Media challenge just the ticket
When Simon Tong was a young Waikato lad living on the outskirts of Hamilton, he recalls going to the dairy each Sunday after church and getting the paper, the bread and his father's cigarettes. He also used to pick up the local paper, the Waikato Times, flung on the driveway and then read only the sports sections.
These days, the New Zealand managing director of Fairfax Media, the country's largest media organisation and publisher of Stuff.co.nz among other print media, has a markedly different way of consuming news.
The self-confessed news junkie gets his early morning fix on his smartphone or iPad when he wakes up - "by the looks of the statistics I'm seeing that's becoming more and more commonplace", Tong says. He also has the Sunday papers delivered to his home and when he's travelling, as he's been doing a lot of lately, he'll read the daily newspapers in the departure lounge.
The father of four children, ranging in age from 21 to just under three years, expects they will consume news via whatever the definition of mobile will be in future and it will be "very much video-oriented".
He thinks brands will become less important than the personality of the journalists producing the content and consumers will look to people they trust. Tong also suggests filtering will become sought after by consumers because of the growing noise on the internet and their choices will become more personal.
Before starting the role in September, Tong hadn't considered how those changed consumption habits would affect the media industry so dramatically.
"You don't think about it that way - it's more about convenience, and time and place."
But it was that industry upheaval following declining advertising revenues as more readers turn from newspaper to online and the rise of social media that attracted him. He likes a challenge.
He had spent seven years as chief executive of Paymark, the country's biggest electronic payments provider, and prior to that held senior management roles with Hewlett Packard and Compaq.
Paymark board member Stephen Franks was initially wary of Tong because in his view "computer salesmen are the modern equivalent of horse dealers" - necessary but suspect. Instead, Tong's listening skills impressed him. Paymark is tricky to run because it's owned by a consortium of banks, which often have their own agendas, Franks says, but Tong managed to weld a loyal team that delivered on shareholder expectations.
When Tong resigned Franks posted on his blog: "He can inspire extraordinary business loyalty, because that is what he offers, down and up. He listens, his ego doesn't blind him, and he'll do his best to keep at bay any ‘bullshit castle' culture of head office."
Tong agonised over leaving the IT industry and moving to one he knew little about and where no-one had yet cracked how to make a decent profit in the modern age. In fact, when approached about the Fairfax role he had already accepted another with some friends running a consultancy service for small to medium-enterprises.
"One of the most difficult aspects of taking over this role was backing out of a handshake over a beer with these guys."
Ultimately, he couldn't say no to the chance to lead a business of scale - some 1800 staff remain after three years of downsizing.
In a recent note to staff he said he'd managed so far to get around Auckland, Wellington, Christchurch, Blenheim, Nelson, Palmerston North, Feilding, Hawera, New Plymouth, Hamilton, Queenstown, Gore, Alexandria, Invercargill, Ashburton, and Timaru. He thinks saying "gidday" to people doesn't translate so well over email.
With staff morale at an all-time low, he jokes at least it can't get any lower.
He thought he'd have to tell people about the need for change but has instead found people get that and are impatient to hear what the answer is.
Some things he's identified as early issues include not having a shared view of where Fairfax wants to be in three years and a lack of self-belief as a result of significant change inside the business and wider industry, plus what others say about its future prospects.
In some cases technology is not working that well and staff are operating in less than optimum surroundings. And he says the company's not yet fully harnessing the huge amount of content and knowledge it has for the benefit of customers.
The old-fashioned, hierarchical culture and centralised decision-making have also been a surprise.
"It's hard to be quick when you're like that and I think it says to people ‘we'd like to trust you but we're just not sure'. I don't believe in that sort of management, I think you get your speed when you let people get on with it."
On the positive side, the financial performance in the first quarter of the new financial year has been good, reflecting the recent organisational restructuring, he says. The Fairfax of the Future restructuring is expected to deliver A$311m in annualised cost savings on both sides of the Tasman by 2015.
In August Fairfax Australia posted annual revenue of A$2 billion and a net loss of A$16.4m ($18.75m) after tax, a major improvement on the A$2.7b loss the prior year when it slashed the value of its newspaper titles. Revenues in New Zealand fell 4.7 per cent for the year to A$339m on the back of weaker advertising and offset by costs also dropping 2.3 per cent.
Alongside paywalls on the Sydney Morning Herald and The Age, the Australian parent has identified four new revenue streams including beefing up events, data, content co-creation, and selling digital marketing strategies to small and medium businesses, the latter launched in New Zealand last week.
Tong says his immediate objective is to do some simple things to improve everyday life and boost company culture. He also wants to knock off some contentious issues such as whether to introduce a paywall, as rival APN has said it will for the NZ Herald next year.
His main aim is to stop pointless hand-wringing over the state of the industry and get on with stuff, although he's largely silent just yet on what that stuff will be.
"We don't have to get that perfect. There's a great saying from a guy I know who says ‘you need to be generally right, not specifically wrong'. Given how much change that's going on, that's kind of good for us. You know three years on will broadly look like this but we might have to tack a bit to get there. Then people can make their own decisions on whether or not they want to be part of that."
He also doesn't think he's the one with all the answers to the company's business model woes. He wants to talk more to customers about what they want and change the business to meet their demand rather than "saying ‘oh no, you can't deal with us because we're not set up that way', which I've seen a bit of".
One big issue is many staff would say they wouldn't get listened to if they have a good idea, he says. "Most often the people who are out there dealing with an audience or a customer, surprisingly, they might be the ones that know what the audience or customers wants as they're dealing with them every day. It's pretty hard to do that from the corner office."
Sunday Star Times