Organizational a major challenge to the survival

Organizational
Factors for AXEL SPRINGER’s successful Transformation:

Company Introduction:

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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 Axel

In 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 website

Axel Springer SE @ Wikipedia

Sustainable culture change for
media companies must start at the top by Tilmann knoll @www.inma.org, 26 May
2014

Interview 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 2016

What Are They Thinking? The eight
principles for transforming Axel Springer by Ken Doctor @ www.politico.com, 04 July 2015

The Structures That Can Support
Your Digital Journey by Prof. Charles Galunic @ INSEAD Knowledge

11 Leadership Guidelines for the
Digital Age by Prof. Ludo Van der Heyden @ INSEAD Knowledge

Overcoming Resistance to Digital
Change by Prof. Charles Galunic @ INSEAD Knowledge