I came across this while reading "The Omnivore's Dilemma" yesterday. Although the book was discussing why mega-store Whole Foods was damaging the organic industry, I realized that by changing one word, substituting radio for farmers, it was a perfect description of our present predicament. Here's the quote:

"Drawing on theories of Harvard Business School professor Michael Porter, Nation had distinguished between industrial and artisanal enterprises to demonstrates why attempts to blend the two modes seldom succeed. Industrial radio (farmers) is in the business of selling commodities, a business where the only viable competitive strategy is to be the least-cost producer. The classic way any industrial producer lowers the costs of his product is by substituting capital—new technologies and fossil fuel energy—for skilled labor and then stepping up production, exploiting the economies of scale to compensate for shrinking profit margins. In a commodity business a producer must sell every more cheaply and grow ever bigger or be crushed by a competitor who does.

Nation contrasts this industrial model with its polar opposite, based on selling something special rather than being the least-cost producer of a commodity. Stressing that “productivity and profits are two entirely different concepts,” Nation suggests that even a small producer can be profitable so long as he is selling an exceptional product and keeping his expenses down. Yet this artisanal model works only so long as it doesn’t attempt to imitate the industrial model in any respect. It must not try to replace skilled labor with capital, it must not grow for the sake of growth, it should not strive for uniformity in its products but rather make a virtue of variation and seasonality; it shouldn’t invest capital to reach national markets but rather should focus on local markets, relying on reputation and word of mouth rather than advertising.

The biggest problem with radio (alternative agriculture) today is that it seeks to incorporate bits and pieces of the industrial model and bits and pieces of the artisan model. This will not work. In the middle of the road, you get the worst of both worlds."

(The quote was actually used in a context of explain why Whole Foods, by contracting with industrial single-crop organic farms, and flying in out of season organic foods from Asia and South America, is failing in its mission by driving the cost and quality of “organic” food down and destroying the small, organic farms their scale won’t let them buy from!)

Good one Tdanner! Here's another:

"Super managers with impressive track records are being let go. Program directors are doubling up not only in their markets but in other cities. It’s folly. Sales people are being fired – how can that be at a time like this. On-air talent is being let go because their salaries are too high and thus, present a greater opportunity for financial belt-tightening."

The quote is from Inside Music Media by Jerry Del Colliano, one of my faves

Here's the whole bit,

http://insidemusicmedia.blogspot.com/2008/02/wall-street-pimped-out-consolidator s.html

so they ARE doing it wrong!!!!!

I knew it.

Very interesting --thanks!

Wonder if such a feat (doing both) could not be done with sub-divisions and some autonomy.

Say the mega-corp is at the top of the stack. They grab all the sticks they can, and run them commodity style. Shuffle radio - Chuck, Jack, etc...

Then, they spin off P&L enterprises, market by market to add local value. Each of these operates as it's own business, sending profit to the mega corp. Each of these gets a stick, based on some research about potential performance expectations, keeping the value-add in mind.

Then, add that value, giving that division autonomy, only accountable to their P&L statements to the parent corp. If they turn a profit, either that's greater than just automating the given stick, or it isn't.

Think of radio franchises, where there are some common elements, but only enough to tie the whole together. Some creative branding and such would clearly differentiate the two to those listeners where it actually matters.

The only question then is are there enough listeners, who would respond to those value adds (artisan style) for it to actually matter?

Edit: If dollars are gonna be the absolute metric, then manage risk and get the questions, R & D, and value add proposition worked out. Dollars will provide the answer region by region.

Either it makes sense or it does not. Having gone through that process, value-add stations can be bootstrapped, one by one, leveraging the return from the operating ones, and over time delivering more value, or not, to the shareholders at the very top.