Peter Drucker, universally regarded as the foremost thinkeron corporate management, once said, "Business has only two basic functions --marketing and innovation."
I'm tempted not to add anything to that, because to alarge extent, that says everything that I'm about to say. I'm also tempted toask you to read the first sentence again. But since you're busy, I figured it best ifI give you my take on what Drucker's words mean to us in cable.
Let's be honest: Innovation has never been a problemfor this industry. Both programmers and operators have never been afraid to askthemselves, "What if?" They've always been on the lookout for the"next-best thing," and in the process, they have continually reshaped the rolethat television plays in the daily lives of Americans.
And our technologists are always pushing the envelope in anattempt to develop some new network or hardware wrinkle -- a design modification that willadd even greater value to our already highly prized product.
No, innovation is something that we do very, very well.
MARKETING IS THE CHALLENGE
It's that other part of Drucker's comment thatseems to challenge us -- the marketing part.
I understand why marketing has been a lower priority inthis industry, at least on the operators' side of the business.
After all, over the course of 20 years, we were able toconvince two-thirds of the homes in America to pay us for something that they had beengetting free for the 20 years prior to that. And we did it without really marketing: Thedemand was there, the business was there. To a certain degree, all that we had to do wasopen the front door or pick up the phone. Marketing was more a product of sales andpromotions than it was a fully integrated corporate philosophy.
But this is a different era. Competition has increased;consumers are more sophisticated and more demanding; and our product is no longer viewedas a refreshing alternative to the broadcast-only days of television.
Cable now must stand on its own merits, and it must havevalue to a whole new group of consumers -- people who don't remember life before MTV:Music Television and ESPN; people who knew how to use a computer before they could writetheir names; and people who, quite frankly, represent the future of this country.
These are all chapters of the gospel that CTAM has beenpreaching for the better part of this decade. As the industry's marketing voice, CTAMhas been chiding us to sharpen our marketing skills because there's a hungry wolf atthe door. They've been telling us at every chance they get: Let's not talkfalsely now, the hour is getting late.
DON'T RELY ON HISTORY
And it is late. It's 1999, and the 1980s --cable's salad days -- will soon be two decades removed. The glories of the past willmean nothing going forward.
The fact that we achieved more than 60 percent-penetrationwhile allocating as little as 2 percent of revenue to marketing will seem like a quaintconcept to a company like AT&T Corp., with its annual marketing budget in excess of$400 million.
The fact that pay penetration once topped 200 percent insome systems won't mean a whole lot as we try to roll out digital packages to adiscriminating and option-laden marketplace.
And the simple fact that we invented niche programmingwon't buy us a whisper of loyalty from a generation of young people who, if strandedon a desert island and given one piece of electronic equipment to take with them, mightjust choose the personal computer.
As chairman of CTAM for just over a year, I've watchedin earnest as the CTAM Strategic Planning Committee, led by Chuck Ellis of Time WarnerCable, carefully crafted a new three-year plan to guide the organization through whatpromises to be one of the most challenging, yet exciting, times in the history of cable.
The committee, which represented a broad cross-section ofthe industry -- programmers and operators, both large and small -- analyzed piles ofresearch, and even conducted some of its own, in an attempt to set an accurate course. Thegoal was to determine where the industry was headed and, as a result, what it would needfrom CTAM.
At the end of the day, the committee determined that onething was inevitable: change. It was also determined that CTAM should set two goals foritself that will help the industry to manage that change.
First, CTAM will seek to get marketers seats at the tableof new-product development. As we continue to create and deploy new technology, it iscritical that this technology matches a need in the marketplace. The stakes are too highto simply develop, say, a digital product and hope that people will buy it.
As the committee decided, it is the marketers who have themost direct line to consumers, and it is the marketers who understand what consumers wantand how much they're willing to pay for it.
Similarly, it is imperative that the marketers become morefamiliar with technology. After all, how can you communicate the excitement of digital orthe joy of high-speed Internet access unless you've experienced it firsthand? To thatend, marketers must also be able to talk technology and, in turn, to communicate itclearly to a nontechnical consuming public.
Which leads me to CTAM's second major goal: to providean ever greater focus on the education and professional development of the people in thisindustry. Everything is more competitive these days, from the consumer marketplace to thejob marketplace, and the more skilled we are as individuals, the more effective andsought-after we will be in the months and years ahead.
And the demands of our jobs seem to increase daily. CTAMhas always focused on educating its members. Moving forward, that focus will not waver --it will simply grow in intensity.
And not only will the organization help its members totechno-speak, but it will help them to learn the language of business, as well. Terms suchas "cost per sale" and "close rate" will soon take a backseat tophrases such as "ROI" (return on investment) and "market share," andCTAM will help this industry -- especially its marketers -- to make that transition.
INNOVATE, AND MARKET
The next three years will represent uncharted waters formany of us. Retail, digital, the Internet; all of these concepts -- which, up to thispoint, had been nothing more than curiosities -- will soon take center stage in ourprofessional lives. We must be prepared to make them essential parts of our business,because if we don't, someone else will be glad to.
Let us all continue to innovate. Let us continue tochallenge conventional thinking and always entertain the possible. And, borrowing fromDrucker's admonitions, let us keep in mind that any business that innovates but thatdoesn't market itself is no business at all.
Jim O'Brien, president and chief operating officer ofJones Intercable Inc., is the chairman of CTAM, the Cable and TelecommunicationsAssociation for Marketing.