For two years running, one of the United States’ most beloved companies, the Boston Red Sox, was failing. It was bloated, underperforming, and lacked any strategy. The company had the third-highest personnel budget in their industry and was riddled with low achievers. The management team was falsifying data in order to elevate the perceived value of the company. Sound familiar?
Then, the company’s owners did the unthinkable — they fired basically everyone, including managers, executives and much of its core workforce. They knew that if they wanted to create a new, high-performance organization, they needed to reinvent it. Not tweak it, but functionally blow it all up and start over.
With this reinvention, the owners admitted the fundamental failure of their model — the very one that had elevated them to the top of their industry only a few years before. Meanwhile, the climate surrounding their organization (with spending caps, no layoff provisions, and compensation picks) made reinvention all the more arduous. Their industry sought to punish them for implementing change.
It is important to understand how bad the Red Sox were last year and how similar their situation was to that of legacy media. In 2012, the Red Sox salary was the third highest in baseball at $173,186,617 and the team won just 69 regular season games. Meanwhile, the 2012 team was a reinvention of the 2011 team, which collapsed, and the manager was fired. After having tried to fix it once, the ownership needed to change the organization even more dramatically for 2013.
If at First You Don’t Succeed…
In advance of 2013, the Red Sox again fired the team’s manager, changed the executive suite, and reinvented the workforce. The new goal: replace high-cost and complaining “superstars” with a talented new group who bought into the new model. The organization became more horizontal and the salary of the team dropped by 20%. Meanwhile, over the course of the year, productivity increased by 40%.
2012 Red Sox salaries totaled $173,186,617 and produced 69 wins = $2.5M per win
2013 Red Sox salaries totaled $140,657,500 and produced 97 wins = $1.45M per win
Blowing Up Legacy Media
If Alan Mutter, the former editor of the Chicago Sun Times and author of the online blog Reflections of a Newsosaur, is correct, this year the newspaper industry will see a decrease in advertising revenue for the eighth consecutive year. Sure, newspapers have union contracts and pensions to deal with in any restructuring, but that pales in comparison to a good no-trade clause for a pitcher who has a $100 million contract and can’t throw strikes any more. Legacy media’s strategy of “arguing for your limitations and they are yours” has been in full bloom for more than a decade.
The reality is that reinvention can be achieved. Yes, sports team analogies may be easy, but this reinvention does offer real transferable lessons: The Red Sox were bloated failures. The team was misleading folks on what it called its “record number of sellouts,” the players were dislikable and a franchise once beloved was losing its brand equity.
Instead of tweaking the model, they blew it up. And just one year later they’re in the World Series.
Josh Fenton is the co-founder of GoLocal24, a digital news company focused on local media in midsized markets (not hyperlocal).