20 Nov 2019
Making a digital transformation work. Part 1
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How did RTL Nederland, part of Europe's largest TV, radio and production company RTL Group, transform themselves to face a new competitive landscape?
The challenge was clear: turn an analog, creative, intuitively-led organization into one with a tech platform that could provide a future for RTL. And it had to work in a highly complex and fast-changing competitive landscape with competitors like Netflix and Facebook changing the rules. So how did RTL fare?
Pieter Ebeling, Partner, Consumer, Retail and Digital at Odgers Berndtson Amsterdam, spoke to three senior leaders of RTL Nederland in the first part of this series: CEO Sven Sauvé, CTO Giovanni Piccirilli and CCO Lucien Brouwer.
Pieter Ebeling: Has RTL’s digital transformation reached its end?
Giovanni Piccirilli: : If you ask me ‘have we completed the transformation of the whole enterprise’, my answer is ‘absolutely not’.
We have not transformed as an enterprise yet. What we have done is major steps in transforming our digital side of the business. Not all of it either, but most of it. The way technology and the business unit interact has changed, and the way these two business units interact with the rest of the enterprise has also changed.
In my mind, in the overall transformation process, we now covered around 30-40%. We will use what we have done until now as a reference to transform the rest of the organization.
PE: When does a digital transformation succeed?
GP: Transformation is not a discussion about technology or about becoming ‘data driven’ or ‘KPI driven’. It is a lot about mindset and how people interact with each other.
It’s fundamentally about transforming a company from one that pre-plans and executes in an accurate way to one that has business goals, starts working on them and achieving them in an iterative, agile way.
It is a mindset that you start having in the enterprise when you know you cannot plan twelve months in advance.
What you can do is set yourself goals and hand these goals to teams and help these teams solve the problems along the way.
Also, it implies that the organisation moves from ‘bossy’ leadership to a servant leadership approach.
"Leaders are not telling people what to do, but leaders are helping teams to solve their problems and sharpen the strategy"
It is a mindset and a culture that allows failure as part of the working methodology. Failure needs to be good failure and not bad failure. It should be a learning process where you keep improving the way you develop your product and approach the market.
Fundamentally, it is a mindset whereby people behave differently and address (market) challenges differently. That allows the enterprise in the end to be faster, more dynamic, more flexible and adaptable to internal and external circumstances.
If you want to change your business plan or adapt your product set to new market circumstances, you could hereby do it pretty rapidly while adapting along the way.
Lucien Brouwer: I think a digital transformation is successful if the transformation has taken place throughout the entire organisation. What I mean by that is that it is not seen as a project or a programme, but as a new state of being. It needs to be tackled in an instrumental way, become anchored in the DNA and the core of the company. This is mainly dependent on people and the way in which these people work together.
Sven Sauvé: I think it never succeeds because it is an ongoing process. Developments are going so fast that it is a continuous process, a permanent phase that you end up in.
PE: What are the risk factors in digital transformations?
GP: Success is dependent on people and thus the greatest risk is people. If you have a start-up, you start with getting the right people in with the right mindset. But what if you have an organisation that has, by and large, a set of people and behaviours which have been defined in a certain way during the last 25-30 years? The level of resistance you get is pretty high. That has to change.
What I saw is people saying they want to change, talking about clichés like ‘the only constant is change’. But when it comes to really do it and make sure that they change and understand what it really means to them and how it impacts them, you get a high level of resistance. Because at the end of the day, the role of each person in the enterprise changes, the amount of managers decreases, you end up to start working in a more ‘multi-disciplinary/agile’ way.
All the levels of power change and the required capabilities are completely different than the ones you needed before. The first 1.5 years in the organisation here, I went through moments where I was told I was managing by fear and doing all the wrong things and ‘people are leaving’.
"Because when you do change, a lot of people with knowledge who used to be the kings in the organisation, start leaving the company, because things are not the way they want them anymore"
That is a pain you have to go through. You have to be conscious, you have to have the support of your board and colleagues, to make sure that whenever you go through these hard moments, you still get the full support to make it happen.
Furthermore, you end up deploying new technologies, while in reality the organisation is not ready for them. To avoid turning it into a technology problem, it must be a business problem to be solved first, with technology being only part of it.
It was doubtful at some point if we were doing the right things and we did have a fair amount of people leaving.
"Now, slowly but surely people are starting to believe we made the right decisions. New blood, new DNA and a new mindset are entering the organization”
PE: In a company like RTL there is always a business consequence for the choices you make. That could be disappointing sales or higher costs. What were the considerations for you and the team?
SS: First of all, you have to remember you’re competing with parties that have a clean sheet, digital natives. Compared to us, we are a company that has a great legacy, in need of an internal transformation. Our competitors do not have such a legacy at all. How do you ensure that the core business manages this innovation and the new competitive world?
The second is ‘how to organise that internally’. Maybe through a separate setting where you put the digital activities together, a kind of incubator? When do you make it your core business, when do you integrate it, when do you phase it in? The issue of internal transformation, how do you organise that?
The third element is ‘who do you do this with’. Because one thing is certain, you need completely different talent for that. It must be the right mix of your own people, who learn new things, skills, supplemented with talent from outside, so that you have the knowledge and skills to make that transformation quickly.
PE: Thank you, we’ll continue this conversation in Part 2 where we’ll look at the type of leaders who really ‘get’ transformation and why making mistakes is often the best way to get things right.