Thursday, 31 January 2013

Polestar in Sweden

Sometimes I really feel privileged as a researcher when I get the opportunity to meet new people who are prepared to change the world. Well, if not the world, at least these guys seem to know how to transform the media business in Scandinavia. This kind of a feeling struck me as I boarded the plane back to Stockholm on the way back from the northern city of Umeå in Västerbotten, Sweden.

The visit took place in early January at Västerbottens-Kuriren (VK), where I was welcomed by Sture Bergman, CEO of VK-koncernen (VK Media Group) and Ingvar Näslund, Editor-in-Chief of VK. VK Media Group comprises of two newspapers – namely VK and Folkbladet published in the north of Sweden, in the city of Umeå and its surroundings, as well as a ‘freebie’ named Totalt Umeå, Nöjesmagasinet and some external brands where VK are resellers (Daily, Mix Megapol and Radio Rix). All except for Daily, a printing company, are directly related to media content. Sture Bergman is a former Editor-in-Chief, who has initiated a big cultural change as part of his job as CEO. The cultural change has been well reported in the INMA publication ‘Ideas – the magazine of newsmedia marketing’ in January, 2012. 

Sture claims that the conditions of corporate culture at VK and other media firms has been characterized by conditions in their market, which is part of the history of how newspapers have evolved in the local and regional community. 

The most important aspect towards change is insight, i.e. becoming aware of the need for change. Fundamental change cannot happen if people do not really understand why it is necessary, both on an individual and an organizational level. Sture and his management team carried out a survey and found that VK is a company with a hierarchic culture, where clans rule characterized by internal relationships and processes. The cultural change was driven by the need to focus on the customers, both readers and advertisers and their changing needs – in order to establish an 'innovation culture' driven by entrepreneurship. The market conditions are well described in the picture below (Ref. INMA ideas).

The management program was initiated in 2011 with a focus on being at the forefront of development. The objective has been to generate a passion for experimentation and new ideas. All the departments were moved into the same office and on the same floor (including previously competing newspapers VK and Folkbladet) – without any silos or walls between functions. VK editorial departments now work with customer segments and are basing publishing decisions on their situations and need for information. The key questions asked include: a) what stories should be published and where, b) the right platform for various information and news, and c) how to combine different platforms to maximize reach over a day and a week? This kind of development is also encompassing the mobile and online services, where a new kind of a ‘semantic web approach’ is in progress. 

Any decision on a ‘paywall’ will be based on producing enough relevant and valuable content to each reader (or customer segment). This is a true challenge and requires a lot of proactive thinking and data analysis, which was not taking place previously. Measurement was traditionally based on the number of readers of print and online visitors. VK ranks among the top Swedish online sites for news, in spite of its focus on the north of Sweden.

The figure above describes the regional reach of compared with, the leading Swedish website (and an evening newspaper) owned by Schibsted.

Print is not forgotten – VK are developing and launching new printed products and has recently invested in an upgrade of the printing press. Sture Bergman is pictured in the printing plant during my visit. I still like the smell of ink!

What impressed me the most is that VK has both a passion for development and a structured approach towards funneling new ideas into projects that can actually be launched commercially. As Sture put it he wants “200 ideas to select from, not only 2 as was the case in the past”. This emphasizes the management effort of getting everyone on board. Sture has also recruited new resources on his management team from other industries e.g. HRD Manager (with a background in ICA, Swedish largest retailer), a Development Manager (IT and telecom background) and a Sales and Marketing executive (from the other retailer Coop). And the proactive approach of the Editor-in-Chief  underlines the importance of change within the editorial team.

The project initiated by the management has taken place in three phases: 
(i) Information and analysis; (ii) improvement of efficiency; and (iii) development. Needless to say efficiency is required in the changing media landscape, as Swedish local newspapers have generally lost both in reach and advertising income in the recent years. VK have managed to achieve flat figures with this regard, and have remarkably improved efficiency at the same time. 

Now the focus for the next three years is built around three main areas of development:

  • A new Business Model for online publishing.
  • The development of ‘Totalt Umeå’, the weekly freebie, aimed at fortifying its position as #1 in view of local competition.
  • A unique mobile service platform including editorial and commercial competence (new platform for a media service concept).

The main challenge remains the change of culture. In order to achieve overall success and to remain as profitable as VK has been, there is a real need for change in attitudes. The whole media group needs to turn from inside to focus on people and businesses on the outside. As Sture put it in his recent presentation at a Media Forum in Oslo: “It is not enough that we know… It is not enough that we have to… We must have the will to… It’s scary! It’s inconvenient! It is difficult! But great fun!”

I wish VK and their staff every luck in the transformation. The attitude is right and I think we are looking at a true ‘Polestar’ – a future winner in media in Scandinavia. It's all about attitude - agility - and a new innovative culture.

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