Are you ready for some change?
How you can find resources now to shape the future you want
One of the less visible but perhaps most successful infrastructure projects backed by the CPB Future Funds was the information system known today as SABS, the Station Activities Benchmarking Survey. Though station staffers have to slog through a lot of data analysis and entry to keep the system going, advocates say it has great potential for stations’ strategic realignments. This commentary comes from Dale Emerson, a managing partner of Transformations Consulting Group.
When an idea for operational change comes up, what are the first objections raised by public television managers?
irst, they say there’s no money to invest in trying new ways of doing business. Second, they say their staffs can’t take on new initiatives because they’re stretched to the limit by their current work.
As consultants who work with many stations in the system, we know resources are in short supply, but that does not necessarily prevent a station from making significant changes. So where can stations find the money and staff?
We believe stations already have the necessary resources, which they can identify and reallocate using information from a tool called SABS — CPB’s Station Activities Benchmarking Survey.
SABS is not a cure-all for the many challenges facing public broadcasting, but we’ve found in our work with stations that it gives them a start at finding the wherewithal to implement changes.
Six years ago, Public Broadcasting Management Association and CPB developed the forerunner of SABS, the PBMA Benchmarking Survey. With key data systematically collected from stations, it’s already helping stations improve operational performance and release resources that can be redirected.
We recently conducted a SABS Institute for one of the best-performing stations in the system and together found the station could cut more than $500,000 from expenses and earn $350,000 from new revenue opportunities. Several other stations had similar findings by making the effort to fully explore their SABS reports.
By using SABS for fiscal reconnaissance, they could know their own finances better and judge their efficiency compared to stations with similar characteristics. With SABS data, similar stations shared knowledge and strategy to improve results. They set measurable targets and goals for improved performance.
They based decisions on sound data, defensible to all stakeholders, rather than relying on emotions, best guesses, assumptions about past experience and the interplay of power bases within the stations.
One station wanted to do more for education in its community but could never find the money to expand services. By examining SABS data from that station and similar ones, we found the station was spending twice the cohort average for both its program guides and its advertising and promotion departments. At the same time it was spending about half as much for education as like stations. Here was a way it could align spending with strategy.
Coming to an insight like this and reallocating resources requires hard work and changes in managers’ thinking.
First, station leaders need to adopt a longer-term operational perspective. They ordinarily make short-term decisions to balance the budget and hit targets each year. They therefore tend to think about investments in one-year cycles, instead of making longer-term investments that will show returns in future years. The inherent risk is often enough to protect the status quo. If any of the CPB/ McKinsey recommendations are to succeed, for instance, managers must incorporate the longer view in their thinking.
Second, stations should adopt a cost/benefit mindset—looking toward potential benefits of change rather than simply reacting against the associated costs.
In our work with SABS, for example, we see great opportunities in underwriting revenue for stations that look at the longer term and compare costs with benefits. Some stations may have relatively low underwriting revenue, as measured by their SABS “power ratios,” but their selling operation is relatively productive. They are doing a good job selling underwriting and still have significant upside potential in the market. However, short-term thinking discourages them from hiring more underwriting representatives. Every other department is competing for the money and pointing to more immediate gains.
We found, however, that two stations that invested adequate resources in underwriting were able to triple their net underwriting revenue in one year.
Here’s another example. Transformations spent the better part of two years analyzing the Advanced Digital Distribution Entity (ADDE) project involving 15 western stations. At the end of the project, one of the main reasons the stations did not move forward was a lack of investment capital. Nearly every station operated close to a break-even budget and had not set aside money to fund future projects. There were simply no resources available for most stations to pay for an investment that could have saved them millions of dollars of operational costs over the next decade.
Husbanding investment resources
After identifying resources from cost savings, we suggest that stations:
- set aside those savings in a restricted investment account until they have identified a suitable investment for the future. The object is to prevent funds from being absorbed back into ongoing operations.
- make sure they are paying into that investment account. For many stations, this means adopting new budgeting strategies and procedures so they can better track revenues and expenses.
- align their strategy with their investments. They can use their strategic plans as a guide. They must not allow enthusiasm for exciting stray ideas to divert resources to projects that don’t support their approved strategic plan.
- require a business plan and demonstrable return on investment for each station investment that would use funds from the account. The only way to manage the human tendency to lobby for these funds is to require discipline and rigorous business planning.
- use their board’s finance committee to review and approve any investments from the fund. Here is an opportunity to use the skills of board members and take the pressure off the general manager.
Public broadcasting has some enormous hurdles to clear during the next five years. Creating an investment pool is preparatory work that cannot be postponed any longer. Stations already have access to SABS, a valuable tool that is ready to help redirect resources and address the challenges that lie ahead.
Dale Emerson, a managing partner with Transformations Consulting, based in Lutz, Fla., has worked with nearly 100 public broadcasting stations over the past 10 years. He helps stations improve their performance and enhance their community service.
Web page posted Sept. 8, 2008
Copyright 2004 by Current Publishing Committee