"They're not going to expect you to grow your way out of these [difficulties]…You're going to have to make your business work the way things are now." So said an anonymous Condé Nast senior executive recently, concerning the state of play at the troubled publishing house. The same executive "speculated that editors and publishers of Condé Nast's various titles "could be asked to reduce spending by as much as 25%," according to Advertising Age.
I've commented here before about the situation at Condé Nast, but here's the quick recap: back in July, the firm called in consulting powerhouse McKinsey to assess the various strands of its business (read: individual magazine titles), and identify potential cost savings. The results of that assessment are now in, and editors and publishers at the group have reportedly been asked to set aside time in the near future for budget meetings that will govern their expenditure over the course coming year. Change, it would appear, is finally afoot.
Looking in from the outside, what's most instructive about the goings on at Condé Nast isn't the minutiae—the spectacle of who or what gets cut from the empire to reduce its costs—but the fact that it's taken so long for the firm to get around to even considering cuts in any sort of substantive way. Sure, there was a mandated 5 percent budget cut back in 2008—an event that garnered more media attention for the reduction in the quality of corporate refreshments than for the handful of layoffs it produced—but it does seem a little strange that the company is only now getting down to the brass tacks of serious reform. I mean, the recession's already over, right Mr. Bernanke?
Perhaps the reason that the changes are coming now is because someone, somewhere—probably at McKinsey—has seen that the recent turmoil is destined to be more than just a bump in the road. The significance of the executive above stating that "you're going to have to make your business work the way it is now" is that it contains an implicit acceptance that things have changed. No longer can companies rely on the promise of future growth to justify living beyond their current means; even if there's a single person out there still promoting that line of thinking, chances are they won't find a banker who'll agree to fund their vision. The result: even the biggest names in business doing the sort of belt-tightening that consumers have been facing up to since the dawning of the recession.
Just as those consumers are adjusting to a world in which they can't plan their retirements based on the hypothetical value of their house or 401(k), today's business leaders are waking up to—or more likely spending sleepless nights mulling over—the realization that the only way to make it to a fiscally viable future is to be fiscally responsible today. That, in turn, is going to mean several years of slower growth, but hopefully of a sort that is more sustainable than the illusory bubble we saw over most of the last decade.
For that reason, the quote in the opening line bears repeating once again—not as a window into the goings-on and strife at a publishing house, but as a mantra that redefines what it means to be successful in business in the current environment: "They're not going to expect you to grow…You're going to have to make your business work the way things are now."