A reader shares a news piece…

…touting counter-intuitive thinking.

My thanks to Christy Beckmann for bringing this piece to my attention.  It’s a November 14, 2009 New York Times article entitled “At Bloomberg, Modest Strategy to Rule The World,” written by Stephanie Clifford and Julie Creswell.

Christy was intrigued by the following quote.  “We need a broader audience,” says Daniel L. Doctoroff, Bloomberg’s president.  “The history of this company is you do the counterintuitive , countercylical thing.  It’s part of our DNA.”

Indeed, Bloomberg’s success stems from it’s financial information systems software called terminals that offer the quick, reliable financial data and analysis to the trading desks of Wall Street firms in formats not available elsewhere.  Bloomberg built a better mouse trap and have maintained their competitive advantage for nearly three decades.  And they did it using counter-intuitive thinking – by looking at financial information in a new light.

Does their new strategy “to be the world’s most influential news organization”  fit their counter-intuitive, countercyclical DNA?  On the surface it doesn’t seem so.  If anything Bloomberg may be on a slippery slope of financial decline.  Why?  Here are the insights Clifford and Creswell provided:

• The vast majority of Bloomberg’s $6.3 billion in revenue and nearly all of it’s profit comes from its financial information systems.
• In 2009 Bloomberg will see a drop in the number of terminals in use.
• Bloomberg feels the need for “a broader audience.”

Let’s explore each of these insights in greater detail.

The fact that nearly all of Bloomberg’s profits come from it’s terminals suggests that its media expansion efforts aren’t producing much, if anything, in the way of profits.  If that’s true Bloomberg is adding a lot of infrastructure cost with little return on its investment.  That’s not a financially sustainable business model.

Bloomberg’s core business is declining as evidenced by a decline in number of terminals in use.  Their desire to expand into other new coverage indicates that they don’t know what to do to fix this problem.  That’s not intended as a criticism.  All companies that enjoy tremendous success eventually face this dilemma.  The intuitive (not counter-intuitive) solution is to look for new lines of business.

Bloomberg is utilizing the intuitive approach by seeking “a broader audience.”  The fact that it is doing so at a time when the world seems to be devaluing news coverage is counter-intuitive.  What’s missing is an indication that Bloomberg has found a formula that will once again entice consumers to pay for that coverage.

While it is my sincere wish that the Bloomberg organization continue to enjoy tremendous success, I have serious doubts that their new strategy will allow that to happen.

To view the rest of the New York Times article visit http://www.nytimes.com/2009/11/15/business/media/15bloom.html?_r=2&scp=1&sq=bloomberg%20rule%20the%20world&st=cse

The 7 Steps to Becoming INVALUABLE program is designed to help you see more effective ways of doing business – ways that dramatically improve your bottom line while making your life easier.  In today’s blog I used Step 5, Contrarian Mindset, contrast Bloomberg’s previous counter-intuitive business strategy with its more intuitive new strategy.  For more information on the 7 Steps to Becoming INVALUABLE visit www.furtwengler.com/7steps.htm.

If you’d like to receive a weekly email reminder with a link to The Invaluable Leader blog or if you’d like me to address specific topics, please send me an email at dale@furtwengler.com.  Please share your experience with our readers by posting a comment.

For examples of how counter-intuitive thinking can help your break the bonds of industry pricing visit my Pricing for Profit blog at www.pricingforprofitbook.com.  Enjoy!