Critical Numbers™: Gross Margin (Magazine)
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Critical Numbers™: Gross Margin (Magazine)
Founded in 1998, 417 Magazine is a second-generation, family-owned regional magazine that focuses on telling its 325,362 monthly audience members the stories they need to know from all around southwest Missouri. The company has also evolved to produce custom publications for corporations, communities, and charities.
When Logan Aguirre took over from her parents in running the magazine (she officially purchased the business from them in September 2020), she wanted to find a way to create line of sight for her employees so each and every one could see how they could make an impact. While the company had always shared profits with employees, Aguirre wanted to find a way to share profits in a way where everyone understood why they had earned a fair share.
Aguirre says she had learned about Jack Stack and The Great Game of Business® (GGOB) when she relocated to Springfield. As President of 417 Magazine, she decided it was the perfect financial operating system to take the company and its team to the next level. They began implementing GGOB in 2019 with the help of their coach, Katie Davis.
While the 417 Magazine team enjoyed some early wins thanks to playing The Game—they closed 2019 with a profit of $57,000—the pandemic hit hard and fast in 2020. In March, revenues decreased 30% and profit was down 299% off their plan. “We went from a profitable year to a very unprofitable one almost overnight,” says Megan Johnson, VP of Operations. “There were times the Huddles were scary,” says Aguirre. But thanks to the power of forward forecasting, each month the team went to work to do everything they could to chip away at their costs and expenses. When November rolled around, they realized they had collectively found a way to eke out a profit. “Without The Game we would have been lost,” says Johnson. “It’s brought the heart back into the business. I feel like employees have a better line of sight to know why their work matters and how they impact the business.”
“Thanks to The Great Game of Business I feel like we are all headed in the same direction in a way we weren't before. Everyone is engaged. Everyone has their eyes on the prize. Everyone encourages their teammates both in and out of their own departments. And everyone is committed to winning The Game.”
~ Katie Estes, Editorial Director
One of the key projects 417 tackled during the pandemic was to objectively reevaluate the size of their monthly publications in a way that allowed them to decrease costs (and protect gross profit) without sacrificing the quality their audience expected from their brand. The team also took an inventory of all of their product lines as a way to assess which ones drove the highest margins. Aguirre and Johnson say the team asked themselves questions like: Does this product serve us, our brand, our audience, should we improve this, or sunset this? “It was our chance to be brave and clean out the closet without any emotions,” says Aguirre. In one case, they came to realize how unprofitable a ticketed event they sponsored was and how much it was costing them. They made the decision to cancel the event. “We were more profitable even after we refunded the tickets and paid our sales team their commission,” says Aguirre.
The 417 team continues to rely on a series of MiniGames to tackle multiple challenges and opportunities inside the business. “MiniGames have been so helpful because they’ve given us small wins and things to cheer for,” says Aguirre. One example was a MiniGame called “417 Everywhere! (Biggest Influencers)”. The goal was to increase 417’s overall brand awareness through staffers, clients, and editorial sources by making 96 commits of engagement in six weeks. By the end of the six weeks, they hit their commit goal and made 69,977 additional impressions with their audience and clients.
“I feel like The Great Game of Business has brought us closer together. We've become not just a team that makes magazines, but a team that runs a magazine, and supports each other in getting to our Critical Number.”
~ Elisabeth Anderson, Director of Account Services
One of the areas the 417 team plans on continuing leaning into for 2021 is refining and rolling out more department scoreboards. They are also continuing their efforts to analyze the amount of labor they spend on events to ensure they are truly profitable. From a strategic angle, the team is intent on investing in the High Involvement Planning™ process to help develop their five- and ten-year strategic plans and Critical Numbers. “Through the past year we’ve had to be reactive, or at best only looking one year in advance,” says Johnson, “and now we are ready to plan for the future of the business.”
“I now play The Great Game of Business at home by forecasting what my fiancée and I plan to spend for the month and what income we have coming into our checking account. This has allowed us to specifically know what type of expenses are coming up and where we should start saving and where we have a little more flexibility to spend money. I personally love playing the Great Game at home because it makes me create a budget and stick to what my initial plan is.”
~ Lauren Silva, Audience Development Director
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