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Value is Created In the Future, Not the Past

16 November, 2010

Summary:

Business value requires meeting future needs.

Businesses have to transition to remain valuable.

Old brands have no value.

Businesses have to develop and fulfill future scenarios, and forget about what made them successful in the past. 

Value comes from delivering in the future, not the past.

Do you know any antique collectors?  They scour for old things, considered rare because they are the remaining few out of a bygone era.  For some people, these old things represent something treasured about the past – perhaps a turn in technology or some aspect of society.  But there is no useful purpose to an antique.  You can’t use the chair as a chair, for fear you’ll break it. 

Mostly, old things are just that – old things. Once useful, but no longer.  They are remembrances. For most of us, seeing them in a museum once in a while is plenty often enough.  We don’t need a houseful of them – and would happily trade the old Schwynn bicycle from high-school days for an iPad.

So what’s the value of the Chicago Tribune, or the Los Angeles Times?  With the internet, tablets and other ereaders, mobile smartphones and laptops – why would anyone expect these newspapers to ever grow in value?  Yes, they were once valuable – when readers could be “current” with daily news, largely from a single source.  But now these newsapapers are practically obsolete.  Expensive to create, expensive to print, expensive to distribute.  And largely outdated by faster news outlets providing real time updates via the web, or television for those still not on-line. They are as valuable as a stack of 45 or 33 RPM records, or 8-track tapes (and if you don’t know what those are, ask your parents.)

As much as some of us, especially over 40, like the idea of newspapers and magazines – they really are obsolete.  When automobiles were first created many people who grew up riding horses said the auto would never be able to displace the horse.  Autos required petrol, where horses could feed anywhere.  Autos required roads, where horses could walk (or tow a cart) practically anywhere.  Mechanical autos broke down, where horses were reliable day after day.  And autos were expensive to purchase and use. To those raised with horses, the auto seemed interesting but unnecessary – and with drawbacks.  Yet, auto technology was clearly superior – offering better speed and longer distances, and the infrastructure was rapidly coming into place.  The horse was obsolete.  And this change made livery stables, saddle makers and blacksmiths obsolete as well.  It took only a few years.

Today, printed documents like newspapers and magazines are obsolete.  They have a purpose for travelers and commuters – but not for long.  Tablets are making even the travelers use of paper unnecessary.  With each of the 12million iPads sold (and who knows how many Kindles and other readers) another newspaper was unnecessary on the hotel room door.  So I was extremely heartened to read that “U.S. News [and World Report] is ending its print edition” on MediaLifeMagazine.com.

Some might nostalgically say this decision is the end of something grand.   Contrarily, this is the smart move by leadership to help the employees, customers and suppliers all continue pushing forward.  As a print product U.S. Newsreached its end of life.  As a digital product, U.S. News has a chance of becoming an important part of future journalism.  While some are concerned the future digital product is not about the same old news it used to report, the facts are that we don’t need another magazine just for news.  But the rankings and industry reports U.S. News has long created have the most value to readers (and therefore advertisers) and so the editors will be focusing on those areas.  Smart move.  Instead of doing what they always did, the editors are going to produce what the market wants.  U.S. News has a fighting chance of survival, and thriving, if it focuses on the marketplace and meeting needs.  It can expand with new products as it continues to learn what digital readers want, and advertisers will support. As an obsolete weekly magazine it didn’t have any value, but as a digital product it has a chance of being worth something.

I was shocked to read in Advertising Age “Meister Brau, Braniff and 148 other Trademarks to be Sold at Auction.”  Who would want to buy a trademark of an old brand?  It no longer has any value.  Brands and trademarks have value when they help you aspire toward something in the future.  A dead brand would have the cost not only of developing value — like Google in search or Android in phones has done; or the entire “i” line from Apple, or even Whole Foods or Prada.  But to resurrect Meister Brau, Lucky Whip or Handi-Wrap would mean first overcoming the old (worn out and failed) position, and then trying to put something new on top.  It’s even more expensive than starting from scratch with a brand that has no meaning – because you have to overcome the old meaning that clearly did not succeed.

Value is in the future.  Yes, rare artifacts are sometimes cherished, and their tangible ownership (think of historical pottery, or rare furniture) can cannote something of a bygone era that provides an emotional trigger.  These occasionally (like real items from the Titanic) can be collected and valuable.  But a brand?  Do you want a plastic Lucky Whip tub to help you recall bad 1960s deserts?  Or a cardboard Handi-Wrap box to remind you of grandma’s leftovers?  In business value is not about the past, it’s entirely about the future.

For businesses to create value they have to generate and fulfill scenarios about the future.  Nobody cares if you were good last year (and certainly not if you were good last decade – anybody want an Oldsmobile?)  They care about what you’re going to give them in the future.  And all business planning needs to be looking forward, not backward. And that’s why it’s a good thing that U.S. News is going all digital.  Maybe if the turnaround pros at Tribune Corporation understood this they could figure out how to grow revenues at Tribune or the Times again, and maybe get the company out of bankruptcy.  Because trying to save any business by looking at what it used to do is never going to work.


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Value is Created In the Future, Not the Past

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