Radio New Zealand announced last week that it was considering gutting its Concert Network, moving it from FM to AM, dismissing all its presenters, replacing it with an automated music stream and allocating the frequency to a more youth-orientated FM channel.
But I do have many years of experience sitting in boardrooms, asking hard questions and formulating corporate strategies. So I’ve taken a different approach from most and have looked at this opera-in-real-time as I would in the boardroom. Of course I have only the information available to a member of the listening public and I assume the board has considered a lot more.
As a director, I’ve found a tool called the Ansoff Matrix (see below) a useful way to guide our thinking:
Let’s assume that Radio NZ’s board has decided it’s no longer its preferred option to stick with what is usually the least risky of these four strategies, ‘market penetration,’ in existing markets, with existing products. We can accept that as the board’s problem definition.
So, what now?
In most organisations, you might decide to move into a new market or launch a new product. But it’s generally thought very high risk to try to do both at once.
Yet this seems to be exactly where Radio NZ is heading:
- They want to attract a new, younger audience – something they’ve tried previously without much success; and
- They’re proposing to launch a new product, which they hope will appeal to that market.
As a director, I’d want to understand two things before we started:
- What gap in the market are we proposing to fill, and
- What competitive advantage do we have with our proposed new product?
When an organisation expands into new markets or new businesses, one of the fundamental rules you normally follow is to keep your base business strong and look after your existing customer base, because another essential component of any board decision is to identify the risks. In other words, to ask, ‘What if:’ ‘What if this plan doesn’t work; what’s Plan B?’
As I understand it, this proposal not only destroys irreversibly one of Radio NZ’s core products – a ‘product’ for which it is New Zealand’s sole provider (in commercial terms, 100% market share). Imagine if Coca-Cola had destroyed the formula for its original product when it launched New Coke. When that failed, what could they have done?
In addition, this move alienates – is already alienating – possibly irretrievably one of its most loyal customer groups – many of whom are among RadioNZ’s strongest promoters.
If the new strategy doesn’t work, the board seems to have left itself nowhere to turn, and they can’t unwind what they’ve done. Game over?
But wait: there’s more. We learned on Friday that the government has announced it’s reviewing a proposal to merge the two main crown owned broadcasters, Radio NZ and TVNZ. During reviews like that by your shareholder, you don’t usually make strategic changes to your business: it makes the shareholder’s job of analysing the data almost impossible.
- If Radio NZ didn’t know this was coming, does this give cause for pause?
- If they did know it was coming, I’d expect some very pointed questions from the shareholder to the board about how they allowed it to proceed.
Just this morning in fact we heard the Responsible Minister, also our Prime Minister, saying publicly on radio that the government had indeed asked Radio NZ to pause while the government looked at other options. It went ahead anyway.
I do hope the board has been asking the types of question I’ve talked about above. If they have, I’d be even more interested in the answers – and data supporting them.
If they haven’t, today would be a very good day to start!
In the old BBC series ‘Yes, Prime Minister’, senior public servant Sir Humphrey would refer to a decision he considered flawed as ‘A bold decision, Prime Minister.’ This was always enough to strike terror into the PM and lead to an immediate reversal. On the face of it, I’d call Radio NZ’s current proposal ‘a very bold decision indeed.’