Organizational Factors for AXEL SPRINGER’s successful Transformation:Company Introduction:Axel Springer SE; headquartered in Berlin, Germany; was founded in 1946 by Axel Springer in Hamburg. Today it is the biggest digital publishing house in Europe, owing multiple newspapers and magazines, such as Bild, Die Welt, and Fakt and has more than 15,300 employees on its payroll. It generated total revenues of about €3.29 billion and had earnings of €595 million in the financial year 2016.
The contribution of digital media activities to its revenues is 67% and nearly 72% to its earnings. The company has a presence in more than 40 countries through various subsidiaries, joint ventures, and licensing agreements. The company is currently headed by its CEO Mathias Dopfner. He has been in the role since 2002. Mathias Dopfner is widely credited for turning around Axel Springer into a global leader in Digital Media and advertisement through his vision and his initiatives in transforming the organization. This document looks at Dopfner’s leadership in influencing the Organizational Factors in leading the successful transformation of Axel’s business.
The document is based on information available over internet through press articles, academic research by business schools and interviews/videos available.Need for Change:The start of the digital change and adoption since 2000 had caused a considerable shift in the publishing industry. Traditional media companies were faced with major technological advancements and changes to consumer preferences and how the news was consumed. Thus the challenge to Axel Springer was to find new ways of how to do business. They were facing dwindling readership as the consumers were becoming more internet savvy and the advertisement rates were falling. The advertisement business model was also shifting.
They were faced with fall in revenue and profits mainly due to digitization. It became a major challenge to the survival and sustenance of the industry and for Axel Springer. There was an urgent need to change the business model and the organization culture from being a print media and publishing house to a digital model wherein more opportunity for journalism could be created.CEO Takes the Lead:Axel CEO Matthias Dopfner decided to take the lead and as a response to the changing business environment; he decided to break free from the industry practice and focus on global expansion and digitization. As Axel was transforming its business model; Matthias Dopfner realized it was mandatory to change the organizational culture at all levels of the organization for his transformation plans to succeed. He firmly believed that the digital era cannot be ushered in with the traditional cultural practices.
The Culture Change:As reported by Nicola Clark in her article in The Irish Times; Dopfner was worried that the company’s management culture was too hierarchical and risk-averse, leaving it vulnerable to challenges from nimbler US technology companies like Google and Facebook, as well as rising digital media brands like BuzzFeed and Vice. “It was very clear to me that we needed to accelerate our cultural transformation,” reported Nicola quoting Dopfner from a recent interview. This clearly indicated that as a CEO; Dopfner was quick to realize the need for cultural change and also he wanted the change to start from the very top. Instead of hiring consultants; Dopfner chose to send 3 of his most senior managers to Silicon Valley for nine months. He wanted the top executives to learn from and adopt the innovation culture from leading digital companies like Google, Apple and Airbnb, etc. The objective being the management understand and identify opportunities for digitization in the publishing and media industry. He followed this up with promoting experiential and educational trips to Silicon Valley for all the top management.
Next he setup educational programs for creating awareness amongst the rank and file of the organization on the opportunities offered by digitization. These included activity days with sessions on multiple digital topics. Online informational videos were created for the staff to access them anytime to clarify various concepts of digital. Axel created platforms and opportunity for groups of people across various departments to come together on common digital topics to discuss and collaborate.
These were facilitated through breakfast or lunch time gatherings. There were clubs setup where new technologies can be explored and practiced.All the above helped the culture to change within the organization. The Executive leadership realized the need to adopt change and they witnessed first-hand from leading global digital companies the required work culture and mindset to succeed in the digital world.
They were able to transcend these down the organization structure. The learning and collaboration opportunities created across the layers opened doors for people to think, innovate and come up with ideas. The environment allowed these thinkers to collaborate with like-minded resources from across departments to nurture and develop the ideas to successful business practices.
All these reflected positively in the financial results with Digital share or revenue and profits surging ahead.Organizational Strategies of Successful Transformation at AxelIn an interview available on YouTube; Dopfner shared his 3 Strategic Principles for the successful transformation at Axel as:No Silos: His first principle was not to allow the organization to create Silos. This is considered to be his most important decision which was in sharp contract with what other media companies were doing in that period. He thought silos will create winners and losers and the loser side will hold down the winning teams from realizing full potential. His action of breaking down silos made sure everybody is part of the growth and success. Dopfner admitted that it was difficult and took time but in the end created a very different and winning mentality within the organization.No fear of self-cannibalization: This was a very important message for the organization. This removed the fear from the minds of the employees and it reassured them that everyone will be part of the success and no one will lose out.
Dopfner held the belief that cannibalization is going to happen anyways as the industry changes; so instead of fighting it he allowed the organization to do it from within. This way he had the support of all his employees and without fear of losing out the organization as a whole participated in the successful transformation. No integration: As acquisition was the route taken for growth; the challenge was of differences in work cultures amongst the acquired companies and Axel. Dopfner decided that there would be no Integration in the traditional sense for acquired companies.
He ensured that there was no enforcement of corporate culture on individual companies. He desired that the companies use the strengths of the corporate but maintain their own uniqueness that made them successful in the first place; if that helps drive their businesses. His strategy made the founders to stay back after acquisition to further grow the businesses which normally is not the case in other organizations.
With founders staying back; the corporate could gain employees trust while retaining the knowledge and leadership that made the company successful. This decision was instrumental in fostering the entrepreneur spirit; encourage diversity amongst the companies which eventually led to success and growth for Axel.Fostering Innovation: One of key success factors for the successful transformation at Axel was how Dopfner managed to reorient the corporate culture to foster internal innovation. He made it clear that the Corporate existed only to help individual companies do better. He encouraged and setup programs and platforms for sharing knowledge and best practices amongst the various companies as part of the corporate. Various programs at different levels of the organization helped grow and nurture ideas. He created a system of mentorship and support and encouraged teams to work across departments and companies. He also setup programs for employees with innovative ideas to apply for a trip to Silicon Valley to nurture the idea and present back to the management findings and business case.
Kai Diekmann Bild’s publisher (Bild is a flagship publication of Axel) was quoted as saying in the Irish Times article “I told them we must be ready to make mistakes and to see that failure can be a precondition of success.” This coming from a top executive was a very bold and empowering statement. One of the biggest challenge was to change the mindset of the staff from being conservative and continuing to do things they exceled in; into looking at new opportunities. Persuading Bild’s staff to experiment with what was already one of Germany’s most successful media brands was a struggle at first, Diekmann admitted. Summary:It is evident that the Leadership and the CEO at Axel has done an exceptional job of transforming the business from being traditional print and publishing into a global successful digital media company.
It reinforces the below (from article by Prof. Ludo Van der Heyden @ INSEAD Knowledge)”Digitalization must be supported by the firm’s corporate culture. The digital revolution is indeed cultural, not merely technological.
As with any large-scale cultural change, digitalization will never take hold unless it is driven by top executives, under the board’s leadership. Digitalization demands a greater level of collaboration. Business success can be achieved only through continuous collaboration and ongoing conversations between shareholders, boards, executives and “frontline” employees. In addition, digitalization is blurring the lines between different industries, heightening the importance of cross-functional and external collaboration.”References:Axel Springer Annual Report 2016 @ Axel Springer websiteAxel Springer SE @ WikipediaSustainable culture change for media companies must start at the top by Tilmann knoll @www.
inma.org, 26 May 2014Interview with Matthias Dopfner at https://www.youtube.com/watch?v=3YCGJeLheHc Axel Springer reboots for digital age by Nicola Clark @ The Irish Times, 04 Jan 2016What Are They Thinking? The eight principles for transforming Axel Springer by Ken Doctor @ www.politico.com, 04 July 2015The Structures That Can Support Your Digital Journey by Prof. Charles Galunic @ INSEAD Knowledge11 Leadership Guidelines for the Digital Age by Prof. Ludo Van der Heyden @ INSEAD KnowledgeOvercoming Resistance to Digital Change by Prof.
Charles Galunic @ INSEAD Knowledge