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Learn from Outsiders What Is Best for Your Business
Knowing what is about to evolve in our industry and how quickly that new technology or industry standard will become important is a major key to your continued success in pro audio. Recent technologies, such as DVD, 5.1 Music Mixing, and Internet streaming audio are good examples of new opportunities. Those of you who understand this reality will “own” the new available audio opportunities and niches now in development because you identified the opportunity and were the leader in your market to offer the new service. Others will be forced to follow and attempt to catch up. Dolby's penetration first in noise reduction and now in HDTV and DVD picture audio standards is, to me, a classic example of how to lead our industry successfully and profitably.
Understanding the economic concept of “value migration” (attributed to the eminent economist Adrian J. Slywotzky) will give you an advantage over your competitors. Basically, he suggests that this concept will help you understand where value resides in your industry today and where it will move tomorrow. Keeping several steps ahead of your competition depends on guessing correctly what your clients will want in the future, how to get there ahead of your competition, and who your direct competitors are most likely to be. It means remaining flexible enough to diversify from your core business to meet on demand the needs of those clients who require the services of your professional audio niche. This is called “superior business design” by the leading marketing consultants who rightfully charge big fees to tell you how to make your business more successful and profitable.
Simply stated, superior business design is determining what services your particular audio expertise offers to satisfy your clients’ most important business priorities. How you define and differentiate those offerings, how much you charge, and how you promote those services that you provide better than others in your marketplace usually determines who becomes the “lead dog.”
We must change with the clients we serve. To do that, we must be ahead of the wave. We must study the trends and try to find the correct way to diversify our talents to meet the needs of our clients. To do this, we should look to our professional associations, such as APRS, SPARS, MPGA, AES, and also to the film and video guilds. By sharing our specialized knowledge as a multivoiced unit through professional organizations, we are able to more powerfully communicate what we think is the best way to improve each of our specialties.
To survive and prosper as leading facilities, we should examine the proven business strategies of major corporations in other industries, and remold their shapes to apply to our segment of pro audio. In my opinion, it is only in this manner that we will be able to excel and grow more successfully than our unknowing competitors—who are not yet aware of this business strategy.
Again, the key strategy is targeting your present and potential clients, recognizing what they think is important from minute to minute (which differentiates your business from your competition), and knowing how much they are willing to pay for these services that you will perform with the equipment that they find acceptable. Also, determine what aspects of service they do not think are important and which they are willing to give up for a corresponding cost saving to their project. Both of these research channels are important to the success of your business.
Strategic planning is a concept new to many in pro audio, but an integral part of major corporate policy. Simply stated, it is your educated guesses about competitive positioning and what you think the future markets will be for your creative audio services. This is based on your own day-to-day experiences of serving your clients in a manner that keeps them coming back to your facility.
For example, knowing how the top record labels and/or networks and/or film companies may feel about their needs for independent audio/video facilities and services during the next few years could be a great help in planning for your future fiscal viability. This is not confidential information. It may be gleaned from audio, film, and television trade magazines that you should be reading if you want to stay up to date. Free annual reports from public corporations also provide excellent information about their present thoughts and their future budget projections.
Sales and profit projections for any particular service that you currently provide, or are considering, are a mandatory requirement to running your business in a sophisticated manner. Develop what you believe will be the minimum annual gross revenue for each of your various profit centers, which is normally based upon historic accounting reports. Then determine what positive/negative cash flow will result after paying the costs of operating your business. It's simple addition and subtraction. It will work or it won't. Wouldn't it be better to know in advance before you take the plunge? If you believe it will work and be profitable—do it! If you know that it won't—don't. This is a great advantage—use it.
If you have a successful business with lots of positive cash flow, consult your accountant and determine the best way to protect your success. Enjoy the advantage of being able to spend some of your business profits to research what the next “wave” may be. Try to better control its development for your business by working with your competitors, customers, and suppliers to create new diversification inside and outside of our industry. Show them “the way” after you have secured your desired part of the new niche for your business, and you all will benefit through the acceptance and growth of the new process or niche you have jointly developed, which is sometimes referred to as “coevolution.”
A good example of this concept is the development and acceptance of nonlinear video editing for film. For many years, the editing machines of choice were the Movieola and the flatbed “Chem” machine. It was quickly found that by doing a telecine copy of your film to video, and then editing in video, you could achieve four electronic edits on a video-editing machine, such as the Avid, in the same amount of time as one razor blade edit on the film-editing machines. It also provided the film editor with more creative freedom by allowing him or her to review several electronic edits before choosing the best, resulting in far better end product for most projects. This was an amazing time- and money-saving process, which was immediately adopted by most filmmakers. It required the cooperation of many different segments of the film and television industry to develop smoothly.
The global pro audio industry also classically exemplifies the corporate buzz phrase: white space opportunity. This concept may be understood as: new areas of growth possibilities that fall between the cracks because they don't naturally match the exact capabilities of existing familiar profit centers. On its surface this could mean audio-only studios suddenly doing sound for picture—a 10-year-old idea. It could also mean taking a close look at what services you are capable of providing in your marketplace because of your present facility and its contents. What is not currently provided in the most efficient manner, and how could that help you lead (or be ready for) the next wave?
Still another commonsense concept is strategic intent, which basically means: a potentially profitable corporate goal or concept that represents a stretch for the organization. It also implies a point of view about the competitive position a company hopes to build in the near future. In my opinion, we audio professionals don't spend enough time simply learning from others who have already done the work. If we can apply the results of the extensive market research of others to our own specialized businesses, it would appear to be a no-cost win.
A final suggestion is the concept of a “business ecosystem.” This is described as a system in which companies within the same industry work cooperatively and competitively to support new products, satisfy customers, and create the next round of innovation in key market segments. Does that sound familiar? Think about digital consoles and how long it took from concept to reality within our industry.
Let's apply the concept to the pro audio industry. Through our peer groups, associations, socializing, and so on, we talk to one another about what is going on in our individual markets and how it will affect our future profits. We know where we are, and we know where we would like to go. Yet we all have different ideas about how to get there because we are thinking as single, isolated entities within our individual business environments. Because we are primarily independent contractors, it is difficult for most of us to understand the concept of sharing information to improve ourselves and help our businesses to survive. Share your ideas with other industry people. You will be amazed at the information you will learn from them about the subject you are discussing. The best market research on any new concept is often done with your ears. Listen!
Let's learn from almost any big industry (such as automobiles or computers) that if we communicate with our suppliers, clients, and our own personnel more effectively, we will benefit greatly.
There is safety in numbers. Don't try to reinvent the wheel. Sample from the buffet of available information and put the information through your personal filters for your own business. Learn from the “big guys’“ research, at no cost, and make the changes that make sense for you, your business, and your market of services for your clients. It is a very personal decision you must make to continue to excel. Take advantage of all of the expert resources that are available. It can only make your business better.