Evaluating Mathias DöPfner’s Strategic Leadership
Mathias DöPfner showed exceptional strategic leadership skills in spearheading the digital transformation of Axel Springer. As discussed in the case study, he faced numerous challenges both internally and externally but still managed to execute various innovative plans effectively. It is because of the strategies he employed that he implemented successful change in the organization. Some of the key strategic actions that underpinned the digital transformation of Axel Springer included the development of new products, mergers, acquisitions, and joint ventures; changing the corporate culture of the company; facilitating training and development of the employees and leaders of the company.
In the face of the digital revolution and the entry of giant technology firmssuch as Google Inc. and the Apple Company into the news broadcasting industry, there was increased competition and strategies had to be devised to cope with the emerging business environment. One of the strategies used by the company was to develop new products from its assets. This plan was executed when the company blended its offline content production segment of Bild and its online news segment of Bild.de. The online segment was concentrating on commercial advertisements and had little consumer content. As a result, the management decided to merge the two segments to spearhead its market penetration and provide consumer content through an online platform.
Another key strategy that enabled the CEO’s success in the digitization of Axel Springer was the use of mergers and acquisitions for smaller and established businesses that had an online presence. These stratagems were executed using late-stage investments in digital companies. For instance, the firm purchased a majority stake in Idealo, which was an online platform for comparing prices. In addition, Alex Springer entered a joint venture with Atlantic LLC, a move that was meant to support the company’s digital classifieds.
To manage the digitization process successfully, there was a need to change the style of management, the environment in which the workers operated and the ways in which they communicated. The management style had to be changed from the bureaucratic style to a more inclusive and consultative management style. As a result, leaders such as Kai Diekmann had their powers curtailed to enable a more consultative management style. The company also hired a digital generation leader, Stephanie Caspar, to manage Die Welt. This represented a change from the culture of hiring managers who had knowledge and experience in print media. To complete the integration of its human resources into the digitization, the company provided training and development opportunities such as sending some of their executives to Silicon Valley and initiating workshops for sensitization on digital transformation.
Other companies in the publishing industry tried various methods and yielded mixed results. For instance, the New York Times tried implementing the acquisition strategy but did not succeed because of the approaches they applied. While Axel Springer concentrated on acquiring and merging with digital companies, the New York Times did so with print companies resulting in insignificant efforts towards digitization. While the other publishers completely acquired and changed the leadership of the organizations, Axel Springer retained the founders of these establishmentsto avoid interfering with the existing cultures.
By 2014, the company was serving close to 98 million online customers and had expanded its reach to over 44 countries. Their digital revenue contribution to total earnings had also exceeded the expectations of the firm’s management. This position was considered a huge success as digital content had become a major contributor to the total earnings of the firm as a result of the transformation.
Lessons from Silicon Valley
One of the lessons was that business leaders did not fear technology. Instead, they embraced it. Unlike in Germany where the old generation opposed technology and stuck to old ways of carrying organizational activities, businesses in Silicon Valley took advantage of innovative strategies and used themto improve their organizations. This lesson was incorporated into the transformation of Axel Springer by organizing a three-day trip for their executives to Silicon Valley so that they could observe directly how technology was integrated into the publishing business.
Another lesson from Silicon Valley was the management system that was being implemented there. They learned that the strategies adopted by most leaders in Silicon Valley got rid of bureaucratic managerial practices that slowed down the process of making important decisions and hindered communication within the organization. As a result, the company stripped Diekman of some of his decision-making powers and put divisional heads in direct control of their departments. The management at Bildwas also changed from a centralizedto a decentralized system by transforming each department into a publishing unit of its own.
They also learned that the organizations at Silicon Valley were identifying and employing emerging talents in the digital world to steer their growth. In order to incorporate this lesson into their own transformation process, Axel Springer partnered with the Sunnyvale based Plug and Play Centre and established Axel Springer Plug and Play. The partnership provided the organization with ideas for new technologies and enabled them to connect with fresh digital talents. This also increased their investment opportunities.
Additionally, the trip to Silicon Valley sent certain signals to Axel Springer. One such signal was that the technology used in the media industry at Silicon Valley was ahead of the technology used in Germany and that their transformation towards a digital media industry was accelerating at a faster rate than had been the expectation of industry players. They realized that the digital transformation at Axel Springer had to be undertaken at a faster rate than it was happening at the time.
Strategic Challenges in the Next Three or Five Years
Despite the success enjoyed by Axel Springer in its transformation to the digital platform, the future presented challenges that had to be dealt with for sustained growth. Today, one of the challenges is the changing preferences of customers. Subjects that fascinate customers are changing. Indeed, the younger generation, which makes up the majority of digital content users, is also having interests in different subject areas that the company might not be providing. If the organization cannot keep up with the dynamic needs of the customers, its transformation to a digital media will not be sustainable.
Another challenge is that the company has to compete with technology companies such as Google Inc. that provide news to readers for free. The provision of free content is making it increasingly difficult for Axel Springer to monetize its digital content. The situation is complicated by the global outreach of the giant technology companies thereby making it more difficult for Axel Springer to market its content.
The most suitable strategy that the organization should use to overcome the challenges is the differentiation strategy. The differentiation strategy entails providing services or products with unique attributes that help differentiate the organization from its competitors. This can be done by encouraging innovation and knowledge sharing among employees of the organization. Another way to ensure the organization produces unique content is to invest in marketing research so that the changing customer needs can be mapped and addressed when they occur. Techniques that target a particular market niche are highly encouraged when using digital platforms. Customers usually look for product- specific information; thus, the advertisements should be designed in a way that gives them priority in the search engines such as Google, Yahoo!, and Bing among others.
To navigate the firm’s local and international interests, the CEO needs to have two teams that are responsible for local and international content. This division of labor will also lead to specialization, which will result in better results. The realization of goals will be underpinned by the concentrated efforts towards the implementation of the company’s strategic plan. Contents provided on the websites of the company should also be in various languages so that international consumers can select their familiar languages.
Beyond 2014
New media technology experts are better positioned to take advantage of the changing digital platform than old providers. The reason for this is the changing natureof media consumption. Only a small percentage of young people read content provided by old media content experts like newspapers. The old generation comprises a majority of the audience who watch old media content on the TV. Eventually, the younger generation, who favor new-fangled technology, will replace the older cohort as the topmost media content consumers. Consequently, new technology companies will be in a better position to succeed in this new environment due to their innovative powers that will enable them to constantly provide more appealing content to consumers.Axel Springer can compete against big technology companies such as Google Inc. by entering into partnerships withtelecommunication firms that provide data transmission services for faster diffusion of content. Old media businesses have an established customer base and a wide range of content that can be provided to the customers. Partnering with telecommunication companies will ensure that their insights reach their targeted audience faster and constantly. In this regard, Alex Springer will maintain its customer base and attract new consumers looking for a wider range of content that cannot be provided by new media technology companies.
Digitally Transformed Publishing Industry in 2020
The digital publishing company I would like in 2020 is one which uses the most state-of-the-art technology to provide the same high-quality content provided by the old media experts. While new technology companies have made it easy and less costly to access news content over the Internet, there has been a surge of fake broadcasts that has eroded consumers’ trust on most online platforms. One of the most distinctive competencies necessary to occupy, defend, and leverage the desired strategic position would be the integration of modern technology infrastructure to promote faster transmission of news that the current technologies offer with a touch of the old-style content verification while ensuring that consumers not only get easy access to news but also credible information. The positioning strategy I would adopt for Axel Springer is that of a legitimate publishing company that provides high-quality and immediate material through digital platforms. The Silicon Valley outpost would play a central role in enhancing such a strategy. I would use the young and digital talent for fast collection of information due to their prowess in digital platforms. However, the collected material would go through the old style verification stages to ensure legitimacy.