Axel Springer in 2014: Strategic Leadership of the Digital Media Transformation

Axel Springer in 2014: Strategic Leadership of the Digital Media Transformation

By
Robert A. Burgelman, Robert E. Siegel, Jason Luther
2014|Case No.E522| Length 27 pgs.

In 2013, Mathias Döpfner, CEO of the publishing house Axel Springer SE, a premier source of content in Germany, with its popular newspapers and magazines such as Bild and Die Welt, was evaluating the progress of his company’s digital transformation. The advent of the digital revolution at the end of the twentieth century had caused an appreciable shift in the publishing industry. Traditional print media players were confronted with major technological advancements and changes in consumer tastes and how news was consumed. Thus, the challenge for Axel Springer was in finding fresh ways to distribute, monetize, and further develop its old product. This had required the firm to re-evaluate and adapt its corporate strategy to most effectively align with the new age.

Döpfner had directed Axel Springer to approach this task with a two-stage digital transformation strategy process. Beginning in 2006, the company focused on organic growth and late-stage digital acquisitions. This stage of the strategy process had centered around profitability and the infusion of digitization into the corporate culture. In 2013, the second stage of the strategy process was driven by Döpfner’s formulation of the firm’s corporate mission to become “The Leading Digital Publisher” and his defining the company’s business as its branded content and not its distribution channels. With this new strategy, Axel Springer intended to espouse early-stage investments and entrepreneurship and grow revenue through three business models: paid content, marketing, and classified advertising.

As of 2013, Döpfner’s two-stage digital transformation strategy had been a stunning success. Axel Springer had more than 12,800 employees, total revenues of $3.9 billion, and EBITDA of $625 million. The company had exceeded the goals it had set for digital media contributions to revenue and EBITDA, achieved reach in 44 countries, and serviced 98 million unique digital visitors worldwide.

Looking forward in April 2014, however, it was clear that the future still held many challenges. Döpfner knew that Axel Springer would need to continue to successfully balance digital and traditional media business strategies, further reestablish the firm’s identity, and continue to pioneer the cultural transition within the organization. Most importantly, he realized the urgency of preparing his organization for the looming battle between digitally transforming old media content providers (like Axel Springer) and new giant digital technology experts (like Google) transforming themselves into media companies. He also pondered whether it would be possible, and if so how, to mobilize a sufficiently powerful coalition to help the digitally transforming old media content providers in that battle.

Learning Objective
This case is intended for use in a course on evaluating the implications of, and navigating the difficulties associated with, a corporation-wide product, infrastructure, and cultural transformation. The case explores Axel Springer’s evolution and the strategic decisions made along the way to turning itself from the leading print, to the leading digital, content provider in Germany.
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