PRIVATE THOUGHTS WITH PARIKHAL Steve Rivers – Music Biz In the past 10 or more years, John Parikhal of Joint Communications and I have worked together on numerous projects. We share the same birthday, but we are very different. John is far blunter than I am and he will be among the first to tell you that either you will agree with his comments and thoughts, or you will not. His thinking and strategies are based on careful analysis that is then presented in strong metaphors. It's designed to get your attention by surprising you and challenging habitual thinking. As a tool, it works best with those who want to grow and learn fast.
For those who would like to take longer to get up to speed, it can create stress. However, Joint Communications is usually contacted by radio stations and interests when there is a crisis, which means time is short and there are severe consequences for a failure to act immediately. For those who work with John over a long period of time, there is lots of middle ground. Bottom line: Parikhal makes you think!
Although I've benefited from using his research through the years, it was at least 20 years ago, when I first heard him speak at a seminar, that his ideas first intrigued me.: "Things are not as they always seem," he said. "For example, what business is McDonald's really in?" People in the audience automatically answered, "food," "hamburgers," and "family outings." John nodded that all were partially correct, but in his mind, they sold only one thing--time.
Why else would you go there? Certainly not for the quality of the food. They simply saved you "time". For some reason, that struck me like as both funny and true. Then he started talking about the future and some of the trends he was finding in his research. From there on, whenever possible I have used him as the "scout" to help me see what is over the horizon with my projects.
Now, many years later, he just said something recently at the NAB that is both accurate and blunt: "Why not take your company private? Everyone would be so much better off." I really understand what he means by that. Radio companies are driven to make their stock perform better, and they usually do that through budget cuts. This means no research, probably no promotional cash, and no outside advertising. Wow! What a concept. Strangle the goose who lays the golden eggs by slashing budgets and eliminating people. That looks good on a short-term spread sheets short-term...but then what, "Excel Boy"?
More people in the radio and records industries are out of work than ever before, and the estimate is that another 17% or so will become unemployed in these fields by 2012. Public radio companies will continue to find more ways to slash budgets because of pressure from new media competition and technologies outside of terrestrial broadcasting. Such as: availability of broadband in the car; Internet radio growing in strength; the video iPod (vPod); additional HD channels; and satellite radio continuing to gain critical mass. P2P gaming like XBox Live continues to thrive with young men and teens, while cell phones will become your on-demand, in-hand entertainment center for radio, TV, Internet, gaming--and will have mp3 players with enough storage capability to store full-length movies and God knows what else.
Mr. Parikhal has been kind enough to give us his thoughts of the mood of the industry at the NAB, and what he foresees in the next five years for radio.
RIVERS: Before we get started, what do you make of Clear Channel CEO Mark Mays wanting more channels in each market in an effort to compete with satellite radio's 150 channels per service? Did I miss something here, but isn't he the owner of the largest radio company in the whole frickin' world?
PARIKHAL: Mark and I haven't really discussed radio together much since I spent three days with his family and the then-"tiny" Clear Channel (just before they bought Jacor). It seems that he still believes bigger is better, in spite of a significant amount of economic evidence to the contrary. The real issue for Clear Channel is simple: You're the biggest, you've got lots of high-rated stations, and you're taking a serious stab at re-thinking commercials, so be a rate leader, not a rate cutter. That's one of the biggest issues in radio. And it hasn't changed since I started in radio 30 years ago. Back then, the "biggest" stations hardly ever lead on rate (with a few notable exceptions). So, help me out on this: How is getting bigger going to help? Is that what the listeners wants? For companies to get bigger? It's got to start with the listener.
RIVERS: Shifting gears a bit, what was the mood like this year at the NAB?
PARIKHAL: Better than the past few years. It felt like a group of people who had survived a huge storm and wanted to rebuild. That's the only ones who were there--the survivors. The biggest thing was the number of formally dressed people...more shirts and ties than I've seen in years. However, even though I heard some great stuff (Bill Figenshu warning radio they only had two years to get HD plans to manufacturers), I still got the feeling that everyone just wanted it to be like the old days. The "big dogs" are so used to being surrounded by people who won't disagree with them, they are going to be, as the old Chinese saying goes, "pecked to death by ducks."
RIVERS: What are your thoughts on today's radio, and what are the biggest problems facing radio in the next five years?
PARIKHAL: Radio's biggest long-term problem is simple and has very serious long-term consequences: It's not attracting talented people. It's driving them away. Business genius Peter Drucker has been right for 50 years about what happens to business. In his brilliant (and very practical) book "The Daily Drucker," he says, "the first sign of decline of an industry is loss of appeal to qualified, able and ambitious people". Unfortunately, in radio under its current model, people are a "cost center" instead of an asset--a short-term form of illogic that leads to mediocrity at best and unintentional sabotage at worst.
The other problem is an almost total lack of FORMAL innovation. Of course, it's no surprise because radio moved from hundreds of mom-and-pop businesses where very few people had any formal management or business skills to a few bigger businesses that were still run by moms-and-pops. As far as I can see, very few (and there are wonderful exceptions) decided to learn the new skills necessary for running large businesses. If they had, you wouldn't have such business errors as cutting marketing budgets based on cash flow rather than as part of a strategic plan.
To re-ask the obvious; why not go private instead of staying a public company? You eliminate the distracting Wall Street pressure and can then concentrate on really running your company. I'm hoping Emmis will be bold enough to do it. Look, it's 2005: The "new media world" has been born and we live in it. It just accelerated the apparent; a 100-year-old technology like terrestrial radio, has not seen any innovation, other than FM stereo broadcasting and the transistor radio.
RIVERS: Is radio any different from other industries when it comes adapting to changes in our environments? Do others move as slowly as we do when faced with new competitive technologies?
PARIKHAL: Most businesses have a life of approximately 30 years. The reason for that is because customers need change and the business won't change with their needs. Some last longer because of patents or barriers to entry. Because radio controls some barriers to entry (they own the right to broadcast), they have lasted longer. Look at the record companies; they had 20 years of evidence that their model wasn't working. First, they made money on back catalogue and the "replacement" of records/tapes by CDs. That obscured the fact that the new acts weren't working. Then, they had 10 years to prepare for digital...and did nothing. Now, they're blaming the customer--just like radio. The same thing happened to railroads, Kodak, and many more.
RIVERS: When did you first realize that the genie was out of the bottle, that broadcasters no longer controlled the transmitters?
PARIKHAL: There were two "light bulb moments"--when we did all the pre-launch programming research for XM last decade and when I heard my first Internet radio station about 10 years ago.
RIVERS: Between now and 2010, what do you see as true "radio killers"?
PARIKHAL: The biggest killer of all will be current management--unless they stop dancing to Wall Street's whip, institute formal training and recruitment, start surrounding themselves with smart people who challenge them, create cultures of FORMAL innovation, and begin to get serious about spot loads. Radio can control this. They can't control Steve Jobs, the Internet or any of the other so-called killers.
RIVERS: Is there any bit of wisdom you would care to pass on to the managers and programmers reading this article?
PARIKHAL: If you tell yourself you just need to hang on for a few more years or that there isn't anything else you can do...quit. You are hurting yourself and your company. If you're afraid to tell your boss you think they're wrong (even you can show evidence and a plan)...quit. There's no future in working for a company that has its head in the sand. Get new skills. Study what worked AND what didn't work when you thought it would in your market (for you and your competition). Write up a formal report about what you learned. Send it to your boss. If they ignore you...quit. If they encourage you and make changes based on your input...stick around.
RIVERS: One last thing John. What were the last two books you have read and the last DVD you viewed at 35,000 feet?
PARIKHAL: I read "The Daily Drucker" with a pen and a highlighter. Everyone in management should read it and learn from this genius. I also read "Blink" by Malcolm Gladwell. His smart insights into intuition and research (especially on A&R) are amazing--and he's not even in the business. As for the DVD, I watch Network twice a year to keep me honest. Made 30 years ago, it predicted exactly what would happen in media...and it's a fabulous movie to boot!
Thanks, John, for taking the time to gaze into our future. We all somehow must find the time each day to set aside quality "thinking time" for new ideas and concepts, and what you are calling "formal innovation," because the next five-year ride is really going to be a wild one for all media. Safe travels. |