Why Talk of Transformation Is Often Short on Action
In September, Publishing Executive hosted FUSE: The Convergence of Technology & Media in Center City Philadelphia. It was the maiden voyage of an annual summit for executives leading digital technology strategy at top publishing and media companies. As you’d imagine, many of the conversations were based around disruptive technology in the industry and the need for publishers to embrace transformation.
Yet talk of transformation frequently doesn’t yield substantial change, says The Economist’s Subrata Mukherjee. Mukherjee contends that it’s incumbent upon the C-suite to create the right conditions for transformation to occur and for the agents of change to take meaningful action. Those conditions range from instilling a culture that empowers innovation rather than adherence to the status quo to proper financial support and flexibility when it comes to budgeting transformation initiatives.
As vice president of product management Mukherjee has executed a radical business transformation of the renowned publisher’s circulation business. At FUSE, Mukherjee presented to the 100-plus media and technology executives in attendance how The Economist managed the strategic shift in driving subscriptions and the technologies that powered new approach. Here Mukherjee shares his experience and insights on the conditions leadership need to set to truly enact business transformation.
Why does talk about transformation often not result in actual change?
Media executives, particularly the C-suite and the board of directors, are often very short-sighted and they are incentivized to deliver immediate results during the year. That is how their performance is judged. The whole industry is at strain and so each year it is survival of the fittest amongst competitors. The whole point about being disrupted in a few years does not resonate much when the executive team is focusing on the current year’s immediate results and not being outplayed in that current year by another competitor or a new startup. So, where is the incentive to innovate? It’s a very catch-22 situation for the entire industry.
Does the company culture play into this challenge?
I have worked for many companies where middle and senior management is comprised of very skeptical naysayers. They focus on existing ways of doing things and they are often the ones that drag the company down. Executives need to have a strategy to counter against this attitude. Oftentimes these middle managers don’t see the forest for the trees, and so they see any disruption as a threat to their existence and relevance in the company. Leaders at all levels need to have a desire to move forward and evolve their areas of responsibility; else stagnancy sets in, combined with groupthink. This culture acts as a headwind against any transformation activity.
What does the CEO need to do to counter this type of culture?
The CEO needs to empower executives to challenge assumptions and conventional wisdom. Often the appointment of a chief digital officer or a chief product officer is the first step. However, the key word is empowerment. Any person leading transformation needs to be judged by the amount of disruption that he or she advocates and the eventual outcomes of those initiatives. Transformation is not a popularity contest, and in many of the transformation initiatives that I have led I have managed to offend a few of my peers and some of my bosses’ peers. Yet once outcomes are measured, everybody comes out as winners and those people offended have become trusted partners.
Transformation is expensive. How should it be funded by CEOs?
In most of the initiatives I have worked on, budget was always an issue; multiple levels of approval, pushback to reduce costs, and super low tolerance for any overage. That is the most challenging item in my mind. Budget needs to be tightly controlled, and there needs to be a contingency for any increased scope of work.
How do you control scope creep? Do you put in tighter governance?
Governance is needed but it is not always the only answer. The amount of time and money we spent to fund elaborate governance activities can fund some kind of a contingency. Sometimes the scope overage is not as it looks to be. Many times in a disruption initiative we come across increased scope of work that is only discovered during testing and UAT [user acceptance testing], and mostly because the incumbent platform has a lot of band-aids and things are not documented. There were times where my team got blamed for not doing the right amount of discovery, but those cases could not have been preempted as they were edge cases or exceptions built into the incumbent platform that were only known by the few people who implemented those many many years ago.
In that case, should the scope be open ended?
There needs to be a bit of fluidity baked into disruptive initiatives. In general, scope needs to be controlled at a high-level, but some leeway is needed for the details. I always give the example of building a bathroom. We need electricity, plumbing, double vanity sink, and a bathtub. The bathtub in this example is the feature. The users say that the bathtub needs to be white, of a renowned brand with good reviews, and with jets. But the details around whether the jets need to be pulsating or need color-changing LED lights is where discrepancies arise. Disruptive initiatives need to be a bit flexible in these finer details.
We have to remember that any transformative initiative needs to be 5- to 10-times more efficient than the incumbent platform. So if there are process enhancements that are gradually conceived there needs to be some room for that change. Otherwise the program will drown from excessive governance and lot of time would be spent on change requests. This would again encourage the naysayer culture and impose limits on how much the transformation initiative can achieve. That said, I want to clarify that I am not advocating a Wild West environment. All I am saying is we need to be realistic in our expectations.
What advice do you have for properly budgeting transformation initiatives?
It all comes down to budget and how much money is available for investment on transformation initiative. Companies need to seriously think of setting aside x% of each year’s revenue to fund transformation. And a good finance team would be able to capitalize those initiatives and hence get tax breaks and depreciation advantages. Transformation initiatives tend to have a longer payback period, say three, five, or seven years. CEOs should not be discouraged by those metrics. Those 5 or 7 years and that investment can become your savior. I always say to my audience during various talks: “If you don’t plan on disrupting yourself, someone else will.”
What is the key to your success?
Perseverance is the key. Getting a transformation initiative funded is not that easy. It needs a fully fleshed-out business case and that needs to showcase the eventual benefit and outcomes. I have an MBA in marketing and an MS in tech management with 25-plus years of technical innovation. These days IT is less of a supporter and more of a business evolution driver. I have managed to evolve my career in strategy, marketing, technology, customer service, design and become a business transformation evangelist. As I have said many times, my job is to see a dream and be able to sell that dream. Selling dreams is not that easy, particularly when the ROI of that dream is to be measured.
Follow Subrata Mukherjee on Twitter @sumutech.
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Denis Wilson is the content director for Book Business and Publishing Executive as well as the FUSE Media and FUSE Digital Marketing summits. In this role, he analyzes and reports on the fundamental changes affecting the media and marketing industries and aims to serve content-driven businesses with practical and strategic insight. As a writer, Denis’ work has been published by Fast Company, Rolling Stone, Fortune, and The New York Times.