OK, maybe not ALL Hollywood is cutting costs, and maybe it’s not the film industry but the TV production business, and maybe it’s not everyone but just one studio. But it’s a trend that bears watching, and perhaps emulating in other businesses, like yours.
The Los Angeles Times ran a story today about News Corp.’s Fox Television Studios’s successful efforts to reduce costs and risks connected with new scripted shows, driven by rising production costs, increasing fragmentation of audiences caused by the Internet and the economy. It’s pretty clear that competition from low cost reality shows was a factor as well, although no one said so. Still, a major move to lower costs in the notoriously spendthrift entertainment world is news, and Fox is demonstrating its intentions with lower pay for actors and writers, shorter production schedules and fewer costly digital effects, among other things.
What’s in this for the small business CEO? A wake-up call if you haven’t already had one. Even a successful business in a profitable industry needs to read the tea leaves and acknowledge the possibility that the old way of doing business is no longer safe. If economic swings are to continue to be short and severe, the potential damage can be too great to recover from with the resources your company typically has in reserve. You need to either (1) build more reserves – meaning less take-home pay for you, or (2) take more measured chances with new initiatives – a potential growth inhibitor but also a risk management device.
Or, you could actually do some serious long range planning. You know, the kind of planning you talk about doing but never quite have time for, or the plans you draft and then put on the shelf until the next planning session. Looking ahead is not an attempt to accurately predict the future; it’s an attempt to realistically assess the range of possibilities, from very good to very bad, and to have some contingency actions laid out for either extreme. That’s just good business, even if you have to redirect some management time to get it done. The alternative is either “it’s so good we can’t go wrong” or “Holy Moley! How did this crash happen so fast?” Both indicate potentially fatal short-sightedness.
As always I welcome your comments.