Steve Forbes' Advice on Innovation and Corporate Mindset
This is the first part of my two-part blog about my conversation with Steve Forbes, chairman and CEO of Forbes Media, speaking about free markets, bold innovations and how he embraces change.
Steve Forbes is a friend who helped me launch my book, Abundance, holding my first-ever launch party at the Forbes headquarters in New York. He's a man whose mindset and brand shouts abundance.
One of my objectives in this BOLD blog is to interview some of today's most successful CEOs and billionaires, and to share with you how they think and how they make critical decisions. This is one of those interviews with the man who knows more successful CEOs and billionaires than almost anyone else, and he shared with me some of what he learned in his encounters with them. The "Forbes List of Billionaires" is most definitely the who's-who of today's most successful entrepreneurs.
During our conversation, I asked Steve to share his thoughts on entrepreneurship, the future of large corporations and his own experience with transforming Forbes.
1. Steve on the "explosion of an entrepreneurial class around the world": "I think characteristics among entrepreneurs around the world are pretty much the same. You have the vision, you have the drive and the desire and obliviousness to the clock, you work till you get it done. That doesn't change. What has changed is that, thanks to the fall of the Berlin Wall, thanks to the success of the U.S. coming out of the malaise in the 1980s, suddenly, what you might call the entrepreneurial class has exploded around the world -- India, China, central and eastern Europe, the Baltic States."
"I mean, who ever thought Skype would be developed in Estonia? So, it's not so much the characteristics of entrepreneurship as much as the opportunity to practice entrepreneurship that has grown exponentially," Steve added.
2. Steve on the "bloated large-size corporations": "It is human nature that organizations inevitably become inward-looking," Steve said. "You lose sight of the reason the organization was created, and you become all about the organization. British historian C. Northcote Parkinson did a history of the British navy, and wrote about this phenomenon. After World War I, when Britain won the war, it didn't need a big navy anymore, so it sharply downsized the number of ships, sailors, dockworkers and the like during the 1920s. Even though the Navy was drastically shrinking in the 20s, the bureaucracy called the Admiralty, which ran the Navy, actually was getting bigger. Parkinson observed that the amount of work or size of an organization has nothing to do with the work really at hand."
"Every organization eventually becomes inward looking, bloated and loses sight and becomes pretty much useless," Steve explained. "The virtue of free markets is if you do that, you get tossed aside. One of the dangers in free markets is if you focus on trying to do what you're doing better, sometimes that may be obsolete. IBM got into personal computers but still had the mainframe mindset, so even though it started to make drastic changes in the 80s, by the early 90s it nearly went down for the count. You saw it in the steel industry, too. The idea of making steel out of scrap was something that traditional steel mills said no to. So they all fell by the wayside or drastically shrank, while new companies like Nucor came in and for a while did very well," he said.
"This gets us to our business today: media. We have the mindset of 150 years ago," Steve said. "You create content, you hope to attract an audience with that content, and then you deliver that audience to an advertiser. That's the mindset you see today – one based mostly on advertising revenue."
"We have to find new sources of revenue," he explained. "The web is knocking out what we call middlemen. What this means for journalists is that you don't make your living as a pure journalist anymore. You have to have a portfolio of jobs as a consultant doing a variety of things. But trying to get traditional media people to wrap their minds around this change is very, very tough."
"So, when you focus on being the best at what you have traditionally done, you might lose sight of the fact that what you still doing may not be in demand in the marketplace anymore," he said. "That's what is so humbling. You're trying to do your best and the market may just pass you by. What you're doing just isn't needed anymore."
3. Steve on "transforming Forbes.com": "You may do something right but it doesn't mean it's always going to be the right thing to do," Steve said, speaking about his business. "In the mid-'90s, like everyone else we went into the electronic world. We started Forbes.com. Most publishers made the mistake of thinking that if you took the printed page and threw it on the screen, voila! You're in a brand-new world, sort of the equivalent of when Edison and others invented movies over 120 years ago. Initially," he explained, "it was thought that feature films would be like filming a stage play. But no: It's an entirely different medium, film."
"So, we did that," said Steve. "We went through the horrors of the early part of the last decade when everyone was telling us we're pouring tens of millions of dollars in information on the website, we're idiots. The bubble burst all of that kind of thing, and then it all came together. And from 2002 to about 2006 or 2007, by golly, our website was booming."
"What we didn't notice was that even though we caught the first wave right, the Web was relentlessly commoditizing marketing. So the market no longer took for granted that because you had a great audience and a great brand name you should be paid a premium for reaching that audience. Ultimately we ended up having to do a mad scramble and make drastic changes," he said.
"I think we did it well," said Steve. "Today we get over 30 million unique visitors a month to our website and it's been doubling over the last year or so. That doesn't mean we're going to be doing that tomorrow. Again, the Web is drastically changing things, and even if you get one part of it right, our traditional competition is no longer the same, it's a whole new world. So, while we got the first wave of change right, we didn't see the other wave as quickly. No one did, but we should have and didn't."
In my next blog, Steve Forbes will share his top 10 recommendations for success. Great stuff.
NOTE: Over the next year, I'm embarking on a BOLD mission -- to speak to top CEOs and entrepreneurs to find out their secrets to success. My last book Abundance, which hit No. 1 on Amazon, No. 2 on the New York Times and was at the top of Bill Gates' personal reading list, shows us the technologies that empower us to create a world of Abundance over the next 20 to 30 years. BOLD, my next book, will provide you with tools you can use to make your dreams come true and help you solve the world's grand challenges to create a world of Abundance. I'm going to write this book and share it with you every week through a series of blog posts. Each step of the way, I'll ask for your input and feedback. Top contributors will be credited within the book as a special "thank you," and all contributors will be recognized on the forthcoming BOLD book website. To ensure you never miss a message, sign up for my newsletter here.