The National Geographic Society (Abridged)
National Geographic Society (NGS) was founded in 1888. It is a non-profit organization of science and education. Around 360 million people reach at National Geographic Society every month. NGS has been investing into scientific research and exploration. 9000 scientific researches had been funded by the mission program department. Mission department had also managed 400 scientific field researches. At NGS, major ideas came from mission department. Competitive advantage of National Geographic Society is to relate scientific components with inspiring stories.
Editions in 33 languages have been published by National Geographic Magazine (NGM) and were circulated in more than sixty countries by 2010. English version was also provided for more than 200 countries. Readership rate grew from 30 million to 40 million in 2009. Second largest magazine readership title was held by National Geographic Magazine. National Geographic Magazine’s 20% income was generated from advertisement and 80% was generated from membership. 12 million unique visitors visited NGS website per month.
Issues at National Geographic Society
Fahey has figured out many issues at NGS. He wanted NGS to remain in the industry for the next 110 years. For this purpose, a new mission was developed in 2004. In that mission statement, differentiation was their main focus. NSG’s mission was to discover as well as to inspire people. There was a purpose behind every story telling.
There was no collaborative structure at NSG. Managers wanted to increase sales of their business unit. In addition, there was no coordination among different departments at NGS. Global Media Group (GMG) brought them onto the same page and presented NGS as a global brand. Leaders were judged on the success of their department rather than NGS as a whole.
Printing industry was suffering. Revenues from consumer magazine had dropped from $23 billion in 2004 to $20 billion in 2009. $18 billion revenue from print market was projected for 2013. Another issue was that advertising revenues came down by 30% to 40% in the last few years. Circulation of National Geographic Magazine (NGM) had declined from 7.3 million in 2000 to 5.2 million in 2009. It was also projected that magazine advertising expenditure would not increase from 2008 expenditure level.
Another issue was that NGS did not have enough funds to invest as compared to their competitors. Their competitors like Disney and Viacom had enough resources to invest. Many distribution channels were available for NGS but they did not have enough resources. As a result, NGS was forced to cut prices and fired their employees.
Another issue of NGS was that the attitude of their employees was not as good as it should be. They were not supposed to take risk. There were unclear promotion standards. Staff was highly frustrated at NGS. Another issue was from member’s side. They considered their membership as magazine subscriber instead of society member. Only 23% members had a feeling of belonging.
With the evolution of technology, e-commerce has gained important role in today’s business. Companies that have not changed to current scenario are facing many challenges. E-commerce has changed the way of doing business for many companies. Many companies have been affected from e-commerce for example print media. Print media revenue has downward trend. Companies need to adopt changes in their organization. Digital media also helps companies to engage with their customers. NGS has another issue of not giving incentives to their employees.
E-commerce was one of the options that Fahey was considering. He wanted to hire an e-commerce executive. NGS wanted to increase their revenue that was declining for last few years. New e-commerce executive would report to whom? That’s the question that Fahey had in his mind. Another issue of NGS was that every business unit had its own website. Most of the products were interactive; therefore, NGS just needed to have to a forceful strategy...........................
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In January 2010, John Fahey, President, CEO and Chairman of the Board of Trustees' Executive Committee in Washington, DC, the National Geographic Society (NGS), to decide how best to organize the 121-year mission driven organizations to accelerate the world of digital convergence and reduce sales of the magazine. Historically supporter of evolutionary change, he sees a radical step: creating a senior position responsible for the coordination of e-commerce web offers and advocacy in various divisions of the Company, the transition of NGS many disparate and independent direct mail efforts more comprehensive and strategic e-commerce strategies, and use NGS relationship with its members, is now defined as a magazine subscribers, because the subscription comes with society membership. finishing touches to the post and its reporting mechanisms has led to considerable debate within the organization, and Fahey is torn about how to proceed.
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by David Garvin, Carin-Isabel Knoop Source: Harvard Business School 20 pages. Publication Date: January 3, 2011. Prod. # : 311002-PDF-ENG
The National Geographic Society
Here is a nice brief of a HBS case study on National Geographic Society (NGS).
NGS has been struggling to increase its sales since 1990s and roped in a new CEO in 1996. The case study deals with the changes and challenges in the organisation since then.
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.
As it has been 15 years since Fahey joined, students debate whether he has been too slow? Is he taking the right steps etc?
What are the lessons from the case?
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.”
There are some intriguing comments as well at the end.
NGS is something which is in fond memories of most. Now people may not be seeing the magazine but the TV channel format is a major hit especially with children. Interesting to know more about the organisation…
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