have perfectly valid reasons for objecting to change that is thrust upon us, especially when such change causes us harm or sacrifice. Unfortunately, there are times when all we gain by taking the moral high ground against change is to be the first to be struck down by lightening.

I’m seeing a lot of businesses pitch tents on Mt. Moral these days.

The great recession in which the global economy finds itself, is something for which few business planned. Certainly there was little or no consideration given of its inevitability or impacts back in 2006, even though the signs of the terrible economic storm on the horizon were painfully obvious. My own customers (and in my experience the vast majority of businesses) have been focused squarely on the moment. As the recession has taken hold, its manifestation has changed from the “crazy talk” of a few to becoming the number one threat impacting every sector of the economy. Today, companies are examining every asset they have under a microscope, and no longer think of a recession as remote possibility. It has hit, and hit hard.

Currently, I’m seeing expected and predictable actions (and reactions) of corporate managers who feel as if they were caught flat-footed by the recession. Across many industries, the same stories are being played out: Redundancies are being hastily eliminated. Operations are being streamlined and/or reduced in any way that doesn’t involve new financial investment. Product innovation is being drastically re-examined and often curtailed. The latter story is of particular interest to me, for obvious reasons of course, but also because I’m seeing two product innovation camps form as I travel around the country.

The first camp is in denial, and is fighting for as much space on the summit of Mt. Moral as possible, even to the extent of pushing others down the hill. Companies in this camp proclaim “no one could have seen this coming” and are bemoaning the unfairness of the recession that has decimated their revenues. Costs have been cut, and product innovation is on hold. For these companies, their strategy, expressed with nervous pride under the flag of hope, is that the problem will just go away if ignored long enough, and the markets (with their past customers) will return to their pre-recession buying habits as if nothing happened. Once revenues return to the levels of yesteryear, resources for product innovation will be freed up, and product pipelines will be filled once more.

Important safety tip: Hope is a four-letter word.

The other camp is far more interesting. Companies in this camp are also facing significant revenue declines in their existing markets, but instead of reacting and retracting, they’re planning and preparing to move. This spring I’ve been helping companies who are seeing their billions-per-year revenues shrink by as much as thirty-five percent in less than twelve months. In this camp, no one is crying foul. Instead what they’re doing is looking for creative ways to strengthen and diversify their product portfolios. In a recessionary period, new monies for R&D are still very difficult to come by. A viable alternative to traditional product innovation is to examine benefits that existing products and technologies bring to current markets. By researching the question, “Who else needs the benefits of my product or technology?”, it is possible to discover new applications and channels for existing products that may not have been previously considered. Such channels can often represent entirely new product lifecycles for otherwise might have been a maturing product in a previously saturated market. It is a proactive strategy which companies in this camp are beginning to pursue aggressively. More often than not, the results are placing these companies in a far more competitive position for that day when the recession does finally end.

Unlike the crowded refugee camps on the high ground, this growing camp is making claims to large tracts of cheap, abandoned beachfront property for the next economic cycle. Ironically, the crowd on the hill will have poor reception in these new channels.

That gives me an idea. Maybe I can sell them my old rabbit ears?

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