CHIEF EXECUTIVE OFFICER
THE INDUSTRY’S GAMBIT
by Rob Temple
In the recent Netflix series, ‘The Queen’s Gambit’, based on the 1983 American novel by the same name, the main character in the series, Beth Harmon, applies a specific chess move, The Queen’s Gambit, to ‘set the advantage’. She also displays a unique skill throughout the series that enables her to see the moves on the chessboard before they happen and in the variable scenarios that might unfold. That unique ability, so well depicted in the film, is a coveted skill that is certainly applicable to today’s challenges.
These challenges are significant in two key respects. First, we are seeing extraordinary consumer behavioral changes due to the pandemic and the long-tail economic impacts that various experts predict (IMF Finance & Development, June 2020, Vol. 57, Number 2). Second, we are seeing accelerating changes in terms of how content is being produced, distributed, consumed and monetized. These two disruptive dynamics raise questions for all of us, such as what are the key strategic approaches to consider in a post-pandemic world? It will clearly not be business as usual. New strategies are needed to lean into the challenges, manage risks, and turn them into opportunities. How do we apply these strategies to ‘set the advantage’ for each of us, for our business interests and for our industry?
The ability to ‘see forward’ is useful to all of us. To do so requires a firm grounding in the relevant industry or business, bold leadership and, at times, access to experienced, trusted advisors to bring an additional lens and expertise to the opportunities and challenges at hand. It also requires an objective review of the various parts of an industry’s ecosystem, and in some cases may require a willingness to take a more direct approach to managing the levers that create value and reduce risks.
After eighteen years working with ESPN and The Walt Disney Company, those strategic imperatives have been a hallmark of my career. When family or friends would invariably ask what I actually did for ESPN, many of them having no real understanding of our industry, I would tell them that my focus was on two simple objectives - to create value and reduce risk.
Whether it was building a high-functioning team to drive results with internal and external partners or designing the commercial rights architecture for an owned or rights holder aligned property, my ‘North Star’ was to keep those two, core strategic imperatives front of mind. It’s this approach to thinking through the comprehensive rights architecture, particularly commercial and media rights, that’s part of seeing forward - of seeing the chess board – and again understanding the key moves to predict what will drive success against variable challenges, both predicted and unexpected.
Of course, the secret ingredient to our success was to build solutions that worked for all parties. The main reason a strategy or an innovative solution sustains success for years is because its design focuses on driving positive outcomes for all parties. Otherwise, if it does not deliver for each party, then it will not stand the test of time. This is the reason that ESPN’s Emmy Award winning show, College Gameday, is still ‘Built by The Home Depot’ after eighteen years of sustained partnership. It is the reason that the College Football Playoff has been a commercial success since its launch. It is also the reason the Little League World Series has been with The Walt Disney Company since 1963 (second only to the Masters and CBS in terms of continued partnership between a property and media company) and was recently renewed through 2030. Simply put, designing the architecture of a deal that delivers for all parties and thus stands the test of time, is essential for any long-term venture – but even more so in today’s challenged business environment. Doing so can help ‘set the advantage’ for what is to come.
There are two current case studies that come to mind, each of which demonstrates this strategic approach – to see forward, to set the advantage and to exert more direct control on the levers of value creation and risk reduction. The first case study comes from a November 2020 FORTUNE article about a surprise winner in the hyper-competitive beverage industry. Titled, “Keurig Is A Machine”, this article focuses on a strategic pivot implemented by new Keurig Dr Pepper (KDP) CEO Bob Gamgort that is already showing tremendous success, particularly during the challenges of COVID-19. KDP’s ‘merger thesis’ from combining hot and cold beverage companies, embracing e-commerce, data collection from consumer, business and retails locations, along with other key strategic decisions has put KDP in a position to both lean into disruption and more directly control the levers affecting value and risks. Putting in place the right strategies, as part of their merger thesis, has allowed KDP’s CEO Bob Gamgort to not only see the chessboard, but more importantly to predict and execute the right moves to drive KDP’s success.
From the same FORTUNE article, Consumer Edge analyst Brett Cooper says that “KDP has done the best job of any beverage company in navigating the crisis” – evidenced no doubt by its overall market share jumping from 22.7% to 24%.
The extraordinary performance of Disney’s Direct-to-Consumer business is itself a case study in designing and executing a strategy with exceptional alacrity. And similar to KDP, their ability to see forward and more directly control and influence the levers of value creation, greatly benefitted The Walt Disney Company during the 2020 pandemic as consumer behaviors quickly changed and they embraced Disney’s Direct-to-Consumer content even more. Disney’s pre-pandemic efforts to control the levers of value creation (ie exiting the Netflix relationship) have been essential to their Direct-to-Consumer business success and they have reported increased consumer adoption as the pandemic dragged on throughout 2020.
All of us should consider a few questions in order to ‘see forward’. What is the strategic architecture of value creation for your organization’s future? What are the levers you could influence to drive that strategy, to create new value for your organization and to reduce risks? Who do you trust to help anticipate the moves on the chessboard, and what would it take for you to ‘set the advantage’?
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