Strategic Digital Transformation Presented in Aalto University, BISE Pro - Professional Diploma in Business and Information Systems Engineering
Jussi Lystimäki, CEO Schibsted Classified Media, Finland May, 2014
Framing the topic for top management and company survival Company direction – drifting or controlled transformation to survive in change
Friction and growth, framing digital transformation
Why this should be a top topic in the boardroom – changing your fundamentals can take years – do you have time for it?
Case Schibsted – what to learn from us Why Harvard and others are writing about our success as a case study
Transformation does not stop, you might need to cannibalize yourself
What we have learned about transformation – 10 principles we believe in
Summing up My top learnings for today
Contents in short
My framework – working in digital change since 1995
IT/Digitalization for online banking, Telcos and transactions, 70+ people, Exit to Ixonos Plc 2007 (OMX), Deloitte FAST 500 EMEA 2006
One of the global #10 in digitalization of BI market intelligence. More than 150 people, over 100 countries, VC-backed (Capman, 3i)
Early stage and incubation – Invested into disruption thru internet/mobile, offices in FIN, ISR, GER, UK, CHINA, US, listed on London AIM-list, market cap 200mil euro. Exit 2002.
One of the top media groups, Mcap 5+bn euro, in top-3 in global online classifieds. Listed in Oslo. A global success story in digital transformation
The leading communications group in the Nordics, 800 people, Fully owned by Finnish state. Klikki is the leading next generation digimarketing company, In 2010, 2011, 2012, 2013 EMEA Deloitte FAST 500
One of the global top10 in digital UX and service design. Deloitte FAST 500 EMEA 2008, 50% California, 50% Finland, 90+ people
Framing up the topic
The future of any company is driven by decisions taken
What is the focus and use of time in the boardroom?
Topics discussed and decisions made in the boardroom?
In which role the board gives the best value for the growth?
What is the digital transformation competence in the boardrooms?
Media companies’ landscape has changed to different planet – its not only about simple logic anymore
• Business fundamentals on how media industry makes money has changed quicker than ever expected – still it took some 15-20 years from the first signals
• Technology enables – and brings in opportunities – others will capitalize on them if you are not
Example: one fundamental - key corner stone of selling advertising into media product is not that simple anymore and its not about skilled media sales organisation anymore
Digitalization is changing every business and new ecosystems evolve around you – you want it or not
7
• Digital transformation requires to take technology into core competence, key principal and asset - its not an extension of traditional IT
”Bad business decisions continue to be made by media companies because of the significant lack of technology leadership in both executive and middle management.”
”Media companies must evolve away from their historical strengths based on distribution control, and must embrace technology as a key principal”.
”Many media companies have treated their existing engineering organizations as an extension of traditional IT models, with mediocre engineering talent endemic in their organizations”.
Its not survival of the fastest, strongest but fittest
• For top management – the transformation is a major change requiring both quick wins but also brave and strong decisions to make it happen from top down
• 2014 is even harder for media companies as Google, FB, Netflix, mobile apps, … are pushing harder and harder to change how people consume content and spend their time
Key Findings in 2011:
”…comes not from implementing new technologies but from transforming your organization to take advantage of the possibilities that new technologies provide.”
”Re-envisioning customer experience, operational processes and business models”
”…does not happen bottom up. It must be driven from the top”
”…focus on the “how” more than the “what.”
The findings from a global study of how 157 executives in 50 large traditional companies are managing Digital Transformation: A Road-Map for Billion-Dollar Organizations
Digital transformation should be a key topic in the boardroom
Why should the board question and challenge the insight and plan of the management team? … and ask about the strategic assumptions and what is seen in the horizon?
Decisions about the future require insight and envisioning
Did he see what ”ships and guns” meant for his troops
and people?
Signals Trends Change drivers
What if – you could foresee your ”ships and guns” early enough to understand the coming up change for your
business and industry?
Directions of development
Phenomena
What if – you could understand development
alternatives for your business and ways to compete in new
phenomena?
Scenario
What if – you could have active
and proactive talks in the
boardroom about skenarios and
needs for digital transformation?
End Game
What if – you would understand where you need to be in 3-5 years time to win
your game?
End game is about digital transformation and developing your shareholders’ value to keep up in the game
Example: Business models transform in media industry
…but also in fast moving internet giants need to transform their businesses
Google’s trading logic
Printing and selling content
Using market cap to buy transformation
Market capitalization is a top management and boardroom topic – the future is key
Comparison of two Nordic Media Groups with Ebay’s stock value development – different strategies and different future skenarios
Case Schibsted
What Schibsted can tell us about digital transformation
• A successful transformation on global scale in media industry • Super traditional industry – but now co-battling with FB, Google and other tech giants
Schibsted used to be a traditional media company in the start
150 years old traditional media group listed in Oslo stockexhancge
Business logic was in traditional media, TV, newspapers, movie distribution
The top management and board members saw the change coming early on and decided to take ”internet business” into the core of the company and let it drive and shine, cannibalize and transform
The key was to make it early on and build on it
=152M euro
Example: online classified site in Norway, Finn.no
Digital transformation is now in speed and the media group is growing with good profitability
Online businesses are bringing in significant part of top line
…but majority of profits
What we can learn from Schibsted for other media companies
1. Scale is the name of the digital game. Once a market opening is found, it needs to rapidly exploited – going into others’ territories
2. The online services model allows publishers to get into new money streams that can grow over time and are cousins to publishers’ traditional activities
3. Getting in early is fundamental to success
Key findings from us:
We have learned that mental acceptance for change and thinking big drive us to new digital landscapes
“You must accept that if you have disruption in an industry, that’s a fact. If you don’t disrupt yourself, somebody else will. And at the end of the day, it’s better that we do it than somebody else does it.”
” We still have the print parts of our business, but we are mainly a digital company. You must mentally say to yourself, ‘Okay, now we have really changed the core of our business and become a digital company.’ If you don’t, you stick to old ways. The most important thing is to change your way of working and put the emphasis on the future, not on the past.”
”The fact that we say we must change and accept the fact that our old business models must be replaced by new ones doesn’t change that we believe in journalism and think journalism is something very important from a societal point of view, but also from a business point of view. It’s not about giving up journalism and putting all the money into classifieds. It’s also about innovating journalism.”
” Going digital is a process that doesn’t stop after you add ones and zeros into the mix. Even for those like Schibsted that have profited from early-mover advantage, fear of getting scooped on the new, new thing is a constant worry. As other publishers have learned the hard way, it is all too easy to end up becoming yesterday’s news.”
” We are considered to be a very successful company compared to our national and regional peers but the problem in a globalized market is our new competitors are Google, Facebook and so on. These are very clever international companies with lots of power and this is a new competitive field for us. To be best in Sweden, or Norway, is not the big thing any more.”
Ten digital transformation principles we believe in
1. Always ask which job the user is trying to do
2. There is no final product version, always ask yourself what you can do to make products better
3. Measure everything, real-time
4. Solve problems based on facts, and use all available data
5. Involve people with different opinions and skills
6. Consensus is good, but speedy decision is better. Trust yourself and others to make good decisions
7. Urgency matters, and fast execution is better than slow
8. Take risk and when you fail, fail quickly. Learn from it and move on
9. Take your work seriously, but not yourself too seriously
10. World class changes the mindset, so be as ambitious as you can
Summing up
What I think is important in digital transformation today • The boardroom and top management needs to accept fact of distruption and act on digital
transformation – changing business models usually takes years – do you have it?
• Its not about being big in the local market anymore – its about scale and exploitation to build enough value thru new business models and revenue streams
• Going digital is a process that doesn’t stop after you add ones and zeros into the mix
• Its about agile and lean marketing game to make the ”movement” spin up. You can win or fail in the internet quickly – both are good things. Some companies burn and push 100+million euros into marketing, some do it together with users and recommendations even quicker. You choose how great you are in this game.
• Agile and fast moving is key – fast execution and fail fast – involve right people
• Involve people with different opinions and skills to create a team that wants to win, use data as much as you can to measure
• Take technology and transformation leadership into your core competence
• Thinking ”world class” changes the mindset, so be as ambitious as you can
