The whole essay:
Corporate America doesn’t get it. It has never got it. And until yesterday this didn’t seem to matter.
Then the Chairman of Viacom fired the CEO of Viacom, and Tom Freston was out of a job.
This might herald a shift in corporate American. I think it is now possible that that not knowing about contemporary culture is now a career liability for the senior manager and a problem for the corporation.
My first proposition is, I think, pretty clear. Corporate America doesn’t understand contemporary culture. There are lots of examples. Gatorade buys Snapple after the trend has passed. (Three years later, it sold Snapple at a $1.3 billion loss.) Levi-Strauss missed hip hop and lost $1 billion in sales. There are lots of examples of corporate America making bone headed moves because no one in senior management has a clue what is happening in music, film or culture.
Some of this is due to the appalling illiteracy of the business school. Most b-school faculty are stuck in a time warp constructed out of Bob Seeger’s CDs and the Die-Hard retrospectives. Not so the b-school students, most of whom have a clue. There are no courses on contemporary culture and the marketplace (unless Rob Kozinets is teaching a course at York I haven’t heard about). There are no courses on the theory and method with which one read contemporary culture.
This was seen to be OK. Then Redstone fired Freston.
My second proposition, that the firing of Freston is a leading indicator, this is less clear. Here’s my argument. Tom Freston began his professional life as an ad guy. Ad guys are generally pretty well informed about contemporary culture. (Ad guys are the way the corporation "cheated" on this issue. As long as the agency knew what was going on, it didn’t have to. This was foolhardy but possible in the early days. But now that the corporation is an innovation machine, and now that contemporary markets and cultures constantly interact, it is, as a policy, still less well advised.)
On the strength of the ad work, Freston became a founding member and head of marketing of MTV: Music Television. Eventually, he rose to become the head of MTV Networks. I think there is a chance that it was this deep training in contemporary culture that qualified him for the job as CEO of Viacom. Freston’s reputation grew. The WSJ calls Freston "a man long regarded as one of the most successful executives in the entertainment business."
So what brought him low? Why did Redstone fire his mighty CEO? Comments circulating in the business press (some of them from Redstone in the FT) suggest that the reason has to do with Viacom’s failure to acquire MySpace (which went instead to News Corporation and Rupert Murdoch). This seems a little unfair. At the time, as I recall, everyone thought News Corporation paid much too much for MySpace. Only now (following a deal with Google) are people now insisting that Freston was outplayed.
In sum, Redstone hired Freston because he knew a thing or two about contemporary culture and its markets, and fired him because he did not know enough to spot the MySpace (and social networking) opportunity.
Now there is no question that Redstone continues to play the diva on this issue. Anne Thompson in today’s Hollywood Reporter makes this clear, quoting Merrill Lynch analyst Jessica Reif Cohen who says: "The change is unexpected and not likely to be well received by the Street or the creative community."
Still and all, there is perhaps a "pattern recognition" moment. It may be that Freston got his job as a CEO because he was deeply informed about contemporary culture and lost it because he was not informed enough.
There is a still deeper, and more chilling pattern here: that senior managers will have a brief window of culture competence. Without constant refitting, this competence may expire, as when an executive of one technology (Freston as a TV executive) is supplanted by the rise of a new shift in contemporary culture (social networking) enabled by a new technology (the internet).
Maidment pointed out in Forbes today that Wallstreet
has not been over-enamored with traditional media’s attempts to come to terms with the media consumption of the iPod generation.
Could this be because the managers of tradition media don’t actually know very much about the media consumption of the iPod generation. When do we put this right? When does the corporation get in touch and build a system for staying in touch? Naturally, this will happen when senior managers decide that it is in their best interests that it happen. Perhaps the Tom Freston story will sound an alarm.
Chaffin, Joshua. 2006. Freston removed as chief of Viacom. Financial Times. September 6, 2006, p. 1.
Karnitschnig, Matthew. 2006. Ouster of Viacom Chief Reflects Redstone’s Impatience for Results. Wall Street Journal. September 6, 2006.
Maidment, Paul. 2006. Why Viacom can’t win. Forbes.com media newsletter. September 6, 2006.
Thompson, Anne. Par’s Grey loses patron: shake-up unsettles studio regime. The Hollywood Reporter. September 6, 2006.