Saturday, December 24, 2011

Kodak - a lesson and a reminder

Eastman Kodak serves as a good case study and reminder for those of us in journalism:
  1. You can't sit on your laurels
  2. The innovation that could save your bacon might be right in your own shop - if you don't discount it
  3. "We needed to understand that we were not a family; we were a team."
All three can be found in a look by Reuters today at Kodak and its spinoff, Eastman Chemical. The venerable film and camera maker is struggling, now seventh in digital cameras and struggling against HP and other established players in the printer market. Spinoff Eastman Chemical, on the other hand, is thriving.

As to point one above, Kodak clearly stayed at the dance with film too long. Think about the difficulties, some tradition and some financial (large debt and capital investments to be paid down; sucking at the teat of the cash cow, etc.), that traditional news organizations have gone through.

Point two follows from point one - as the article notes, Kodak invented the digital camera. But there was no urgency to develop it - after all, why cannibalize the cash cow that was film (and chemicals).

Point three is from a former CEO of Eastman Chemical, Brian Ferguson, who talks about the difficulties Eastman had in adjusting to faster, more flexible times (and the need to lay people off) because of the "paternalism" of Kodak. You can scoff at it if you want; you can decry how the orientation of capital and labor has changed - or regressed, depending on your view. But I throw it in because it captures nicely the orientation I hope graduating students have and understand. Too many in my generation wanted to work for a "family," and the PR spin in many corporations still emphasizes that. But when push comes to shove, it's best to remember Ferguson's words because in the cold light of business, they ring more true.

I've used Kodak before as a parable of our times. Kodak's story is worth reviewing periodically for any journalist.

As we approach another new year, I want to share with you that 6-year-old speech that's also linked to above. I think it still has some good points.



Keynote Address
Florida Press Club Annual Meeting
Oct. 15, 2005, Orlando, Fla.
Doug Fisher, author Common Sense Journalism
and instructor University of South Carolina

    It's been a tough year. Journalism has been economically battered ... then legally battered in the Valerie Plame case ... and finally – literally – physically battered by Hurricanes Katrina and Rita.
    Yet you have persevered, practiced and honed your craft, true to the idea that people deserve to know what works – and what doesn't – in this world. It is not easy. It is not a job everyone can, or will, do, despite what some people would tell us.
    But you did it. And you are being honored tonight for excellence in that work, and you should all give yourselves a round of applause.
  
    I'm a nomad. I started in radio some 30 years ago when all-news was becoming hot and got a break working for one of the all-news pioneers – Westinghouse Broadcasting. I moved to a TV assignment and anchor desk for a while, and then got hired at the paper because an editor was willing to take a chance on me. It didn't hurt that we kept beating them down at City Hall.
    I ended up spending 18 years at the Associated Press, the kind of journalism that is exhausting, maddening – and thoroughly exhilarating: From covering presidents and what were then the super-secret stealth fighters, to writing about the guy in western Ohio who had a Titanic museum in his basement and watching thousands of elderly people jam the Rhode Island Statehouse because their money was frozen in decrepit credit unions.
    So I figured when you all invited me to speak, the press club decided, given the times, it might be good to see that it's possible to be a nomad journalist and still maintain a 300-pound, churlish figure.
    When I was leaving the AP bureau in Columbus, Ohio, to start my days as a correspondent, my boss put his arm around me and gave me my – as he put it – "AP management training."
    "Do good, don't do bad. And don't miss the big one." That was it – short and sweet. So we'll try to stick to a few short observations tonight about our current state of affairs in journalism and what we might do about it.

    My first piece of advice: Next time, instead of New Orleans, send the hurricane entries to Boise.
    [Eds note: The press club lost about half of its entries, those that had been sent to the Press Club of New Orleans for judging, as a result of Katrina.]

A "media" company threatened
    Let's start with the tale of a media company, one that's been an integral part of our business.
    In recent years, this company saw technology change. High-tech competitors from industries it hadn't had to think about before invaded its turf.
    The company is trying to reinvent itself – to pull away from the medium to which it is so closely tied. Its stock price is down almost a third in the past year, and large layoffs threaten to cut to the core of its business.
    I'm not going to tell you quite yet which media company I'm talking about, but all of us could probably find something in there that sounds a lot like where we work.

What is journalism worth?
    The one thing this company does know is what its product is worth, even if that worth is diminishing.
    Sadly, I'd suggest that's not the case with journalists. We know what our newspapers are worth, and our radio or TV stations. You can put a value on those presses and transmitters, on those cameras and subscription lists.
    But what is the journalism itself worth?
    If we look at it with the cold, hard eye we bring to our stories, we might have to admit our journalism is worth nothing, at least when it comes to money, which is the way business keeps score.
    Our journalism has gotten its value from being lumped together into a package that attracts eyeballs and thus attracts advertisers. We're like some giant 800-number dating service, only with a purpose we keep telling ourselves is nobler.
    For a journalist, advertisers exist for one reason – to turn time into money.
Our readers and viewers pay us in time. But if we want to be in business, we have to keep score with money. But if our only value comes from aggregation, that's a problem at a time when corporate behemoths like Viacom are splitting and when we see a rise in free papers and we continue to struggle with whether we can charge for news on the Web.
    After all, if the "package" your journalism comes in is free, what does that say about the value of the actual content?
    Without knowing what our journalism is worth, we end up valuing the package, not the content. And that makes us dependent on any change that suddenly makes that package less relevant.
    In short, it cheapens our journalism.
    Yet I rarely hear journalists ask this basic question. And there's hardly been a peep from the major journalism organizations. (True, they've been a little tied up lately trying to keep journalists out of jail and to preserve some semblance of freedom of information after September 11.)
    Some researchers – Stephen Lacy and Phillip Meyer are the most prominent – have been trying to figure out this question – can quality sell? So far, the answer is a tentative yes.
    But too much of today's journalism is just a commodity, one nugget not much different from the next. And as we learned in beginning economics, in a commodity business, you get large and you get cheap.
If you think about it, that sounds a lot like modern media.
    If we're going to argue that somehow quality journalism is too important to die – and if we expect anyone to pay attention to that argument – we need a crash program that gets to that core question: What is journalism worth?
    I challenge you tonight to leave here and start asking what your journalism really is worth.
    Because if we don't do that, if we let others do it for us, then we might as well admit journalism is nothing more than a social good to be supported by foundations, donations and government funding. In short (and with apologies to anyone from public radio or TV in the audience), the way we pay for most social goods in this country – by begging.

Rapid Relevance
    Part of modern business is understanding that your customers likely will be gone tomorrow if you don't meet their needs. There are simply too many alternatives.
    Who is that customer? As Pogo said: "We have met the enemy and it is us."
    That media company I talked about? The medium is film, the company is Kodak, and we, journalists, were among its largest customers. At every sporting event, newspaper and magazine photographers went through yards and yards of film.
And then things changed. The digital camera became relatively affordable. We didn't want to wait. We wanted those images now. And we could do away with all those messy chemicals and cost.
    One day, in the late 1990s, the AP decreed that if you were a newspaper and you wanted photos, you'd better get a digital receiver. That was enough to move even recalcitrant publishers. Some of Kodak's largest customers were history.
    OK, so you're Kodak. You still have that massive base of retail customers who not only have film cameras but have to get that film developed, something that also was a big part of Kodak's business.
    Only now Kodak had to deal with cameras that had names like Sony. Or Hewlett-Packard: A computer company? Selling cameras? (Does that sound familiar – Yahoo hiring war correspondents?) And that developing went to one-hour labs. (How many of us still send film for two-day processing – assuming we still own film camera?)
    So now one of Kodak's biggest competitors isn't another camera company but a retailer – the world's largest – Wal-Mart. And Wal-Mart often is using another company's equipment – Fuji's.
    But we – as journalists or as amateur photographers – didn't care about some venerable name, did we? We wanted rapid relevance  – when we wanted it, where we wanted it and how we wanted it.
    We're not the first. People are fond of saying the railroads suffered because they didn't realize they were in the transportation business. But the smartest people in transportation realized their business also was actually rapid relevance – getting it to the customer exactly when, where and how the customer wanted it.
    So if Kodak dies – and I really don't think it will because it is reinventing itself, but it's going to be gut-wrenching for many people – but if it does, we helped kill it. And if we don't care about a little $13 billion company, why should our readers care any more about a $3 billion Knight Ridder or New York Times or a $1 billion McClatchy – or any other media company, if we don't give them what they want?
    Consider a few things about those customers we covet, the 18- to 34-year-olds:
  • Jupiter Research recently reported a third of them increasingly rely on their portable media players for TV and instant news and information – and that was before the video iPod.
  • M-metrics says full-time students with jobs are significantly more likely to use mobile e-mail than anyone else.
  • Another recent survey found that 85 percent of college students surveyed had cell phones – and most of those could send and receive text messages or play games.
    Consider the widely reported Washington Post focus groups where people said they wanted the news – they just didn't want the newspaper. It was dirty, messy, a pain to deal with – in other words, just like all those photo chemicals we were so happy to banish from our newsrooms.
    And – even though Yahoo sponsored this study – consider a report from this week that should scare the heck out of you as a journalist: 81 percent of college students said search engines were the "best" source of information. Friends and family came next at 64 percent and then traditional media at 34 percent. (The numbers are more than 100 because the study took the top two choices as "best.)
    In other words, if we continue to value our journalism by the package it comes in, we have no idea what the core product – the thing our customers say they want – is worth, and we risk becoming obsolete.

"Dead Money" and "Bad Competitors"
    If we just cut profits and put the money back into the newsroom, all would be well. Right?
    It's become such a chorus that I'm reminded of something Gen. George Patton once said: "If everyone is thinking alike, then someone isn't thinking."
    Recently, some folks have pointed out it isn't that simple, not when most media companies now are creatures of the public stock markets.
When you get stockholders used to a certain profit margin, you can't just wake up one morning and say, I think we'll cut the profits so we can do better journalism – even if you wanted to.
    You'd be fired – the directors by law have to protect shareholders' interests. And you'd probably be sued.
    So if you don't innovate and find new products – or new ways of doing things – you basically must cut and cut to make margin. Finally, the market decides you've cut too much and you're no longer worth the price. It's called: "dead money."
    Eventually, your stock value falls enough that you can afford to buy back the shares and go private, or you become cheap enough that a takeover company dismembers you.
    That does allow some new players – some who might care deeply about the journalism – into the game. But it's gut wrenching, and there's no guarantee you won't be bought up by a financial blood-sucker. This is business survival of the fittest. Be ready for it.
    We also face what business-strategy expert Michael Porter calls the "bad competitor," one that doesn't play by "our" rules. It doesn't have to. Electronic news sites have much lower costs of entry. Even a new newspaper these days can buy press time or even new presses more cheaply than those of the established media.
    "Citizen journalism" sites – one of which I'm in the middle of trying to set up – are even doing it without "big-j" Journalists.

Bet on the jockey, not on the horse
    It sounds like a bleak picture. It doesn't need to be.
    Yes, there are going to be rough times.
    But if we, as journalists, are to have a hope of reclaiming the journalism we set out to do, we can't ignore – or worse yet, simply wring our hands and whine about – what's happening around us. We have to bet on the jockey, not the horse.
    Let me explain.
    I enjoy putting a few bucks down on the ponies. But you won't find me in most cases at thoroughbred tracks like Belmont or Churchill Downs. I'm more likely to be watching the harness races at Yonkers or the old Louisville Downs – or maybe Pompano Park.
    I've learned that I'm lousy at betting on horses. They are like technology – big, sleek, powerful – and more likely to come in out of the money. So while the payoff can be great, I'm not willing to tie my paycheck to Big Elmer.
    But I have learned I can bet the jockey.
    The jockey straddling half a ton of horseflesh is pretty much along for the ride. But a harness jockey has more control over that "technology," and you can find jockeys who tend to be more consistent winners. So I'm betting on the skill, the craft, not the technology.
    And that's what I'm hoping you'll do as journalists.
    You need to worry less about the technology and bet more on your craft. The medium does not matter as much as the journalism.
If you're a good storyteller – and that you're here tonight shows you are, whether in words, pictures or graphics – you already are honing the skills necessary in this multimedia, always-on world.
    A good storyteller already tries to create a multimedia event in the reader's mind. Sight, sound, smell – you're trying to transmit all of them.
And the smart writer has always worked with photographers. That writer knew a so-so story could make 1-A with a great photo -- and the photographer was another advocate for the story. And a good photographer always got a sense of the writer's story, knowing that if the pictures matched, they were likely to get the best play.
    That's what this multimedia world is all about – being aware of all the ways to tell a story and knowing enough to use those other resources when needed – and when appropriate.
    If you're a writer who wants the reader to "hear" a story, why wouldn't you want to help those readers who come to the story on the Web with a few short audio clips? If you want them to "see," why not video or a slide show?
    Fortunately, we rather quickly shrank from this vision of the new-age multimedia reporter as "Edward Scissorhands" – outfitted with multiple tools, a veritable Swiss Army knife of a journalist. Of course, as in the movie, things tended to turn out badly when it was tried, or even when we just thought about it much. We now seem to realize this "one-person band" idea isn't the best and this isn't going to be journalism on the cheap.
    But even if you're in a small newsroom without big resources, you can still expand your storytelling. There are so many simple, cheap tools out there that even if all you do is occasionally add sound to your print story shoveled onto the Web, you're giving people a reason to come to that Web site for your journalism.
    This isn't going to be painless. We're in the "Jell-O era" – the time when managers are tempted throw anything they can against the wall to see what sticks. That's natural. It also produces silly mandates, such as you have to get sound on every story or every story has to have some other multimedia element.
    Of course, not every story lends itself to sound, and you certainly don't want to spook an interview by whipping out a microphone at the wrong time. Just the same, I've seen too many "print" journalists and journalism students fall back on that excuse when it clearly wasn't likely. Do what we used to do in TV when we had to shoot film – do the interview in pencil and paper first, and then pull out the microphone and record. You'll probably get better, more thoughtful answers as a result.

Watch the people, not the rats
    Two final points: First, listen to the rat poison expert.
    On NPR the other day there was a fascinating interview with an author who recounted dinner with the rat poison specialist of Europe. Asked about his success, the poison specialist said: "I watch the people, not the rats."
    Rats eat the food people leave. So in France, he mixes in a little butterfat with the poison. In Germany, it's some pork fat. In Venice, I guess it's olive oil. As journalists, we also need to watch the people – not the rats.
    Part of the reason we're in this mess is because we haven't paid attention to changing desires, lifestyles and needs.
    We wrote too much for those we were covering – the rats. We expected people to read it the way we wanted them to. We heard, but we didn't really pay attention, when someone questioned whether we were really in "mass media" anymore.
    And too often we forgot that it doesn't hurt to mix a little butter – or some occasional sugar – into our stories.

In the 21st century, large is not in charge
    My final point comes from, Sumner Redstone, the power behind Viacom. When Redstone said this year that he was splitting the $23 billion colossus so that it could more nimbly respond to changes in the media world, he said this: "In the 21st century, large is no longer in charge."
    Those should be sweet words to journalists because, at its essence, journalism is small. We too often confuse journalism with the practice of putting out a newspaper or putting on a newscast. Those are team efforts.
    But the process of gathering news, of discovering and uncovering, of going places where the average person can't go – that, my friends, remains a one-on-one relationship between source and journalist. And that's not likely to change anytime soon.
    Small means opportunity. Yes, it was sad when the Baltimore Sun said it was closing its London and Beijing bureaus. But perhaps now jobs open for two, three or more freelancers.
    If we don't like the way things are going and think we can do it better ourselves, there's no better time. The costs to entry are low – you can put up a community news Web site for a few hundred dollars and a few hours' work. Remember, unlike at Kodak, we are the raw material.
    Will such "citizen journalism" make money? I don't know. That's what we're trying to find out in a South Carolina project.
    But don't make the same kind of arrogant mistakes we've made before in dismissing things out of hand, like this kind of thinking from a former SPJ president:
    "There is a difference between 'citizen journalism' and 'professional journalism,'" he wrote. "A professional journalist's No. 1 obligation is to be accurate. A citizen journalist's No. 1 obligation is to be interesting."
    He missed the point. The challenge for both these days is to be accurate and interesting.
    If we can do both – and be quick ... if we can figure out what we do is worth ... if we can bet on the jockey and not the horse ... and watch the people not the rats ... and if we remember that large is not in charge ...  I believe we as journalists can reclaim journalism's soul, no matter what the medium.
    There is no better time than now. There is no one else but us!
    And if you don't believe me on that, well at least trust me on this: Next year the hurricane entries go to Boise.

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