If like many firms in the western hemisphere, 50% or more of your employees are not expected back to your office before 1st January or will never return, how do you maintain high energy, high enthusiasm and intelligent use of humour in a virtual hiatus? You cannot do that alone staring into a backlit screen or on the phone.
My question is do you possess now or can you rapidly acquire the leadership skills, behaviours and experience to thrive in that environment? Are you investing exponentially in your own development or trying to make do?
It is easy to say you were “surprised” by an event or reaction to it. Witness the countless CEO’s referring to the pandemic as a “black swan” event when the originator of the metaphor, Nassim Nicholas Taleb, clearly states it is a “white swan” event (complies with its’ statistical properties).
It is harder to admit that you failed to prepare properly, you made a misjudgement or lacked the skills to put in place appropriate preventative or contingent actions.
If you are intellectually honest with yourself, there are very few “free passes” in business.
In periods of high ambiguity, keeping our promises is more important than making predictions. Where we cannot keep our promise for foreseen or unforeseen reasons, what we say and when is more important than the promise broken. Respect is hard earned, and easily gifted away.
Here is a contrarian idea that really shouldn’t be for sellers of businesses, at this time, when entering into serious discussions with a purchaser. How can you be absolutely sure that the individual you are negotiating with has the means and authority to pay you, as you mutually agree?
Preventative action: the seller and their adviser ask to see hard evidence or strong anecdotal information that their preferred bidder has the liquidity to meet their obligations BEFORE agreeing terms, and absolute clarity on who the “economic buyer(s)” of the business are including the funders. The individuals, who control the means, can sign off, approve, veto or will claim credit for the purchase of the business.
Contingent action: the seller terminates the sale agreement with the “economic buyer(s)” for a failure to complete and make payment, on the agreed dates.
In many small and mid-market sale situations, where the seller is using a debt facility to finance the purchase, the “economic buyer” of the business includes not just the buyer’s CEO and Board but the powerful voices on their bank’s home office Lending Committee.
Would you know, who that individual(s) are by name, what their decision-making process is under uncertainty and their ability to fulfil any agreement on YOUR preferred terms and timing? If you don’t, don’t complain when you are left waiting for extended approval.
A survey last week had the average adult during lockdown in the UK spending 6.5 hours per day watching some form of digital entertainment. Let’s put it another way over 45 hours per week “captive” in front of a screen. My simple question is “why”?
Now replace that finding with any other “live” sports and entertainment activity.
The competition for eyeballs, entertainment and commerce is monumental.
How we distribute and consume “live” entertainment, cannot rely on pre-Covid strategies or 4-months spent trying to formulate them. There is not time for that. Risk taking and immediate action is the priority.
It requires rights holders to:
Show huge and meaningful excitement is demonstrably on offer. “Must see content”.
Make it easily accessible, locations and at times, users want to consume but not oversimplify the entertainment (commodity).
Ensure the infrastructure doesn’t detract from the entertainment and enjoyment.
Understand who their ideal users are (key traits).
Possess the intellectual firepower to attract and retain a “captive audience”, before, during and after an event. Relevant offers of additional products, services and relationships that improve the users’ experience and quality of life.
Intelligently price their offering.
Continue to reinvest in innovation, people and high tech to create compelling new offerings.
Fans calling their friends on an iPhone pre-game, videoing each other or making a table booking, are already integrated. The challenge for commercial rights holders is how their own distribution becomes more integrated with their ideal sponsors, ideal fans and ideal digital audiences? You cannot achieve that if you don’t know, who they are or how to best reach them and vice versa.
Deals with huge broadcast networks (Disney, Fox, Sky, Canal+ or BT) bring phenomenal riches but at what cost? Most of those organisations know very little about, who is watching and their preferences. Sure, they can dazzle advertisers with viewing stats but they cannot unlike Apple, Facebook, Netflix or Amazon form a clear picture of the user. That is why those organisations are worth more than the nominal GDP of the State of Qatar and the networks aren’t.
Direct to user, or OTT content promises to circumvent that problem for rights holders but very quickly those same broadcasting giants, are going to create their own OTT platforms. They also have massive subscription numbers. Equally, it is not exclusively a DAZN world. We are though moving closer to a multi-faceted distribution of sports and entertainment content.
Secret Sauce
It is fundamentally about the transference of “critical data” (cutting away the “noise”) into “information of value” (to someone else), “information of value” into “intellectual knowledge” where and when it is combined effectively with existing institutional insights, and “intellectual knowledge” into “commercial wisdom” where it is applied to to key questions about how best to organise, distribute and consume content, to accomplish the rights holders’ strategic goals (sporting success, increased market share, profit, powerful brand, asset value etc.).
Data in isolation is not worth a lot, commercial wisdom is. That is the pot of gold at the end of the rainbow.
Offerings
It requires a range of free and fee offerings. Look at how a highly successful lifestyle business such as Ralph Lauren has been constructed and operates. From the rigs that sit in Ralph Lauren’s neighbouring office with the next season’s offerings, Lauren’s expert eye daily tweaking and seeking to tap into an emotional desire for a product we never thought we needed. Then Lauren’s awareness of the environment his business operates in today and will in the future, and the gamut of actions open to him to reinvent and profitably grow and expand in existing and new markets.
With the same eye of a word-class designer, rights holders must design their own “free” digital newsletters, fan giveaways, video content and other such free content as “hooks”. Then the creation of more intimate offerings, at higher price points that leads to unique “money cannot buy” experiences that uniquely the commercial rights holders (leagues, teams and players) can create for their most valued users. Making sure not to leave any gaps in the “range” of products and services that let the user run off to others competing for their attention and money.
Higher Tech, Higher Touch
Greater application of high tech where high touch is not required these days. Who needs to wait 20 minutes in a line for a ticket to the event? Why cannot you “guarantee” your preferred seat for a premium price? Why cannot the food and drinks be brought to me in a Just Eat world? Why in a contactless world cannot I put on my branded payment wristband, and pay on a mutually agreeable basis? Crucially, why cannot I have human “help at hand” — customer service expertise — where problems arise?
Go Global or Stay Local
Chasing global audiences is a long game that requires huge resources (NBA, UK’s Premier League or Spain’s La Liga) and highly committed local partners. In larger sports and entertainment markets (North America, W. Europe, Asia) there remains huge untapped opportunities in local communities (“localism”), with far lower acquisition costs, lead times and attendant risk exists.
Capital Hunting Yield
Where permitted to do so, private capital is increasingly embedded in sports leagues (Formula 1) , teams (European soccer and rugby, Indian cricket) and live events (Live Nation). Where it is not today to a huge extent but might reasonably be in this next decade, is in the portrayal of the players. Red Bird Capital’s One Team Partners LLP is a fascinating partnership with the NFL and MLB players, seeking to turbo charge the monetisation of their images. How long before players associations or unions in soccer, rugby, cricket and so on seek to exploit these opportunities?
Immediate Future
Post-Covid the issues largely remain the same about attracting and retaining local sponsors, commercial partners and fans, as they did 10 years ago, and will do for the next 10 years. What has changed is who has the resources and volition to spend assertively on sports and entertainment, how best to reach them and vice versa, and the use of high tech to distribute and consume content.
Professional gamblers ask of their fellow gamblers, what is your “edge”? Most last for a while until others cotton on.
As an insurance underwriter, I was trained to look for the first question people forget to ask: who wrote this risk? Well, other insurance underwriters and brokers did. Could these people be fooled? Let’s be polite and say they are all humans, who think with logic and act on emotional imperatives. There is a structural bias in “soft markets” — times of excessive supply of insurance capital — where their own paychecks, are highly dependent on maintaining the prior year’s income base, ensuring it outpaces this year’s overheads, and maintaining good relations with the “fishermen”, the brokers and agents. Risk and reward can, and is, skewed.
In any market you are looking to find opportunity in, today, what is the first question people forget to ask?
Unless a company is bankrupt, they have the money, they just don’t wish to make you THEIR priority, at this time. You overcome this resistance by making it unquestionably in their self-interest to give it to you.
That means both of you see a significant deterioration in your condition (tangible, intangible and peripheral x annualised period) by delaying a day longer or an outright refusal (a deal missed, reduced profit, lower revenues, higher acquisition costs, loss of trust, loss of credibility, poorer image, loss of key people, lower productivity and so on).
