At the Crossroads....or past it?

Have you heard of “Trajectories of Industry Change”.

Historically, all industries find themselves faced with gut-wrenching decisions related to remaining relevant.

Compare the lifecycle charts below for MySpace and broadcast radio.

The relevance clock for broadcast radio is nearing midnight which means little time remains for the industry to adapt to the times.

According to author and business strategist Anita McGahan, who observes all types of industries and companies, traditional radio may no longer be at a crossroads, but beyond it and should seriously heed the warning signs presented by new competitive media. She explains that broadcasters are misreading growth clues and may be arriving at false conclusions.

The most important thing to understand, she says, is that all business goes through lifecycles during which obsolescence becomes a real threat to the core of the business. New technologies shake up all industries and all companies at some time are faced with ‘defending their turf’.

So, what has really been going on with the broadcast industry?

Radio has been caught in an evolution as a result of Two Types of Threats of Obsolescence from digital media:

1. A threat to its core activities (those activities of attracting listeners with programming, technology and delivering consumers for advertisers), and

2. A threat to its core assets (durable resources such as talent and programming and intangibles such as programming knowledge and brand capital, that have historically made radio effective at delivering audiences).

Based on the nature of these threats, the broadcast industry has been on a growth curve with the following identities:

Phase 1 (1960-2000) – The Stable Trajectory when neither its core assets nor core activities are jeopardized. During this phase the industry was operating effectively and efficiently, it understood its strengths and weaknesses with no significant outside competitive threat(s).

There was a balance between investing in product and sales.

Persons using radio 1980-2012. Click on image to enlarge.

However, this phase began to weaken after an extended period of wealth and profit-taking. The traditional radio industry had been on a Stable Trajectory until around 2000-2001 when a “perfect storm” of weakening economies coupled with the rise of new technologies began to threaten its core.

Phase 2 (2001-2007) - The Intermediary Trajectory – the period after successful times when the industry began to experience new competition generally aided by new technology when either its core activities or core assets started to become threatened – but not both. It was a time when a “tipping point” was approaching and there was still time to adjust and avoid significant damage to revenues, profits and consumers.

This phase is often characterized by short-term profit-taking as a reaction to this new threat while avoiding investment that could later prevent competitive inroads.

According to Dr. McGahan, the traditional radio industry at this point of the trajectory curve should've fended off attacks to either its core activities or core assets by reinvestment in those core strengths. Defensive strategies should've come from company marketing, product,  sales and technical innovations which would've refreshed perceived obsolescence.

Phase 3 (2008-Present - A Radical Trajectory, the most serious, occurs when core assets and core activities are both threatened with impending obsolescence. Often considered too late in the lifecyle to recover from severe competitive and technological inroads, industries in the radical phase may never be able to infuse enough funding back into the business to fend off the momentum of on-coming competitors. It is often too late for industries in this phase to offset the negative momentum of consumer attrition.

These three trajectories of industry change can be applied to most industries.  Read more here.

With this in mind what path remains for broadcast radio?

I'd be interested in your thoughts.

Your feedback is vital to our company's on-going success. As always, I look forward to hearing from you.


Dave Van Dyke - President