Content: I was shocked when I heard that Conde Nast was shuttering Gourmet Magazine after 68 years of operation. Gourmet had 900,000 subscribers, with total readership of approximately six million. Yes, advertising revenue was off 30%, but clearly Gourmet was a brand and franchise that was destined to morph into an Internet beehive of content, social sharing of travel and food tips, community, and close affinity. And they were on their way with 8,000 Facebook friends, 22,000 followers for editor Ruth Reichl on Twittter, and a YouTube channel. Gourmet could have and should have become the upscale Grand Dame sister of Epicurious.com, Conde Nast's successful recipe site. Why didn't the company get this?

Because much of Conde Nast is stuck in media meltdown. 

It's all in a recent report from Forrester -- How To Rebuild The Media Industries. I've extracted the most important lessons for CEOs:

CEO Lesson One:  Media companies must move through three stages. Stage One:  digitization -- when their music, newspapers, books, magazines, TV shows begin to leave their traditional form and enter low-cost digital forms. The majority of media has passed through this stage. Stage Two:  media meltdown -- when companies resist digital distribution, unsuccessfully try to reproduce their old analog business models in a digital world, and finally willy nilly liquidate their old assets in the hopes that their profit margins will rebound. That's the stage where Conde Nast finds itself. And then finally Stage Three:  rebuild -- when CEOs figure out the new pricing models, understand that consumer convenience is the new imperative, let the market (not imperious editors and producers) decide what it will pay for and value, and move their companies forward.

CEO Lesson Two: Get your company through media meltdown as fast as possible. Rupert Murdoch is clearly not there yet -- he spent the week threatening to sue the BBC and Google for "...stealing content." You might be able to replicate your old model for a time, but, as the Forrester reports states, "...you do so under a sun that is gradually sinking on the horizon." The more time you spend in the meltdown stage, the fewer resources you'll have to work with during your recovery -- cf. Gourmet.

CEO Lesson Three:  Use your leadership to prod, push, cajole your company into Stage Three. No, it won't be easy and you could very well lose your job in the process -- note that Reed Elsevier's Ian Smith left the company this week after spending nine months on the job. Your executives may only know the old way. Your board may only know the old way. You see lower operating margins ahead. You don't have a clear pricing model. But why wait around while Jeff Bezos, Steve Jobs, and the Google guys feast on your carcass? Get out there and start innovating and moving at their speed. You have no choice.

I have spent many years helping technologists in large companies communicate with executive management. Chief Information Officers often speak a different language than the CEO and commonly see the world through a different lens. As a way of signaling to the CEO that a new era of business-focused technology has arrived I have been advocating that the CIO change the term Information Technology (IT) to Business Technology (BT). It's a not-too-subtle way for the CIO to say, "Hey, I'm no longer the insular geek you've come to know and love through the years -- my team and I are about making money, not just tech."

But CIOs tell me they need more. They want to know what is in the CEO's mind so they can tune their message more precisely to that frequency.

To gather clues, you could read the annual report letters from CEOs. But they don't offer a clear answer. You'll get a lot of flowery language about, "Helping our customers through a pretty tough year…” or “Develop safe, fuel-efficient, high-quality new products” or  corporate-wide re-invigoration...”

Yes it is true that seven themes recur -- numbers, organization, shareholder value, customers, innovation, brand, improving the world -- but that still feels too general and mushy...

So I'm about to let you in on a simple but powerful secret -- one they only reveal at Chief Executive School. CEOs think incessantly about only two things: 1) higher revenue, and 2) increasing profits. That's it. All of the rhetoric about productivity, or efficiency, or corporate responsibility can be directly linked to these two goals.

Why? Because in the long run, revenue and profit change governs the stock price. While in the short term, alluring strategic statements or charming executives can cause temporary share price spikes, you can't get sustainable valuation without driving the top and bottom line. In the 13 years I've spent running a public company, the intelligent investors I've worked with focus on these two metrics above all else.

So the next time you have to present to the CEO, remember to connect your tech project, or your new product idea, or your reorganization plan to revenue and profit increases. That's when the CEO's brain will light up and you'll be speaking his or her simple language. And don't tell them I let you in on the secret.

As a note, I presented these thoughts as a keynote at Forrester's Business Technology Leadership Forum held in Chicago on October 8th and 9th, 2009.

That said, there are many valuable lessons to be learned. I get inspiration and tips from fiction (Martin Sheen's President Bartlet on The West Wing), history (Churchill's writings on WW II) academics like Warren Bennis, and from watching other CEOs in action. Recently I've drawn some inspiration from John Chambers, the CEO at Cisco. Here's what I've learned:

1) "Grab the marker." John is a good listener, but he's even a better talker. He's never afraid to push his ideas and the Cisco strategy -- he'll get to the white board and draw until the message is clear. Until John, no speaker at a Forrester Forum had ever gotten off the podium and roamed the audience, touching people, connecting to people, and convincing people one on one. For my taste John can sometimes talk too much -- but most people love it.

2) "Vision + execution." John carries vision in one hand and day-to-day execution in the other -- and he can show you how they connect. Very unique. 

3) Curiosity. When he gets into the mode, John can be an attentive, genuine listener. He wants to absorb and he wants to honestly debate. Many CEOs become robotic, imperial talking heads -- but John cultivates learning and opening himself to new ideas.

4) Accepting and embracing the future. As most CEOs age, they lose their curiosity and adaptability. They refuse to accept or understand change -- cf. media and music executives. In contrast, John appears to be forever in motion -- breathing in new technologies and methods and incorporating them into his operation.

If I had to sum up "Chamber's Lesson" it would be this: Be tough, but be open. When the tech market melted in 2001-2003, John quickly downsized Cisco -- tough. But when the company grew fast in 2005-2008 he used social technologies to govern the company in a new way -- open. If you get the chance, spend some time with John. He'll sell Cisco hard, but if you watch closely you will get some inspiring leadership tips.

Any other lessons out there from CEOs you've worked for or with? I'd love to hear about them.

When CEOs doubt the importance of technology in the economy, I pull out a home grown aphorism: Technology is changing your customer, and your customer will change your company. In other words, whether you like it or not, demand will ultimately morph supply. And it's the job of the CEO to have a firm grasp of that dynamic.

So in the spirit of keeping CEOs up-to-date on the changing customer (like my 92 year old mother, shown above reading from a Kindle), here's a super-condensed summary of Forrester's recent survey of U.S. consumers. And I've also included short, pithy "What it means" comments. You can go here for a very short summary of the survey, or you can go to the New York Times story about the report.

1) The 2009 customer is unrecognizable from the 1999 customer. What it means (WIM) to you: If your business looks the same now as it did in 1999, you are risking irrelevancy.

2) Consumers in every age group are quickly moving from offline channels to online. WIM: If your marketing department is filled with people that still over-emphasize TV or magazine advertising rather than a more balanced approach to the customer, you're wasting your money. 

3) Americans spend 8 hours per week with old media (TV, newspapers) and 8 hours per week with new media (Internet). WIM: spending on your Web site and new media advertising should be comparable to your old media spend.

4) 25% of households have digital video recorders -- devices like Tivo that let TV watchers record shows and fast forward over ads. WIM: you're probably over-paying for TV ads.

5) 88% of people under the age of 40 are regular Internet users -- at home and at work. WIM: while all of your customers are changing, your future customers (young people) are changing even faster. Moving slowly now will inhibit market share and new customer acquisition over the next ten years.

6) Half of all Americans research products online before buying. WIM: your customers are ever smarter about what they purchase. All the more reason to treat them like partners and enlist them to help you design your next product.

7) Half of all U.S. adults play computer games. WIM: begin to use this medium, as IBM has done, as a training medium for your workforce.

Over the next ten years the move to digital will not abate -- it will intensify. As CEO, you must stay current with those outside revolutions and translate them into meaningful change within your company.

What do you think will be the most amazing change in the way that people use technology over the next 10 years? I'd love to get your thoughts.

[Cross-posted at BusinessWeek's Technology At Work blog.]

To give a taste, here's my summary, plus a few of my favorite quotes.

Lafley argues that because the CEO doesn't report to anyone within the enterprise, only he can truly advocate for customers and shareholders. As Peter Drucker, Lafley's guru, stated: "The CEO is the link between the Inside that is 'the organization' and the Outside of society, economy, technology, markets, and customers. Inside there are only costs. Results are only on the outside."

Lafley states it well: "The CEO can see opportunities that others don't see and, as the one person whose boss isn't another company employee, make the judgments and the tough calls others are unable to make."

The job of connecting the inside to the outside entails four activities:

1) Defining in clear terms the nature of the outside -- identifying the target customers.

2) Setting strategy. This means deciding what the company will do, and will not do.

3) Balancing short term expenditures with long-term goals. Ensuring the right trade-off.

4) Setting and reinforcing company values.

Lafley's concepts are highly germaine  -- especially given the aftermath of the Gateway Recession, when fundamental changes will be forthcoming in customers, market structures, elites, media, and marketing. This will not be a time for CEOs to hunker down and stay internally focused. Lafley's is a clarion call for the ultimate leader to get out of the office, shed old thinking, open themselves to the impending societal revolution,and advocate for new ways of operating. As Drucker states: "One cannot manage change. One can only be ahead of it. In a period of upheavals, such as the one we are living in, change is the norm."

1) User interface. Despite the annoyance of the glass keyboard, the iPhone interface is faster, more intuitive, more flexible, and more versatile. You can do more, with more content, less instruction, and faster speed.

2) Applications. iPhone has a massive head start in the battle for applications. It's possible that your company already has an iPhone application in the market -- servicing your customers. Don't you wish you could see it? And there may already be applications available that will make your job easier -- I predict that corporate dashboards for CEOs will be a small but influential segment of the iPhone apps portfolio. In some markets, it's changing how customers connect to companies -- here's an example around mobile banking. The application revolution has begun -- and it's not on BlackBerry.

3) iPhone will soon be available from more cell services providers -- starting first in Europe. Once the device breaks out of its AT&T cage, the multiplier effect will kick in -- and the flood waters will rise fast.

Now there's a big "if" in all of this. Apple has been hostile to large corporate environments for years. Steve Jobs has famously called your CIO an "orifice" as in, "...we've never been good at going through the orifices to get to end users." Every time the company tries to leave the consumer and go enterprise, it goes from being cool to being incompetent. The company hates to take direction from anyone  -- especially from large company CIOs.

But Apple may have to bend its corporate culture to grab the enterprise iPhone business -- the opportunity of moving iPhones into large companies will be too big and too lucrative to ignore. Once your company supports full Outlook replication to iPhones, many of your employees will dump their Blackberries -- and your CIO will begin looking at how she can build some game-changing corporate applications for the Apple device.

After many years of watching tech revolutions unfold, I know that winners control two factors: 1) they effect a quantum jump in man/machine interface, and 2) they win massive applications support. Check and check with the iPhone. If Apple consents to change its strategy, an iPhone will be coming your way.

What should the CEO take away from this?

1) The report showed renewed focus on return on investment measures for marketing -- this is a healthy development that will help you post-recession. ROI analysis will eliminate, or at least minimize future marketing nonsense.

2) Social marketing is here to stay. It's time for you to understand it.

3) Budget cuts are forcing marketing to use more internal IT/BT resources. This is driving long-delayed collaboration between marketing and IT/BT -- critical to your future brand building. As I've said for years: When you give the Web site to IT/BT, they will screw up the customer. If you give it to the marketers, they will screw up the technology. There's only one path forward -- the two groups have to work together. Use some political capital and grease these skids.

4) Here's a nit -- but something you should bring up with your CMO. The report revealed that marketing was cutting deeply in online display ads (those ads you see in Web sites) -- too deeply in Forrester's opinion. We believe that this could endanger sales and brands as the economy recovers. Make sure that your marketing team is being judicious, not self-immolating.

When the economic clouds clear, many prevailing elites will have been swept away, organizational structures will have fallen, and many who were formerly in control will have lost power. Those who can speak digital will thrive, and those who cannot will finally get the message and retire.

The signs are everywhere. Post-Gateway players: Obama; Amazon; Zappos; Jet Blue; Twitter; Facebook; blogs; Craigslist; broadband; Wikipedia; DVRs and iTunes. Pre-Gateway: GM; The New York Times; the Republican party; shopping malls; print advertising; excessive executive pay; TV networks; boards of directors full of aging plutocrats; and the TV-centered Washington chattering classes. Like the US Civil War, which separated an agrarian society from an industrialized economy, or World War I — a death knell for many European elites — the Gateway Recession is exposing fundamental weaknesses in long-standing political, cultural, and economic institutions.

Here are the new challenges and rules that await CEOs on the other side of that door:

1) Digital will be mandatory, not a choice. Pre-digital CEOs could get away with IT/BT (information technology/business technology) ignorance. No longer. Tech will be key to how you sell, connect to customers, become more efficient, and lower costs. Why is Amazon so powerful? Because it combines two old-world attributes, great customer service, and superb execution with a critical post-Gateway attribute — digital. In the new world, CEOs of all stripes will have to have it all, in the mode of Amazon.

2) Brand loyalty will be limited. For five years, Forrester has been tracking the precipitous decline in brand loyalty — particularly for complex products like cars. Brands will afford only limited protection for your company in the new world — because choice has been radically expanded. All brands are subject to consumer testing, discussion, disclosure, and transparency. You can no longer own your customer — your customer will own you.

3) Customers will look very unfamiliar, as shown in the Forrester report, The State Of Consumers And Technology: Benchmark 2008. They will learn, play, work, and live differently than you or the customers you studied in business school. In the US, 18- to 27-year-olds spend 30% less time reading magazines and newspapers than 28- to 40-year-olds. They spend twice as much time playing digital games, 53% more time on cell phones, and twice the amount of time on social sites like Facebook. You may not like it, and you may not understand it, but your customer is being changed by technology — and your customer will change your company.

4) The war for people will be intense. It’s a counterintuitive thought at this moment of high worldwide unemployment, but the post-Gateway era will be distinguished by a pitched battle for good people. Basic demographics are at work — in the next eight years 35% of nurses and 40% of federal government workers will retire in the US. Already-low fertility rates in Europe will continue to fall. Yes, the baby boomers’ kids will fill the gap but not for another 20 years. CEOs will fight for people on three fronts: 1) Attracting and winning the best and the brightest takes world-class offices and factories, the best internal technology, and truly compelling corporate purpose and values; 2) retaining the best workers takes a great corporate strategy, excellent leadership, and inspiring management; and finally 3) getting productivity from the limited workforce you have — again, this loops back to nailing the technology imperative.

5) You will sell differently. You used to advertise in the local newspaper, BusinessWeek, CNN, Le Monde, or The Wall Street Journal. Many of these channels won’t survive in the new era — because the new consumer won’t pick them up or tune them in. You will have to reach customers in new ways — blogs, Facebook, Google, Twitter, and whatever supersedes them.

6) The way you innovated is dead. The era of black-box innovation has passed. Look to P&G for the new model. CEO A.G. Lafley searches for product ideas all over the world — competitors, customers, China, and India — then partners to bring the new innovation to market. The biggest change will be the involvement of customers in building your products — a concept that I call “social sigma” (with apologies to Six Sigma). The idea is that the customer, through social technologies, will spec the new product — that the customer will be an active participant in broad aspects of product development.
The forces of the recession will trigger many of these changes. But the end of the Gateway Recession will also usher in a new technology era. Tech and the Internet have been around for decades, so why is their impact felt post-recession? Because while technology changes quickly, people don’t. It has taken 15 years of cultural fermentation, generational transitions, and habit breaking for society to catch up to what technology can do. Pre-Gateway, society wasn’t ready. Post-Gateway, technology and human behavior will align to create a powerful brew.

Elites will die, but new ones will take their place. The Sulzbergers will fade from view, but the Brins and the Bezos' will fill the void. New companies (and therefore new elites) will aggregate around three areas: 1) new healthcare; 2) new forms of energy; and 3) technology. As CEO, you’ll have to drop your connections to the dying elites and figure out how to form connections with the emerging ones.

I'd love to get your thoughts on this topic. And as a note, this post appeared first in the Huffington Post:   http://www.huffingtonpost.com/george-f-colony/beyond-the-gateway-recess_b_205458.html

Content:  At the Forrester IT Forum in Las Vegas two weeks ago, I held a private dinner for 15 Chief Information Officers. We worked on the question: "How do you raise the tech IQ of your CEO?" 

I've always thought a CEO who knew tech would be welcomed by the CIO. But most of the CIOs at my dinner didn't agree. Here are some comments:

1) "The CEO should trust IT to get it right."

2) "CEOs are about making the company successful -- not on the minutiae of tech."

3) "The CEO is about results, not tech."

Now I had a great time at the dinner, but I must respectfully disagree with my guests. The CEO doesn't have to program, but he/she cannot be ignorant when it comes to IT/business technology. I'm a big believer that the CEO must connect the outside world to the company (see A.G. Lafley's great article in HBR -- What Only the CEO Can Do -- you can get a short summary and the ability to download it here). There is much change being driven by tech in the outside world that the CEO must understand -- and translate for the inside. As I like to say: Tech is changing your customers, and your customers will change your company. It's a dynamic that CEOs must wade into up to their hips -- it can't be left to marketing or to IT/BT. Only the CEO has the wide view to make the connections between external tech change and the company, and the power to ensure that the company responds in a way that benefits its customers.

1. Allmans
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