Reinventing the National Geographic Society
How do you transform a 123-year-old cultural icon and prepare it for the digital world? Slowly, as a new case on the National Geographic Society by professor David Garvin demonstrates. Key concepts include:
- Practitioners need to understand the power of the history of their own organizations in order to effect change.
- Making transformational changes at the National Geographic Society involved pulling management levers to alter a deeply ingrained culture, develop new organizational capabilities, and design a compensation structure aligned with new values.
- A one-size-fits-all approach to management doesn't work. General managers encountering similar problems in different organizations may need different solutions to solve them.
Teaching a case study on the National Geographic Society for the first time, HBS professor David A. Garvin walks out to the middle of the horseshoe-shaped classroom and asks his students, "How many of you have familiarity with National Geographic magazine?"
Nearly all 72 students, many from foreign countries, raise their hand. "What do you associate with it?" The yellow border, answers one. Others note the stunning photography, detailed maps, and magazines piled up all around the house.
A few minutes later National Geographic CEO John Fahey is addressing the class, and recalls the remark about magazine piles. "That has come back to haunt us," Fahey says. "People today don't want clutter."
It turns out that many things that made National Geographic one of the world's top brands during its 123 years are obstacles to overcome. Like many other print publications, National Geographic's subscription revenue has declined significantly, from $284 million in 1999 to $211 million in 2009. The value of becoming a member of the Society, once a matter of prestige, has eroded. The institution has made large bets on various forms of media—Internet, movies, TV, cable programming—but is still trying to figure out the best strategy for integrating them. Despite repeated structural changes, employees still operate in silos.
In short, the National Geographic case is fertile learning ground for managers. Its lessons address transforming the culture, behaviors, and values of a legacy organization, changing a business model from paper to digital, capitalizing on huge brand awareness and international presence, and promoting cross-functional and cross-divisional collaboration.
Increasing geographic knowledge
Founded in 1888 as an educational and scientific society with a mission "to increase and diffuse geographic knowledge," the National Geographic Society (NGS) soon launched a scholarly journal, National Geographic Magazine. Using revenues secured from members, the Society supported many groundbreaking scientific adventures—Dian Fossey's 18-year study of mountain gorillas in Rwanda, for one—filling in the empty spots on the world's map as it went along.
But when Fahey arrived to head the National Geographic Ventures unit in 1996, the institution was in decline. Decision-making was slow and fusty. A digital strategy was just emerging. Various units operated as independent fiefdoms. In 1998, Fahey was named CEO, and the task was clear: build an organization to thrive for the next 100 years. To do so, he "assembled a management team of diverse backgrounds to transform the Society's culture and organization, fostering more risk-taking, a greater focus on commercial activities, and more cross-departmental collaboration," notes the case, cowritten by Garvin and Carin-Isabel Knoop, executive director of HBS's Global Research Group.
The story especially appealed to Garvin because he had profiled Fahey in an earlier case study in 1994 when Fahey was CEO of Time Life, ironically facing many of the same challenges with earlier generations of media and technology. Fifteen years later it was an opportunity to observe an elite general manager at work in a completely different organization, to see how his thinking and management style had changed or stayed the same.
Slow to change
When Garvin and Knoop flew to NGS headquarters in Washington D.C., in the summer of 2009, Fahey was heading what appeared to be a steady but slow-motion revolution. His effort to rebuild the organization for the digital era was now more than a decade old, with some notable successes—a new mission in 2004, a reorganization in 2007—but with unresolved problems. Fahey says his leisurely pace of change was deliberate, that creative people take longer to accept change. However, "He's been at it 12 years, and people's first loyalty is still to their silos," Garvin observes.
The case encourages students to put themselves in his place. Is Fahey moving too slowly? Does he have the right people in the right positions? Is the new mission—"to inspire people to care about the planet"—the right one? How does the situation facing Fahey at National Geographic compare with the challenges at Time Life? Is he taking the right steps to destroy silos and integrate the organization?
But the case actually hangs around another question. Fahey created a position of senior vice president, e-commerce. It's a pivotal and, for NGS, radical step. The position will be responsible for coordinating web-based offerings and outreach across the Society's numerous departments, integrating several direct-mail efforts into a cohesive e-commerce strategy, and leveraging the NGS relationship with subscribers.
The students are asked the same question Fahey debated with his team: to whom should this person report? To Fahey himself, signaling the importance of the role? To the Global Media Group, which is responsible for the magazine, book publishing, TV and film, and digital ventures? Or to the Enterprise Group, which operates the Society's merchandising businesses, brand extensions, and licensed products and services?
"This issue appears to be pretty straightforward—it's just a reporting issue," says Garvin. "In fact it embeds the larger issue of who is going to control the integrated aspects of e-commerce, and what authorities and what decision rights that person will have relative to the existing divisions."
With Fahey listening on, the students dive in. The first few think the position should report to the CEO. "The easy out is to say John Fahey should be the direct report," Garvin says later in his office. "But Fahey already has 14 direct reports. And do you always want a centralized position to report to the CEO?" Maybe reporting to Global Media makes sense, one student suggests, if the position is considered functional rather than strategic.
The decision revealed
When Fahey steps in front of the class he reveals his decision, which was made after the case was written. The position reports to the Enterprise Group, the alternative hardly mentioned by students. If the person reported to Global Media, he says, pressure on the new e-commerce senior VP would have been immense from the various units—magazines, catalogues, and expeditions—to push their products. Instead, Fahey wanted someone to think holistically about NGS's offerings and how best to approach customers and sell them what they want to buy.
Many of the cases taught at HBS involve a visit from the case "protagonist." There are pluses and minuses, says Garvin. The minuses are that students can be muted in their criticisms and concerns, a situation he saw teaching "National Geographic." But the good far outweighs the bad.
"They got to hear how Fahey thinks and how he addresses the problem," Garvin says. "Fahey is a highly skilled general manager. He thinks like a generalist. He focuses on integration and how to make it a reality. They need to hear him in action, how he responds to their questions. What levers is he pulling? Where is he pushing? How is he assembling the pieces into a whole? Where is he drawing lines?"
Lessons for practitioners
Just as the case is rich in lessons for students, it is also instructive for practitioners.
"The first relatively straightforward lesson is how difficult it is to move beyond your historical culture and legacy," Garvin continues. "History has power. Faulkner writes in Requiem for a Nun, 'The past is never dead. It's not even past.' Old ways of thinking and acting are deeply embedded and slow to change. So practitioners need to understand the powerful influence of the history of their own organizations."
Other lessons include the importance of getting the organizational culture right, and the need to pull multiple levers when pursuing integration. "There is an organizational structure lever Fahey pulls when he reorganizes. There is a culture and values lever—he changes what behaviors are valued in the system as they move from silos to collaboration. There is a people lever; you often have to change personnel. And there is an incentive lever where you change the compensation structure. All of those need to be done in a mutually reinforcing fashion."
Finally, combining the Time Life and National Geographic cases offers a unique view of how a manager evolves over time. "If you teach the cases together it shows students both how a general manager's style evolves and how it stays very much the same. And practitioners need to recognize that 20 years out, in a different organization, perhaps their natural tendency when faced with problem X again is to do Y, but maybe problem X is a little different in this organization and this context than the other one. So maybe this time you don't do Y, you do Z."
Garvin thinks Fahey is on the right track with his work at National Geographic. One big factor favoring the Society is that it has bought itself time thanks to a multiyear cable deal with Fox that is expected to net NGS $100 million in 2012.
"These kinds of changes take time, and they have time. Second, these kinds of changes require lots of experiments, not all of which will succeed. They are running lots of experiments. Third, it requires a change in culture and values, and that change is well under way—I would say based on Fahey's comments in class that those changes, including the necessary changes in people, have accelerated quite rapidly over the last year. Fourth, this is a world-class brand. And finally, as Fahey said himself, he's not sure they are the ones who are going to figure out what the right digital combination is, but surely because of their progress to date they will be in a position to take advantage and exploit that opportunity when someone does figure it out."
When he teaches the case in the future, Garvin says, he wants to up the volume on certain ingredients. For example, the ability for NGS to offer membership benefits—access to a research team in the field, for example—lifts the value proposition of the Society much higher than what competitors can offer.
Another issue he wants students to explore is decision-making in an era of blinding technological speed, something Fahey didn't have to think as much about at Time Life.
"The iPad basically didn't exist two years ago, and now it's a core platform. Digital delivery of content to the cell phone didn't exist a few years ago, and now it's everywhere. You go six months, and it's two generations. That's something I would love to exploit in the future. Just what do these speed changes mean for how Fahey needs to operate?"