Technology and Innovation

Martha Stewart is one of the most visible entrepreneurs in the United States and in many other Western countries. After nearly thirty years of building a home décor and publishing empire, Ms. Stewart served five months in prison for lying to investigators about a stock trade. This adversely affected both her personal image and Martha Stewart Living Omnimedia (MSO). However, since her release from prison, both Ms. Stewart’s public image as reported in polls and the stock and other indicators regarding her company are on the upswing. This places the company in a place where evaluation of its strategic environment for the future and potential problems should be reviewed in consideration of possible strategies for the future. Martha Stewart Omnimedia’s strategic environment is complex. The PESTEL framework is a commonly used acronym to define the external influences that comprise the strategic environment, including social, political, economic, technological, environmental, and legal components. Of these, the most important and potentially impactful for MSO are social and economic (her legal woes were personal, not related to the company). Since the brand is so strongly tied to Ms. Stewart’s personal image, the social reaction to Ms. Stewart is a major influence on the brand’s success. So far, the reaction from most of Ms. Stewart’s customers to her prison term does not seem to be negatively affecting sales. Her now-famous poncho, made for her by a fellow inmate and worn on her release became an overnight fashion item, reinforcing her potential for future popularity. She is also reported to be trying to project a more positive caring image, partially in response to stories published at the time of her trial that she was demanding and unkind to employees and others. Finally, whilst magazine pages have reduced in many of her publications, sales have not declined for her various home products, indicating unlikely long-term social repercussions regarding her time in prison. Economically, MSO stock tumbled significantly with her conviction. The company also made several moves away from the Martha Stewart name at that time; removing the name ‘Martha Stewart’ from MSO’s Everyday Food magazine, for example, and downplaying her name on the Martha Stewart Living publication. MSO has experienced recent financial revival, however. Stock prices have trebled since Ms. Stewart’s conviction, and current concerns are that it is actually overvalued. The recent Kmart-Sears merger moves the Martha Stewart home lines into Sears outlets in addition to their traditional Kmart location, a potential windfall for MSO. However, one important element of the economic environment to consider is increased competition in many of MSO’s primary product areas. Many celebrities in the US are introducing their own household product lines, whilst the number of home, food, and decorating publications expands yearly. Markides (2004) similarly outlines four main internal influences that impact the strategic environment: culture, structure, incentives, and people. Culture includes the organization’s style and values, traditions, expectations, and norms, whilst structure includes the various processes related to responsibility, communication, and responsibility. Incentives include the goals and returns of the organization, usually financial, whilst people include the organization’s employees, their ideas, and their potential for contribution. MSO’s culture and structure are positive aspects of their environment. The company has rallied around Ms. Stewart, both during her prison time and since her release. Whilst Ms. Stewart is appealing her conviction, she went ahead and served her time anyway so as to get it out of the way. This stabilized the company, reassured her employees, customers, and partners, and lessened the impact of the situation. As Seglin (2005) contends, “agreeing to serve time without delay was a sacrifice” and is seen by those in the company as their leader being willing to take one for the team (91). Internal financial incentives remain strong, as does the company’s overall economic situation. People, however, are a particularly improved area of MSO. Ms. Stewart relinquished a number of her responsibilities upon her conviction, and the company was able to bring in a number of highly talented, experienced personnel who are expected to make significant contributions to the print publishing and television projects in particular. For example, MSO was able to bring in Susan Lyne, a top-notch CEO from ABC at a time when the MS brand is preparing an expansion of its television programmes to include a talk/how-to show, Martha, and an Apprentice spin off, based on the popular series by fellow entrepreneur Donald Trump. Some critics, however, contend that Ms. Stewart is still too dominant in the MSO structure and has not allowed enough other people to fully engage in planning and decision-making. For example, Atkinson (2005) quotes Brian Terkelsen, the senior vice-president and director of entertainment at Media Vest USA as saying that whilst Ms. Stewart is likely to be successful in restoring her name and starting new ventures, she has still not surrounded herself with enough advisers nor empowered a large enough number of others to ensure success or stability for MSO. This is a significant environmental factor for MSO relating to the people element. MSO does face a number of potential problems, both in its short-term and long-term future. First, Ms. Stewart’s recent issues have brought home the reality that she will eventually not be part of the company. She is currently in her sixties and in good health, but a time will come when she will not be available. As with any company that is built around a single person or image, this is an inherent danger to the entire MSO organization. Whilst this is a short-term problem now due to her legal and personal issues, it will be a major problem in the long-term when Ms. Stewart eventually passes away or is unable to continue as the image at the forefront of MSO. The company needs to consider now, therefore, ways it can begin moving from being Martha-centered to being more focused on the ideas and culture she presents to her audiences and customers. In addition, executives need to be further empowered to run the company without as much Martha. There is simply too much of MSO riding on one person for a healthy long-term future outlook. There is further concern whether Ms. Stewart will be able to continue to carry the brand, even if she remains on board. Ms. Stewart’s recent legal woes brought to light a number of personal issues, where she was reportedly unkind and even abusive to employees. This lessens her appeal to customers. MSO is launching a television programme, Martha, in which Ms. Stewart will star. In addition to offering the various kinds of ‘how-to’ projects and information common in the company’s other programmes