این فصل را با ذکر تمام تیترها (تاکید میکنم تمام تیترها) به زبان انگلیسی ساده و روان خلاصه کن 3 Strategic Concepts for the Media Industries

So far, this book has examined the industry context, the strategic environment, in hich media organisations operate. This chapter builds upon this basis to explore a ariety of different strategic approaches and tools that managers can use to respond to this. It deals primarily with concepts, with theoretically driven approaches that an be used to guide strategic activities in the media sector. Its goal is to build a bridge between the general discipline of strategic management and the specificities f the media industries and media organisations. On paper this sounds like a elatively straightforward exercise; in practice, however, it is complex, due to a umber of intrinsic aspects of the field of strategy.

First, there is the problem of breadth. The body of scholarship relating to matters of trategy is quite simply enormous. As Starbuck (1965) pointed out over 50 years
go – since when the field has continued to expand – potentially every single thing ver written about organisations can theoretically be described as concerning trategy.

Second, there is the problem of fragmentation or pluralism. Research in strategic anagement started in the 1960s. At this point the foci were business policy and
general management, and the primary emphasis in research and teaching was single ase studies (Hitt, 1997). Gradually, however, the themes of corporate strategy and firm performance rose to prominence, and prompted in part by the publication of an influential book by Schendel and Hofer (1979), the name of the field gradually hanged to strategic management, a shift that was reinforced with the publication of Porter’s equally influential book (1980) a year later.

In subsequent years the field remained manageable, with investigations centred on three issues in particular: the effects of the environment on strategy, the importance f the fit between strategy and the environment, and the effects of strategy on performance; with most of these involving large samples using secondary data and tatistical techniques (Hitt, 1997). Over this period the MBA qualification developed, and business policy or corporate strategy course was often the capstone lement in such programmes. At the time these benefited from the fact that the field
f strategy was still relatively coherent and rested on a widely accepted set of premises, assumptions, instruments and techniques. In subsequent decades, however, successive waves of research and critical reflection have generated a profusion of different concepts, approaches and schools. This has left the field icher, more mature and more subtle, but also more differentiated and complex.

The third problem concerns compartmentalism – or incommensurability as it is

xpressed in scholarly literature. The various concepts and theories contained ithin the field of strategy are not only diverse, but in many cases inconsistent, if
ot contradictory. This is problematic for researchers and managers: ‘accepting’ the legitimacy of one particular model can often imply recognising alternative pproaches as invalid (and also creates tremendous problems in terms of designing nd teaching strategy courses, in that providing a thorough overview of the field ca
ean teaching a series of mutually incompatible theories).

A fourth problem concerns a fundamental difficulty establishing the boundaries to the field. Indeed, one of the rare areas of agreement in the strategy field is that there is little consensus concerning exactly what strategy is. If Starbuck is correct in sserting that virtually everything ever written about an organisation can theoretically be classified as strategy literature, then where, for example, does the discipline of strategy stop and organisational theory start? If we accept the
ssertion made by some scholars that all strategy is about change, does rganisational change differ from strategic change, and if so, how? Translated into practical terms, which concepts and theories should be included in a book such as this, and how should they relate to each other?

There are, therefore, fundamental challenges in deciding what constitutes strategy, nd, further, which of the many tenets and tools in the field are most relevant to anagers in the media industries. One obvious selection criterion is to choose those most relevant to the field of media management. This is, however, problematic: media management is an emergent discipline and there is as yet no onsensus concerning where the boundaries of the field should be drawn. Plus, lthough managers and researchers use the collective term ‘the media and ntertainment industries’, in reality this comprises a broad range of sub-sectors, anging from academic journal publishing to radio, from pure play digital news providers to movie production, from streamed VOD services to public service broadcasters, and each of its many sub-sectors has an individual constellation of
nvironmental context, core technologies, regulatory requirements, and so on. Thus the relevance of strategic tools can vary greatly.

Dimensions of the strategy construct
One way to reduce the complexity in the field of strategy is by categorising or rganising the theories within it. A number of researchers have developed
proposals for organising the field of strategic theory (see, for example, Whittington, 1993; Rajagopalan and Spreitzer, 1996; Mintzberg et al., 2003). This book uses a ategorisation which has been adapted from those of Johnson (1987) and Chaffee (1985). This views strategic models as falling into three core schools which are ituated on a continuum moving from rationalist approaches on one side to interpretative approaches on the other, as depicted in Figure 3.1. It provides a
eans of reducing the complexity prevailing in the field, and accommodating the arious, divergent, key concepts. These approaches are described below.

Rationalist approaches
Just about all typologies of strategy literature start with some variant of this ategory. It includes analytic approaches to the task of strategy, and concepts which ssume firms and individuals behave in the main rationally (they can also be termed ‘positivist’ because of their reliance on analytical reasoning). Rational or classical pproaches draw on industrial organisation (IO) economics and have a
deterministic view of organisational behaviour. They focus on the strategic behaviour of firms, the structures of markets and their interactions.

Figure 3.1‘Organising’ strategic theory (adapted from Chaffee, 1985; Johnson, 1987)

Morgan (1986) uses the metaphor of ‘organisations as brains’ to describe
ationalist approaches: organisations are rational systems that operate as efficiently s possible with standardised processes, mechanistic designs and clear goals.
Chaffee (1985) describes such approaches as ‘linear’ to denote the methodical, directed, sequential action they entail. Rationalist approaches have also been termed the ‘external environment school’ because of their focus on the external factors that provide competitive and comparative advantages and limitations.

The strong influence of this school reflects the development of the discipline of anagement in general. In the 1960s formal business education grew dramatically
in the US, business strategy grew as a field of study, as did the strategic planning function in firms. The business environment in the US at that time was remarkably table and uncomplicated: US companies faced relatively little competition from broad and the economy was growing strongly (Fulmer, 2000). During this period

the foundation stones of rational approaches to strategy were laid. They were to be xtended and enhanced in future years and still provide the cornerstone of ndergraduate and MBA management courses today, as well as of the activities of anagement consultants (who have created some well-known models in the field, uch as the Boston Consulting Group’s growth/share matrix or Bain’s Structure- Conduct-Performance (SCP) paradigm).

According to the rationalist school, strategy is essentially a plan, formed through the methodical, sequential analysis of the environment and the evaluation of the xtent to which organisational resources can be utilised to take advantage of nvironmental opportunities or to address environmental threats (Minzberg et al., 1998). Some of the strongest and most enduring theoretical influences are Chandler’s work in the distinction between strategy and structure and Porter’s (1980, 1985) work on competitive strategy and competitive advantage. So,
ccording to Chandler (1969: 383), strategy is ‘the determination of the basic long- term goals and objectives of an enterprise, and the adoption of courses of action nd the allocation of resources necessary for carrying out these goals’. The nderlying assumption is that competitive forces in the marketplace determine the uccess and long-term viability of the firm.

Thus, the external environment is the starting place for strategy, and the uncertainty nd complexity present in the strategic environment can be reduced through omprehensive analysis. The models within the rational school focus on the content f strategy, on how plans should be formulated that provide a clear basis for trategic decision and action. The school is extensive, and some of the best-known oncepts include Porter’s Five-Forces Model (explained below), Porter’s Value
Chain (explained in Chapter 2), and the resource-based view (also discussed below).

A large proportion of existing research into strategy in the media works with ationalist approaches (see, for example, Croteau and Hoynes, 2001; Doyle, 2002b; Hesmondhalgh, 2002; Sanchez-Tabernero and Carvajal, 2002). In broad terms thes tudies tend to explore whether a variance (change in state) has occurred in the
edia sector and if so which causal factors may be responsible – for example, hether the number of joint ventures and alliances by media firms has increased nd if the search for specific strategically relevant resources can explain this.

This is understandable. For researchers whose primary scholarly interest concerns industry conditions and structures, regulatory and policy issues, or the impact of
edia content on media and society, an aggregate level of enquiry makes sense.
This research has provided fine-grained insights into shifts in the media landscape nd into the drivers of firm behaviour. However, it has meant that the processes of anagement within the media organisation and the complex interplay of

rganisational phenomena at play have received less attention.

Further, rationalist models lose validity in rapidly changing industries where tructural boundaries are breaking down. Well before convergence had really taken hold, Fulmer (2000), for example, discussed the challenges of applying Porter’s Five-Forces Model to organisations such as Sony or Microsoft since it was even then almost impossible to define which industries they are competing in. The core problem Fulmer identifies is that some of the most significant competitors straddle
any sectors and contain many different businesses, and are as a result too large nd complex to analyse using the strategic models to hand. This problem is even ore pertinent today, when even sector specialists are challenged by the breadth nd complexity of companies such as Alphabet or Amazon. As discussed in the previous chapter, these technology giants are a new competitive set for the media industry, and hard to categorise and therefore analyse. If we take Google (leaving side, for the purposes of simplicity, the businesses contained in its Alphabet division), it combines internet-related businesses including search (where it has a irtual monopoly position), advertising, cloud storage (where it is, at time of
riting, overshadowed by Amazon, which has a dominant market share of that arket), mobile operating systems (Android – and here it is competing with
Apple’s iOS), and video (YouTube – a dominant business globally).

Many classic approaches to strategy involve exploring the logical consequences of arious strategic options within a given set of circumstances and therefore do not dapt well to fast-changing environments (Morgan, 1986). Increasing dynamism nd complexity of the media industry’s environment, the fact that markets become
increasingly ‘fuzzy’ – that is, key aspects of the market structure, such as the probability of substitution, the number of firms in a market and barriers to entry, are difficult to identify, describe and define (Lacy and Simon, 1993) – mean that it is difficult to make the assumptions necessary to apply these models, although it
hould be noted that key architects of the school have disputed this conclusion (see, for example, Porter, 1996).

One aim of this book is to demonstrate the relevance of concepts from the adaptive nd interpretative schools to the media industries, and underline how these might omplement insights gained through the application of the rational frameworks. For this reason, subsequent chapters, in the main, focus on concepts and tools from these two schools (for a detailed breakdown see the ‘Conclusions’ to this chapter). In order to balance this out, two important models from the rational school are discussed below and applied to the media sector. A third model from this school, the value chain, is applied in Chapter 2.

Porter’s Five-Forces Model
Along with the Value Chain (also from Porter), this is probably the single best- known model from the ‘rational’ school. The base assumption is that above average performance requires determining an optimal strategic position through close nalysis of the dynamics of competitive rivalry in the industry concerned. The state
f competition depends on five competitive ‘forces’, and the collective strength of these determine the ultimate profit potential in, and attractiveness of, the industry (Porter, 1980). The forces are: the threat of entrants, buyer power, supplier power, the threat of substitutes, and rivalry among existing firms. Application of this framework will support an organisation in finding a product-market position that llows it to exercise bargaining power over suppliers and customers while xcluding new entrants and rivals from its product-market positions.

This model can supply valuable insights for organisations in stable contexts and learly defined sectors. This is seldom the case for the media industry today, but to nderstand its utility we can apply it to the case ofEncyclopaedia Britannica(this is explored in Chapter 4 as an example of an unsuccessful strategic response to technological change). Before the advent of the CD-Rom and the PC, rivalry in the
ulti-volume encyclopaedia sector was relatively benign (see Figure 3.2). High ntry and exit barriers brought stability, and theEncyclopaedia Britannicaenjoyed premium position with no obvious competitor. It had strong bargaining power ver both suppliers (authors were plentiful and there was no threat of forward
integration) and buyers (theEncyclopaedia Britannicahad a highly differentiated brand and switching costs were high – it was unlikely that customers would shift id-series to another encyclopaedia, or replaceEncyclopaedia Britannicawith
nother publication). The threat of new entrants was low (the capital requirements for creating a competing product were substantial, especially if the cost of the direct sales force was factored in) as was the threat of substitute products (the Encyclopaedia Britannicawas the only one of its kind).

Figure 3.2Five-Forces analysis ofEncyclopaedia Britannicaprint edition



However,Encyclopaedia Britannicafailed to fully understand how the CD-Rom, hich was introduced in the late 1980s, would transform competition within its ector. The threat of new entrants increased because it was far less expensive to produce encyclopaedias in CD-Rom format and customers were less fussy about the brands producing them. Distribution channels – retailers – were easy to access in comparison to the complexities of establishing a door-to-door sales force. The threat of substitutes also increased. Not only was this a relatively easy field to nter, but CD-Roms offered functions that books could not match – for example ound, video and search. And while supplier power remained low, the bargaining power of buyers increased dramatically – there were now many alternative products and low switching costs. The result was a far more competitive
nvironment, with more competitors, fast growth, low fixed costs, high exit barriers nd high strategic stakes, as shown in Figure 3.3.

Figure 3.3Five-Forces analysis ofEncyclopaedia Britannicapost-PC and CD- Rom



If we apply Porter’s Five-Forces Model to the newspaper industry and its current trategic threats, we see a similar picture. A newspaper publisher in a geographic egion where the industry is not yet too disrupted may be considering whether to cquire a competitor in order to increase market share and reduce costs. Analysis sing the Five-Forces Model would suggest that benefits would be short-lived because the newspaper sector is not attractive in the long term: the threat of new ntrants is high since digital technologies have both made entry into the news sector asier and transformed traditional barriers to entry (in the shape of expensive printing presses, delivery infrastructures, even print journalism expertise) into trategic hindrances; buyer power is increasing since consumers have access to
free online news that, thanks to social media, can be delivered in individually urated bundles to their mobile screens; and rivalry between existing firms who face high exit barriers, emotional and physical, is intense.

In his book on the future of the newspaper industry, Meyer (2004: 40–1) applies Porter’s theories to identify two basic strategic scenarios open to newspaper proprietors facing digital disruption. The first is what Porter (1985: 311–12) terms ‘harvest instead of defend’. This is a short-term strategy with the goal of
aximising returns now. It involves concentrating on segments where the threat of ubstitution is lowest, raising prices, cutting costs and postponing capital investments. The second strategy is to ‘enter the substitute industry’. This entails ccepting the new competitive situation, viewing the substitute (the internet) not as
threat but as an opportunity, and for newspapers to establish online editions and

eek to reap competitive advantages from their existing competencies and elationships with readers and advertisers.


TheDeseret News: Harvest the OldandEnter the Substitute Industry1
TheDeseret Newsfollowed an unusually clearly articulated strategy that combined both of Meyer’s scenarios, whereby it sought to harvest as much revenue as it could by rethinking and refocusing from the legacy print newspaper business, while at the same time building out an entirely new business that aimed to seize the new opportunities in digital media markets. (The organisational restructuring put in place to support these changes is discussed in the next chapter.)
Founded in 1850 in Salt Lake City and owned by the Church of Jesus Christ of Latter- Day Saints, theDeseret Newswas Utah’s oldest continually published newspaper. For 160 years it had followed the standard model for US regional newspapers – daily delivery of a print paper to doorsteps in return for a monthly subscription, and the inclusion of advertising display and classified advertising catering for the local community. When Clark Gilbert arrived in 2009 as new CEO of the newly formed Deseret Digital Media, industry disruption was well underway. Adrop in advertising revenue was accelerating: between 2008 and 2010 30 per cent of display advertising revenues and 70 per cent of classified advertising revenues had been lost. However, by 2013, as a result of the new strategy, the Pew Research Center reported that the Deseret Newswas one of only four US newspapers that had bucked the trend of industry decline and managed to boost revenues (Ingram, 2013).

Harvest the old business
When Gilbert took over, theDeseret Newswas a typical general-interest daily newspaper with articles on a wide range of local and national subjects. As advertising revenues continued to drop and as the internet continued to offer more and more generalist news, Gilbert felt this undifferentiated position no longer made sense.
Instead, it needed to maximise revenues by identifying the strongest competitive position possible and concentrate on that. This meant making the paper smaller and better,2 and repositioning it to serve a wider national audience but with a narrower range of content.3
Three questions guided the repositioning analysis: ‘what do we do that customers still want?’, ‘what can we still do better than anyone?’, ‘what should we stop doing?’ The conclusion reached was that the paper should shift from addressing Mormon readers in the region to address a larger national audience of all readers engaged in faith practices. Within this broad field, the paper then identified six core themes it would focus its content on: the family, faith in the community, excellence in education, values in the media, financial responsibility, and care for the poor. In addition, a new weekly national Sunday newspaper was launched which, it was hoped, would sell in lower volumes, but with higher advertising rates and higher margins.

These changes allowed Gilbert to increase returns from the company’s sunk investments in legacy assets such as its sales force, print journalists and printing presses and generate new revenues from national advertisers. Stringent cost cuts were also part of the harvest strategy: if revenues had fallen to 1950s levels, then cost structures needed to be cut back to 1950s levels also. Aseries of measures were introduced including replacing the leadership, lay offs and relocating the newspaper to a building occupied by the rest of the company. Together, these led to a reduction in overall costs of 42 per cent.



Resource-based view (RBV)
Porter’s Five-Forces Model argues that a firm should design strategies that allow it to exercise bargaining power over suppliers and customers while preventing new ntrants and rivals from entering its market. The ‘resource-based view’ (RBV) is a pproach to strategy that focuses on how companies can gain competitive advantag through the combination of resources it possesses, and in essence proposes that ompetitive advantage comes from owning unique, valuable, inimitable, non- ubstitutable capabilities that allow the firm to offer its customers better value than its competitors.

The resource-based view of strategy can be traced back to the late 1950s (Penrose, 1959), although it developed into a substantial and widely applied stream of esearch during the 1980s. It concentrates on the resources and capabilities a firm possesses and the competitive advantage they can or cannot create in a particular trategic environment (Wernerfelt, 1984; Prahalad and Hamel, 1990; Barney, 1991; Hitt et al., 2001). Firms can achieve sustained superior returns only when they possess resources other firms do not have (Peteraf, 1993; Miller and Shamsie, 1996). Strategically relevant resources need to meet the ‘VRIN’ criteria, that is, they need to be:

1. Valuable: a resource is only strategic if it is rent-generating and makes a substantial difference to a firm’s cost-base or provides a source of differentiation.
2. Rare: possession of the resource must be exceptional rather than standard. A standard resource is a threshold resource, a resource that is not strategic but necessary to compete in an industry.
3. Inimitable: it must be difficult for other firms in an industry to acquire or copy. This can be because rivals cannot understand how they were created or are unable to replicate this process. (Bowman and Collier, 2006)
4. Non-substitutable: there must be no freely available substitutes for this resource.

Resources that meet these criteria influence which markets a firm may enter and the levels of profit it may expect (Wernerfelt, 1984). Examples in the media industry include Pixar’s mastery of story-telling using digital animation technology or BuzzFeed’s mastery of data analytics to drive content creation and increase its hances of going viral on social media. Both resources all meet the RBV criteria: they are a valuable source of differentiation, are rare, have no substitutes and are hard for competitors to imitate.

The task of imitation is complicated, too, by the fact that a company’s strategically elevant capabilities are often acquired in path dependent ways and closely

interlinked. Disney’s market strength is underpinned by a combination of resources that stem in part from a capability in acquisitions. This brought Pixar, Marvel and Lucasfilm into the Disney fold. These acquisitions brought valuable media properties (the Marvel superhero universe, theStar Warsfranchise, and Pixar’s nimated movies), to which Disney applied its expertise in merchandising and licensing to increase revenues from them. These acquisitions also brought Disney a ange of cutting-edge technological capabilities (special effects from Industrial Light & Magic that was acquired as part of Lucasfilm, digital animation from Pixar) that allowed it to maintain the ‘Disney magic’ in an era of convergence.

It is noticeable how often technological competencies feature in the examples bove. Indeed, as convergence marches on, technology has moved to the heart of trategically significant core competencies. Competencies in data management and nalytics are increasingly core to these. In fact, data are becoming an increasingly important strategic asset for the media, and content strategies and business trategies are increasingly centred on gathering better data and using data more ffectively. However, data are also becoming more complicated. Leaving aside the issue of interpretation, there are basic challenges around gathering data, collating data from different platforms and linking these to demographic information.

Here, new organisations have an advantage since they can design their businesses round data analysis from the start. For example, data science lies at the heart of BuzzFeed’s business model and content creation. User data are captured, analysed nd manipulated in a perpetual loop of analysis, interpretation, experimentation, feedback and refinement. The goal is to identify which content characteristics drive haring and then maximising these to accelerate the rate at which BuzzFeed content preads on social networks.


Netflix’s Mastery of Data Analytics
Acapability in data analytics lies at the heart of Netflix’s business model and has made waves in the industry because it underpins a high-profile move into original content, that has resulted in hit series such asHouse of CardsandOrange is the New Black(Vanderbilt, 2013). Aunique aspect of Netflix’s approach is that teams of people have been trained to analyse and tag Netflix content with metadata to create a database of over 70 thousand data points – product attributes ranging from the obvious (plot, actors, genres, period, and so on) to the subjective (the moral status of characters or degree of plot resolution). These detailed tags are combined with machine-generated customer intelligence derived from analysis of viewing habits to develop personalised micro-genres, which resonate closely with members’ viewing preferences (Fritz, 2012). This allows Netflix to improve member loyalty and acquisition, since the better Netflix knows what its members want and can provide such content, the more likely it is to retain those subscribers. This finely-grained information on members’ preferences also serves as a bridge to content creation, by highlighting the genres, plot twists, actors, contexts, directors, etc. that members find most compelling or appealing. This type of data driven commissioning is a significant departure from the development and piloting process that has long been standard for the television industry (in a further departure from standard practice, Netflix also releases all episodes at once to allow binge viewing). Being able to create successful original content is strategically important for Netflix. Exclusive content strengthens the brand, drives up viewing hours, and allows it to differentiate itself in an increasingly competitive market.

Netflix’s data mastery is thus a strategic asset that fits the VRIN criteria. It is valuable (it underpins the creation of content that differentiates Netflix from competitors and attracts new subscribers, keeps those subscribers loyal, and generates additional revenues from the sales of that content in other markets and formats), rare (none of its competitors has comparable analytic database), non-substitutable (there are no freely-available substitutes for this on sale on the market), and inimitable – as of 2014 Netflix invested $150 million a year in developing its recommendation engine (Filloux, 2014).

A number of alternative categorisation systems have been proposed for classifying trategically-relevant resources that fit the VRIN criteria (see Chan-Olmsted, 2006, for discussion). Miller and Shamsie (1996) divide resources into two categories: property-based resources and knowledge-based resources, either of which can tand alone (discrete) or as part of a network of resources (systemic). Property- based resources are inimitable because they are protected by property rights.
Discrete property-based resources include legally protected ‘scarce and valuable inputs, facilities, locations, or patents’ (Miller and Shamsie, 1996: 524). The rights to broadcast key international sporting events such as the Olympic Games or the FIFA World Cup Soccer Championship qualify as examples. Systemic property- based resources include unique constellations of facilities, process and systems that re too complex for competitors to imitate, for example Sky Digital’s marketing infrastructure, which encompasses call centre, retail sales team and customer sales

team.

Knowledge-based resources – tacit, implicit know-how and skills – cannot be imitated because they are protected by knowledge barriers. A creative team’s etwork of freelance suppliers and a relationship built up over decades of ollaboration, and reinforced by market success, is an example of a discrete knowledge-based resource. Systemic knowledge-based resources, on the other hand, involve knowledge-based resources that are integrated throughout an rganisation, and would therefore also qualify as core competencies – for example,
Disney’s ability to leverage the value of one content source across the company’s any divisions.

The RBV research stream has been applied frequently to the media sector. Chan- Olmsted (2006)4 proposes that because competitive advantage in the media industry derives so heavily from unique properties (exclusive content) and expert knowledge (the intangible ‘know-how’ concerning audience appetites and creative
processes), the property/knowledge-based typology is valuable for classifying and nalysing media firms’ resources, and, by extension, understanding performance differences.

Resources can be created in four ways (Bowman and Collier, 2006). The first is through acquisition, which is a favoured route for legacy players to acquire digital esources. A good example is Axel Springer, which acquired over 190 companies between 2001 and 2015, includingBusiness Insider, and stakes in Politico and Blendle. Similarly, News Corp acquired the social agency Storyful in 2013 to xpand both its video and its social media capabilities (including social media dashboards, real-time discovery tools, feeds and analytics, all of which are both sed internally by News Corp and sold to other customers). The second is resource picking. To do this a firm must have a view of the future that is not shared by other firms, which in turn relies on skills in analysing the external environment and firm information (Makadok, 2001). BSkyB’s recognition in the 1980s of the role of killer content in driving uptake of pay-television offers, which led to early moves in acquiring exclusive rights to key sporting fixtures, is an example of resource picking. Third is internal development. This is a path-dependent process by which, ver the course of its unique history, a firm builds rare and valuable resources and an exploit these in unique ways. Disney’s library of animated films and characters,
hich provide a basis for content re-exploitation in many formats, is an example of path-dependent resource creation. The last method of acquiring resources is lliance activity. An industry example of this is Vice Media’s joint venture with HBO, which provides HBO with video content attractive to Gen Y audiences and Vice with access to prime-time television audiences.

While the RBV has become an enduring and valuable addition to strategic theory,

s with many of the frameworks that feature in this book, definitions can prove imprecise when actually operationalised in in-company research. Barney (1991: 101), for example, defines resources very broadly indeed as ‘all assets, apabilities, organisational processes, firm attributes, information, knowledge, etc. ontrolled by a firm that enable the firm to conceive of and implement strategies that improve its efficiency and effectiveness’, a categorisation that could stretch to include just about any aspect of an organisation. The RBV can also be difficult to
test empirically because idiosyncratic resources are hard to measure (Hitt, 1997). It has also been suggested that the approach is inappropriate for dynamic and volatile nvironments (D’Aveni, 1994; Eisenhardt and Martin, 2000) and fails to ccommodate the influence of firm evolution over time (Wang and Ahmed, 2007).
Finally, some criticise the lack of prescriptive guidelines arising from the theory (Bowman and Collier, 2006).

Core competencies and dynamic capabilities
The core competence is a somewhat more pragmatic ‘sister’ to the RBV and has chieved greater resonance with practising managers. A core competence is also imprecisely defined, but is generally understood as a distinctive organisational ttribute that creates sustainable competitive advantage and provides a platform for future growth – a ‘gateway to tomorrow’s opportunities’ (Prahalad and Hamel, 1994). A competency is understood as a ‘bundle’ of individual skills and technologies that is integrated and company-wide, is unique to the organisation oncerned, cannot be easily reproduced by competitors, delivers real and
eaningful customer benefit, is extendable, is sustainable and is appropriable (that is, the added value created by the competence is retained by the organisation – if this value accrues to the individual who possesses the competence, then the ompetence concerned is not ‘core’) (Prahalad and Hamel, 1990; Quinn, 1992; Kay, 1993).

The distinction between a strategic resource and a core competence is not easy to draw: competencies, capabilities and strategic resources all fall into resource- based theory. However, the critical distinction appears to lie in the fact that a apability or competence is a more complex phenomenon that is embedded in the
ider organisational system. It is home grown (and therefore hard to acquire), involves organisational routines that have been acquired over time, are embedded in its architecture and culture (Teece et al., 1997), and has a high knowledge omponent. Further, the roots of distinctive capabilities often extend back to the rganisation’s founding circumstances, emerging in the first place as a means by
hich an organisation can fulfil its primary mission. They are thus intrinsic to a ompany’s identity, deeply rooted in its culture, and contribute not only to ompetitiveness but also to the psychosocial ‘glue’ that creates identity, differentiation and cohesion (Schein, 1992), and they form part of an organisation’s personality (Drucker, 1994).


CNN’s Breaking News as a Core Competency
In approximately the first 15 years of its life (from 1980 to 1995), in the period before it was acquired by Time Warner and before it became part of the AOL Time Warner empire, CNN was worldwide leader in broadcast news on cable platforms. A core competence in covering and transmitting breaking news on a global basis, faster than any other news organisations at the time, contributed greatly to its leadership position. Analysis using the core competency framework allows the individual components, the routines embedded in CNN’s architecture, that together made up this competence, to be identified:
1. Organisational infrastructure. CNN was a news network, and also a geographically diffused network organisation, a response to the requirements of its newsgathering and broadcasting activities. The hub was in Atlanta, Georgia. There were production facilities in Georgia, Washington, London and Hong Kong, ten national and 21 international news bureaux. It had a 32.6 per cent stake in n-tv (Germany) and 50 per cent of TV-6 Moscow, was a subscriber to Worldwide Television News, Reuters TV and APTV, and a participant in news pools covering the Far East, Europe, North America and the Middle East.
2. Distribution infrastructure. CNN’s broadcast infrastructure was difficult for competitors to replicate because it had been created in a path-dependent way. Domestically, it was the first cable news service and therefore had locked-in ‘must carry’ agreements with most cable operating firms in the US. Internationally, it had blocked space on eight satellites that carried its signal. This gave it the largest and most flexible footprint of any broadcast service and by splitting up its signal in so many ways, CNN, uniquely, could offer both global advertising and regionally targeted advertising.
3. Newsgathering infrastructure. CNN achieved success partly through alliances. In addition to its relationships with cable operators, it had reciprocity arrangements with local stations all over the world to exchange its news coverage in return for significant local stories of global interest. This created a worldwide newsgathering system – albeit an unorthodox one for the industry at that time, which had a strong bias for home-grown news. CNN invested consistently in developing overseas newsgathering, by increasing both alliances and the number of international bureaux. It also invested in the technology for international newsgathering, thus making its own operations faster and easier. It pioneered the use of collapsible satellite dishes that could be taken on commercial aircraft – this allowed it to get its journalists on site and broadcasting far faster than competitors. It used a network of high-level relationships to further these activities, particularly through Ted Turner’s friendships with heads of state, which enabled CNN to extend its newsgathering network into parts of the world that were closed to other broadcasters (Rosenstiel, 1994). As a result of this newsgathering capacity, CNN becamede rigueurviewing for world leaders, opening whole new communications systems between governments (Whittemore, 1990).
4. 100 per cent control of airtime. Unlike its competitors, CNN did not depend on advertising for the bulk of its revenues (its main income was from cable providers). This meant it could suspend normal schedules at any point should a new story break. Its advertising-financed competitors could not, in the main, do

this since they would forfeit both revenues from, and credibility with, their advertising customers.
5. Real-time decision-making skills. The news journalists’ emphasis on speed infused the entire organisation. Even staff in non-broadcast areas became skilled at making fast decisions.
6. Track record of success/news coups. CNN’s track record of news coups helped create a powerful brand associated globally with immediacy and drama. This again was a product of its history and therefore difficult for competitors to copy. In 1986, when the Challenger Space Shuttle exploded, CNN was the only television channel to cover it live. It then sold its footage to broadcasters all over the word, creating an awareness of CNN, particularly in Europe, which would have been hard and expensive to achieve through marketing campaigns. As a result, a few months later CNN was available in over 150,000 households. In subsequent years, CNN’s consistent investment in its international newsgathering infrastructure meant it could repeatedly score against its competitors by being the only news service to broadcast exclusive live coverage of events such as the Tiananmen Square Massacre (1989), the US invasion of Panama (1989), the release of Nelson Mandela (1990) and the Gulf War bombing of Baghdad (1991).

CNN’s abilities with breaking news classify as a core competency. But illustrating the overlap between the two theories, this ‘skill bundle’ also conforms to the VRIN criteria used to identify a strategic resource according to the RBV. Thus CNN’s competency in breaking news was also rent-generating and a source of differentiation (valuable), comprised an exceptional combination of elements (rare), had no obvious alternatives (non-substitutable) and was challenging for competitors to replicate (inimitable). Applying Miller and Shamsie’s (1996) property-knowledge resource typology shows that this core competence combined property-based resources (the organisational and distribution infrastructures were property-based systemic resources, and 100 per cent control of airtime was a property-based discrete resource) and knowledge-based resources (the real-time decision-makingskills and the track-record of success/news coups were knowledge-based systemicresources, the newsgathering infrastructure was a property- and knowledge-based systemic resource).

Competencies, capabilities and resource-based analysis comprise a powerful lens for strategic analysis. While many classic tools from the rational school are difficult to apply in the current environment, this approach highlights how the trategic landscape is changing and pinpoints emerging strategic priorities.
Analysis of disrupters’ capabilities in terms of creating customer value, optimising ustomer experience, driving down costs, making organisations agile, and of course in shaping technology infrastructures and data analytics, allow organisations to ecognise one of the central truths in the new media ecosystem, the centrality of technology and the strategic necessity of technological competencies: technology is o longer a service function but intrinsic to growth, market share, and value
reation. Comparing new players’ competencies to an existing players’ competence profile can illuminate parts of media businesses that need ‘de-emphasising’ (to use

euphemism) in order to regain competitiveness. Thus in the past an important core apability for a book publisher was the ability to get books into bookshops and oticed by consumers. Entire sub-competencies were put in place to support this – large sales forces, point-of-sale promotion expertise, strong relationships with buyers at key retailers, and so on. Today, when much buying has moved online and Amazon has an extraordinary competence in getting a specific book into the hands
f a customer extremely quickly, and there are far fewer retail outlets, book publishers need to shift resources into building capabilities in search optimisation, building author fanbases, and social media marketing, as well as in developing new evenue streams.

Is long-term strategic planning still possible?

The tragedy for the vast majority of legacy media is they no longer have the luxury of long term thinking. … By contrast, most digital companies are built for the long term: Their management is asked to grow, conquer, secure market positions and then monetize. It can take years. (Filloux, 2014)

Legacy media organisations have found rationalist strategic approaches hard to pply in the industry’s dynamic and volatile environment. Rather than engage in traditional strategic planning, strategy work in many cases has become pportunistic and piecemeal, defined on the one hand by firefighting in response to pecific challenges and on the other by a large number of individual strategic
projects that only, if at all, coalesce into a coherent strategy in retrospect.5
The prevailing if unconscious assumption therefore seems to be that a fast-changing nvironment, where that change is driven in large part by tech advances, precludes long-term planning because this is contingent on close environmental analysis,
hich focuses on competitor behaviour within existing product categories, and on xisting sources of value creation, and both these categories are evolving. It is triking, however, that the so-called digital disrupters, a group which includes the o-called GAFA (Google, Apple, Facebook and Amazon), engage in very long-ter trategic planning, or at minimum strategic scenario building, indeed.

Amazon, as discussed in Chapter 2, has pursued a long-term adjacencies strategy. Apple’s strength, as one of the most highly valued companies in the world at the time of writing, reflects Steve Jobs’ long-term goal of shaping a post-PC world. The iPod and iPad were both elements in this plan and both were poorly nderstood when launched because they did not conform to prevailing
arket/product categories. Both products later established themselves as new ategories. Similarly, the iPhone was both a new product in the mobile phone arket (ultimately helping render existing categories obsolete), and a disrupter to
the PC market. This type of long-term strategic vision aimed at creating new sector is typical for the tech industry. As Mann (2015) observes, ‘innovation in tech is arely, if ever, short term’.

Adaptive approaches
A core distinction in strategy literature is between strategy content and strategy process (Chakravarthy and Doz, 1992; Pettigrew, 1992). Rationalist approaches focus on the content of strategy, crudely put, the contents of the strategic plan. They eek to find a strategic position that will lead to optimal performance under varying nvironmental conditions (Chakravarthy and Doz, 1992). They argue that the
growth and survival of organisations is influenced by the structure and dynamics of n industry and the quality of response to environmental factors, particularly the conomics of business cycles. Strategy involves maximising returns from resources nd establishing equilibrium within this context.

An alternative perspective is that equilibrium is rare. Change is endemic to rganisational environments and, echoing Schumpeter’s concept of ‘creative destruction’ (1934), is an ultimately positive force. Researchers sharing this iewpoint began to study the interplay between the structure and dynamics of an industry and the structures, strategies and processes inside organisations. They ecognised that the interrelationship between these elements needed to be explored, nd that an important aspect of strategic activity involved reconciling and integrating these external and internal elements. They also recognised that nvironmental change, particularly technological change, can erode the strategic alue of an attractive product-market position or of distinctive resources or apabilities.

Such considerations lie at the heart of the ‘adaptive’ school. This views strategy as ‘a process not a state’ (Pettigrew, 1992) and is concerned with ‘how effective trategies are shaped … validated and implemented effectively’ (Chakravarthy and Doz, 1992: 5) to ensure that organisations master complex and uncertain nvironments. An important emphasis is on adaptation and self-renewal: ‘strategies
ust change in keeping with both new opportunities and threats in its environment nd changes in … strategies and strategic intent’ (Rajagopalan and Spreizer, 1996).
Thus strategy is not primarily about planning. Rather, it is about trying to see the orld as it really is, and preparing the organisation so that it has a chance of a uccessful future (Fulmer, 2000), and the reality of strategy lies in strategic actions, ather than strategic statements (Burgelman, 2002).

So change (or adaptation) is intrinsic to strategy and, by extension, strategy is intimately involved with the organisation. A shift in the content of strategy must
ean shifts in the organisation – in structure, people and processes. Indeed, for Mintzberg and colleagues the field of strategy is subsumed within the broader one f strategic change, thus ‘to manage strategy is to manage change – to recognise
hen a shift of a strategic nature is possible, desirable, and necessary, and then to

ct – possibly putting in place mechanisms for continuous change’ (Mintzberg et al., 2003: 166).

If rationalist approaches see strategy as a plan, then adaptive ones see strategy as
n evolutionary process where change takes place progressively as firms undertake series of strategic readjustments in response to a changing environment. While the devising of the content of a strategy can be structured and formal, the actual process f strategy is gradual and messy, triggered by learning taking place in various parts
f the organisation. Strategy can sometimes be visible only in hindsight as a ‘pattern in a stream of decisions’, as Mintzberg (1987) famously described it.

Critically, strategy is not decided, then carried out, but emerges in the process of being implemented. Monitoring the environment, analysing developments and
aking changes are continuous and contiguous activities. The boundary between the rganisation and its environment is highly permeable, and the environment is a
ajor focus of attention in determining organisational action.

If the frameworks in the rational school seek to support organisations in their earch for a strategic position that will guarantee sustainable advantage, the
oncepts in this school seek to enable dynamic strategic positioning, for example in the design and redesign of the structures and processes by which an organisation an respond to changes in the environment.

Concepts particularly relevant to the media sector from this school are those oncerning responses to technological advance. For example, those that allow rganisations to distinguish between different types of technological change and nderstand their respective implications for different types of organisation, or odels that provide insight into which technology will dominate after a technology
transition, and explain why an ‘inferior’ technology may become an industry tandard, or concepts that help incumbent organisations resist inertia and establish ew ventures based on new technological platforms (these are discussed in Chapte 4).

A further distinction in this field is between incremental change and transformational change. The pace and velocity of environmental change are not onstant. Organisations need to be capable of both incremental and transformational hange (Tushman and Anderson, 1986). Transformational change itself has more than one incarnation, and can involve a quick dramatic revolution or renewal – a
ore gradual process. Transformational strategic change, such as is currently equired in many sectors of the media in response to the internet and digitalisation, is recognised as one of the most challenging for leaders and uncomfortable for those inside organisations, since it involves moving from the known to the nknown, and requires existing success formulas to be abandoned and new

ompetencies and attitudes to be developed (Mintzberg et al., 2003). These aspects f adaptive approaches to strategy are discussed in Chapter 7.


Strategic Adaptation at theNew York Times 6
Founded in 1851, theNew York Timesis one of the most highly respected news organisations in the world. It has been engaged in a two-decade-long journey of strategic adaptation in response to the emergence of the internet and world wide web and subsequent advances in digital technologies, whereby it has innovated repeatedly in response to both opportunities to enrich journalism and serve its audiences using new technologies and new threats in its environment arising from new products, services and competitive actors in the news field.
‘The Times’ is a ‘fast follower’ in terms of adapting to technology developments. It launched a website early in 1996, and from then on responded speedily to successive waves of innovation in the industry. It has had a continuous news desk since 2000, started to merge print and online in 2005,7 created an e-reader app in 2006, established an Interactive News Technology Team of developer-journalists in 2007, launched the ‘Times Extra’ site that aggregated coverage from other online news sources, opened its numerous APIs to developers,8 and opened its archives to external data journalists to develop visualisations of its data, and launched iPhone and iPod Touch apps in 2008. An iPad app came in 2010, and in the same year it launched TimesCast, a daily video service.

These projects were not all successful (as is the case with innovation projects in all organisations, legacy or start-up) but the early start and iterative, adaptive approach created competitive advantage through building digital expertise, know-how in digital markets and experience of the challenges associated with organisational transition.
Recent strategic adaptations have focused on strengthening its appeal to younger, digital and mobile audiences. The Upshot (launched 2014) is a politics and policy ‘explainer’ website that combines data and journalism to help readers ‘get to the essence of issues and understand them in a contextual and conversational way’.9 In 2014 a machine learning team was established that combined data engineers, business analysts and data visualisers to interpret online user data to generate insights into usage and ideas for new products. A Video Hub was launched in 2014 with content produced by an in-house team and external partners. Videos are also increasingly added to relevant articles on the website, and included as stand-alone pieces, sometimes functioning as a precursor to a subsequent print story.


Buzzfeed’s Pivots – Strategic Adaptation à La Silicon Valley10
Rapid strategic adaptation is standard practice for Silicon Valley, where new companies and their backers are permanently adapting business models and strategy in search of market success. In the Valley lingo, these shifts are known as ‘pivots’ and are seen as an essential mechanism to bring growth.
BuzzFeed, a pioneer in viral content and now a leading digital social news and entertainment company with a global and cross-platform footprint, is a prime exponent of the art of the pivot (Küng, 2015). While founder Jonah Peretti always had a broad strategic direction in mind, there were significant shifts in how the company moved in this direction.

Founded in 2006 by Jonah Peretti, once described as a ‘quintessential nerd genius’, BuzzFeed started life as an experimental ‘viral content skunkworks’ that sought to track viral memes and use data analysis techniques to identify which aspects of content made people want to send it on to friends. At this point, social media had not yet taken off (Facebook was in its infancy, and Twitter did not yet exist), and BuzzFeed was a side role for Peretti. He ran the firm in parallel to his ‘day job’ as co- founder and tech guru at Huffington Post (he only left to join BuzzFeed full-time when the Huffpo was sold to AOL).

BuzzFeed was initially a tech company. Its first product was the BuzzBot, an instant messaging client that analysed viral traffic to detect trending content and sold it to publishers to use on their sites. (Peretti was constrained at this point from working with content, since this would compete with his role at the Huffpo.)
The first pivot was a move from a technology business into an editorial business, initially through a website for ‘contagious’ content that collected some of the most popular links on the web, and then by hiring editorial staff to create original content explicitly for sharing. Content activities grew progressively in scope and professionalism and a distinct BuzzFeed editorial voice emerged – amusing (BuzzFeed described its mission as to ‘make life more interesting for the hundreds of millions bored at work’), optimised for social-mobile consumption, and, above all, designed to share (see Chapter 4 for an analysis of how data science underlies the content creation at BuzzFeed). New genres were developed – the listicle and the quiz
– and there was a preponderance of cats.

News represented the next pivot. BuzzFeed, in classic disrupter pattern, moved from the inane listicle to serious investigative journalism. In 2012, with the goal of making BuzzFeed the leading provider of news for the social media and mobile world, BuzzFeed started hiring a series of high-profile journalists from traditional and respected news organisations to build out its news content and make BuzzFeed into a credible news provider. The company now has foreign correspondents around the world and a growing number of journalists.

Video came next, which is now one of the major driving forces of the company. A BuzzFeed YouTube channel was launched in 2013, and in 2014 this division became

BuzzFeed Motion Pictures. This shifted from short-form web video to mid-length serialised video shorts distributed on social platforms including Facebook, YouTube and Snapchat. BuzzFeed is also currently looking at more linear televisual forms of content (much of the 2015 $200 million investment from NBCU was ear-marked to expand its video activities, and the company acquired an additional 250,000 square feet of space in Los Angeles).

There have been pivots too of a subtler nature.11 BuzzFeed started as a vertically integrated company, with a make your own content, build your own, full-stack vertical integration technology philosophy. It then moved to the network integrated model, where it published on many different platforms (including Snapchat, Facebook, Instagram and Pinterest) and simply focused on getting the data back to optimise content virality. The next stage was to push BuzzFeed into an intelligent network with autonomous nodes that share learning. BuzzFeed can now track, learn and optimise from the relationship between the different platforms and markets on and in which it operates – applying learnings from Instagram to Snapchat, from a post to a video, from a success in the UK to Australia.
BuzzFeed is still best understood as a tech company with a sophisticated layer of media content creation on top. Data science underlies content creation, tech industry processes shape both how the organisation is run and its product development processes. Its fast growth (and high valuation) rests in part on its ability to pivot – in terms of content strategy and in terms of the shape and structure of the organisation, as digital media markets evolve.

Interpretative approaches
Rationalist approaches to strategy in particular have been criticised for failing to ccommodate the diversity and disorder of organisational life – Mintzberg once famously claimed that 90 per cent of rational strategies are never implemented uccessfully – and also for failing to address the habits of mind that so often prevent strong players from making a bridge between one type of environment and nother.

The interpretative school of strategy focuses on exactly those elements that often prevent strategic plans being implemented, namely the deeper ‘hidden’ aspects of the organisation, such as mindset, belief systems, values, motivation and emotions. These elements are often underplayed or even ignored in strategic planning, partly because they are highly subjective and somewhat ethereal, and partly because they oncern subjective and unconscious phenomena that are difficult to access and interpret. Researchers in the field, however, argue that interpretative elements can both help and hinder strategic change, and that successful strategic initiatives have found a way to take these powerful but hard-to-manage forces into consideration.

The interpretative approach seeks to understand organisations from the perspective f those working in them with a focus on how meaning is constructed out of events nd phenomena, the influence this meaning has on the behaviour of the firm, and the utcomes of that behaviour. A basic assumption is that organisational members ctively create or enact the reality they inhabit (Weick, 1979), thus reality is nderstood as ‘socially constructed’.

The adaptive and interpretative schools are closely linked. If all strategic activity is ultimately about change, the adaptive school looks at the changes that need to be ade in routines, systems and technology. But congruent changes also need to be
ade in the organisation’s overt and covert cultural and social systems, in its interpretative phenomena, and these issues form the focal point of the interpretative chool.

A number of levers can be used to achieve strategic change. While rational pproaches tend to focus on tools such as education and communication, the interpretative school looks at how socio-cultural, symbolic, cognitive and political processes can be employed to speed processes of transformation and signal the types of changes required from organisation members. Thus, interpretative pproaches focus not only on how an organisation might be restructured (a focus of the adaptive school), but also on the meaning created by the events staged to publicise the change, by the choice of individuals to head up the new structure, by the individuals marginalised through these actions, and how these flag up the hanges that are required on an individual level (Johnson and Scholes, 1989).

Of all the schools outlined here, the interpretative school is the least cohesive – indeed, some would dispute whether it even constitutes a school. However, the oncepts in this approach have a common starting point, the ‘higher order’, or deeper psychological and often unconscious, aspects of organisations such as nderlying beliefs, mindset, mental models and motivation.

Interpretative approaches also consider how the emotions expressed by the change leader allow those in the organisation to frame and ‘make sense’ of the changes (Gioia and Chittipeddi, 1991). Academic understanding of the role of emotions in trategic change is still in its infancy, but the emotional capability of an
rganisation has been identified as important in processes of radical change in that it affects its ability to acknowledge, recognise, monitor, discriminate and attend to motions at both individual and collective levels (Huy, 1999).

Symbolic, cognitive and cultural elements are particularly important in media rganisations, partly because the individuals who choose to work in the sector are ften motivated to do so because of their own ‘higher order’ needs, and partly because of the tremendous influence that the media industries exert over our lives nd societies. And there is ample evidence of the strategic relevance of concepts from this school to the media industries. Culture is an important factor in stablished firms’ ability to respond to new technology.

Many observers have attributed the demise of the print newspaper to cultural igidity. Meyer (2004), for instance, found that the high levels of cash traditionally generated by the newspaper industry generated a complacent culture that slowed its bility to respond to the threat of new technology, and noted that the new content forms that seize the potential of new technologies are being created by non- journalists who have worked outside the journalism culture.

And in the entertainment sector, the past years have shown how mental models have influenced the music majors’ responses to the internet, and indeed to a raft of
arlier advances, including compact cassettes, VCRs, CDs, and so on. Similarly, the blockbuster strategy is a good example of the impact of cognitive assumptions n investment decisions. The movie industry steadfastly clings to the beliefs that big budgets mean big audiences and that consumers respond to saturation dvertising, even though the statistical correlation between stars and success in the film industry is disputed (Ravid, 1999).

Conclusions
A central tenet of this book is that strategy is contextual: different strategic onditions mandate different strategic approaches. A media organisation lucky nough to find itself in a relatively stable environment will benefit from the classic nalysis and plan-based approaches of the rational school. Those in fast-moving nd unpredictable contexts will need to adapt more dynamic approaches from the daptive and interpretative schools. Subsequent chapters of this book draw heavily n models from the adaptive and interpretative schools, and far less on rationalist pproaches. The latter have been applied extensively to the sector, as already
discussed, while the other two, appear far less frequently in research. Concepts from the adaptive school are to be found in Chapter 4 (on technology), Chapter 5 (on creativity and innovation), Chapter 7 (on organisation structure) and Chapter 8 (on leadership). Interpretative models feature in Chapter 6 (on culture, mindset and trategy), Chapter 5 (on creativity and innovation) and Chapter 8 (on leadership).