UK: Leadership At All Levels - Leading TMT Organisations Into The Digital Future

Last Updated: 29 November 2010
Article by Deloitte Technology, Media & Telecommunications Industry Group

Most Read Contributor in UK, August 2017


Digital is revolutionising the technology, media and telecoms (TMT) sector, acting as a catalyst to change business models and putting increased focus on Leadership to guide organisations through the change. In developing this paper, Deloitte LLP and Spencer Stuart have combined perspectives from interviews with a number of leaders from TMT clients with their own expertise and experience of developing leadership at all levels in organisations.

This paper is the second in the 'Digital Leadership' series,which explores how TMT organisations can develop the agility to successfully navigate the digital transformation whilst developing the new skills and capabilities required for the digital economy. The first paper in the series, called 'New Shapes and Sizes', explores organisation design and can be downloaded at: and

Executive summary

"We don't need someone who just breaks eggs; we need someone with a ferocious intellect who can set out a clear and compelling vision and align people and their behaviours to it."

Rona Fairhead, Chief Executive Officer, Financial Times Group.

Digital has been a double-edged sword for Technology, Media and Telecoms (TMT) organisations. On the plus side it has created many new avenues for growth amongst a connected and technology-savvy consumer base. On the flip side, it has suddenly and drastically reduced the effectiveness of business models that have sustained the industry for decades. The recent downturn has added to the pressures resulting from these structural shifts by draining balance sheets of cash and organisations of the resources to effect change.

Never has the call for leadership been stronger. Now more than ever, organisations need leaders with the ability to galvanise a group of people to work together on tough problems, many of which have no known solution. We define leadership as a set of actions or activities, rather than as a position or the unique character of a visionary. As such, we argue that leadership is needed across TMT organisations as they tackle the multifaceted challenges of the digital transformation; leadership is needed at all levels.

Traditional players need to overcome significant cultural barriers as they look to change working practices that have thrived for many years. Leadership is about helping people to transition past these existing ways of working and seeing the world, it is about adapting organisations for the new environment they are facing.

TMT leaders have been, and continue to be, challenged to demonstrate a set of skills and insights that are new to almost all of the current leaders across the industry. They need to navigate their organisations through incomparably tough market conditions whilst also repositioning and transforming them.

"You can put all the checks, balances and controls in place but unless you change the culture it will be meaningless. Unless there is real leadership that stands up and talks about digital, that lauds it, that boycotts award ceremonies unless they have online awards, that sponsors online awards, it won't become a digital culture."

Malcolm Wall, former Chief Executive for Content, Virgin Media.

Many leaders are still struggling to make complex choices about the future of their business, to articulate a convincing narrative of what digital means for them. TMT organisations need to develop leadership at all levels so that the right people can take key decisions around business model and product innovation. Traditional organisations need to develop agility to manage the transition to a new market place which is defined by consumers whose consumption habits and demands are ever-changing.

"I've been in this business 12 years and for the first 8 years we were ahead of our customers, delivering multi-channel, PVRs, high def, etc. As an industry we are now behind our customers' expectations and demands – devices have changed everything."

Mike Darcey, Chief Operating Officer, BSkyB.

This is the central challenge for chief executives and their management teams. What mix of approaches will enable them to successfully navigate the road out of recession and to transform their organisations to keep pace with their consumers? This is a question that can only be answered by the executive team. We believe that it can be broken into three broad topics:

1. Reshaping organisations, rather than uniform cost reduction approaches or the closing down of legacy businesses.1

2. Increasing innovation (both product and business model), at all levels of the organisation.2

3. Building leadership at all levels – the subject of this paper.

The UK TMT industry demonstrates enduring strengths in creativity, quality, and dynamism. The UK creative sector consistently punches above its weight in the international market. A third of all television format sales around the world are created in British Production companies. The sector is a major part of the domestic economy contributing 6.4% of GVA. Furthermore it continues to be a leading export success for the UK. In order to maintain this position, senior leaders will need to demonstrate leadership in four dimensions – developing the insights necessary for successful change within complex systems, building the cognitive skills to manage effectively in demanding environments, and encouraging the emotional intelligence to motivate their people.

By bringing these three dimensions together, leaders must build leadership at all levels, developing leadership capability throughout the organisational hierarchy and ensuring that legacy structures do not impede the ability of individuals across the organisation to exercise leadership. Using the media sector as an anchor, this paper identifies explicit actions for TMT leaders to improve leadership within their organisations in the digital age, quoting a wide range of successful TMT leaders throughout.

The leadership challenge for TMT organisations

In researching this paper, Deloitte and Spencer Stuart interviewed leaders from some of the UK's largest TMT firms. The theme of these interviews was the Digital Transformation and the impact it is having on their businesses. A consistent theme emerged: digital is changing the TMT world, and many organisations are not changing quickly enough.

"We came to the conclusion, maybe an obvious one, that we are confronted with a real revolution. In the future digital will be compared to electricity and the consequences it had on people's lives and on society. It is not only the change in the media landscape, but the way people will be educated, will learn, will communicate, make friends, shop, work. Everything in their daily life will be impacted by the development of digital. These changes will be dramatic. And accordingly nothing short of dramatic change will do for our organisations, structures, talent pool, etc."

Maurice Levy, Chairman and Chief Executive Officer of Publicis Groupe.

TMT leaders are challenged by the financial climate, the emergence of digital technology, consumers' demands for improved services at lower cost and increasing competition from new market entrants.

The economic downturn was a record recession and has arguably created the harshest conditions since the end of the Second World War.4 The budget deficit will exceed £150 billion and national debt will peak at over 70 percent of GDP despite implementing real cuts in public spending. This has been a tough recession for some TMT organisations (see figure 1 on the right).

Furthermore there are many new competitors in an ever converging market pace. Technology firms such as Google now deliver vast volumes of media and aggregate even more, whilst social networking sites capture eyeballs that once belonged to the traditional media. In response to the availability of new, on-trend services, consumer interest is moving ever further and faster than traditional organisations have necessarily anticipated.

"19 year olds use media inter-changeably, listening to the radio on YouTube, watching a movie on their iPod – yet media organisations keep different types of content production in silos – music, TV, film divisions etc. We just haven't moved with our audience".

Martin Morgan, Group Chief Executive Officer, DMGT.

The recent cyclical economic downturn has been severe and although there are signs of recovery, structural challenges remain for media companies from disruptive technology and business models.

Against this tough backdrop, the need to deliver high quality programmes, technology and customer service will become ever more critical. Despite revenue and profit reductions – and because of the advent of digital technology – consumers expect easy access to high quality products at a lower cost. Consumers expect to be able to get content when and where they want it. Broadband users want fault free, high quality service, at a low cost. And mobile phone users expect exemplary data and voice services wherever they are.

Four key themes emerged from our interviews, which highlighted the leadership challenge facing TMT organisations. These four themes throw up the following questions for leaders of TMT organisations:

1. Vision & Identity. Have I got a clear understanding of how to change my organisation to maximise the opportunity from digital?

2. Business Model. How do I evolve my business model to integrate digital successfully?

3. Organisation. How do I organise to take advantage of digital? What are the capabilities I need? How do I acquire, grow and nurture digital talent?

4. Innovation. How do I create an environment where innovation drives my organisation forward?

In the following pages, we will reflect on these questions and offer solutions based on the combined experience of our interviewees and our own knowledge and expertise.

1. Vision and identity

Have I got a clear understanding of how to change my organisation to maximise the opportunity from digital?

The decline in revenues resultant from the economic downturn provides media organisations with a strong rationale to drive digital change. Urgency and a fear of death provide the catalyst to re-shape businesses. To take advantage of this opportunity, it is vital that digital is a core part of the business strategy. For this to be the case, senior leaders must define a clear vision for digital within their organisation.

Local press is a great example within the media industry of where a real threat to survival has galvanised radical change to the traditional business model.

"If you look at local press, in many ways you see a more rapid evolution ... Maybe it's because they're looking over the precipice. They got to a point 18 months ago where you had to have your head really deep in the sand not to know that you had to change rapidly to survive."

Martin Morgan, Chief Executive, DMGT.

It is clear that digital is, or will become central to the future success of established media organisations. Although some parts of the industry face immediate extinction, others are caught in a Catch 22 situation, where inaction will certainly lead to a long, slow decline in fortunes, but radical action could either save the business or accelerate the decline. One of our interviewees perfectly summed this effect:

"We need to try things out and see what works, without cannibalising the existing business."

John Robson, Vice President & General Manager, Paramount.

The level at which the digital leader sits within an organisation typically indicates an organisation's 'state of digital evolution', and the extent to which digital media is integrated in to the core business strategy. For a digital vision to be defined with the degree of clarity and certainty necessary to drive transformative change, it is imperative that digital is on the agenda of the most senior leaders within the business.

"Media companies are unlikely to reap the benefits of the digital revolution until the CEO is really living a digital lifestyle themself, day-to-day. If a digital strategy is just a tick-box on the CEO's "to-do" list then the business will never be able to prove properly that targeted and behavioural advertising (i.e. Digital) has more impact than old style advertising."

Ashley Highfield, Managing Director and Vice President of Consumer and Online UK, Microsoft.

"Influence at the top table is paramount to the success of digital. Getting invited in to the leadership team can have a significant impact as it puts digital on the agenda of every leader in the business and can bring digital into the wider business strategy. Equally, a business' digital strategy and stage of evolution determine where Digital Leaders sit within the organisation."

Rebecca Miskin, General Manager, iVillage.

2. Business model

How do I evolve my business model to integrate digital successfully?

The established business model of traditional media organisations needs to change. Digital provides an opportunity to get closer to customers than ever before, yet the extent of digital adoption within established media organisations has been limited to date. The challenge for leaders is in balancing the revenue shift from established and lucrative old products, to the relative 'unknown' of new digital products. This context has influenced the mindset of traditional media leaders to become more risk averse than the 'digital natives' who operate in a legacy free, wholly digital world.

The rapid pace of digital change threatens the business model of established media organisations and it is widely accepted by leaders that simply selling more for less is not a winning response.

"Attempts to increase the number of advertising minutes per hour will simply create a feeding frenzy for advertisers that will not yield any long-term winner. There are parallels with the price promotions of The Sun and The Mirror where there was no real winner."

Malcolm Wall, former Chief Executive Officer, Content, Virgin Media. Digital

provides the potential for media organisations to radically change the blend of products and services offered to consumers by getting closer to customers, using consumer data to target particular offerings, market products directly to specific segments, and build relationships with customers through two-way dialogue.

"When I'm thinking about digital it's not just about what it means in terms of being able to change the operational structure of my business to be more efficient at a cost level. It's about what it does in terms of allowing me to ... access new revenue sources, as both circulation and advertising revenues are going to be under continued pressure."

Arnaud de Puyfontaine, CEO of Hearst UK, National Magazines.

Additionally, more accurate and immediate tracking of marketing and advertising initiatives enables greater understanding of level of return on investment:

"We can track an advertising campaign and its impact on the buying habit of a consumer in a store – we can give you exact ROI. Incredible ..."

Mark Rabe, Managing Director, Yahoo! UK.

Digital also allows media organisations quick access to much larger audiences than has historically been the case. For example, NBC's realisation that they had access to 30million female customers through iVillage was formative in achieving greater acceptance of digital within the traditional business.

Despite the benefits of embracing digital, there was a strong feeling among the people that we talked to that media organisations have not yet moved far enough – a sense of digital 'transition' rather than 'transformation':

"The whole film eco-system is set up around the windows as they exist now – this has to change so that we can get our product to our consumers when they want it."

John McMahon, Managing Director Europe, Sony Pictures Home Entertainment.

Leaders need to decide what and how to change, when:

"We have more routes to market than ever before, we can have a direct relationship with our consumers. All of this is great – but there is more complexity than we have ever faced ..."

John Robson, Vice President & General Manager, Paramount.

There is clearly a tension between maintaining the old product set and transitioning to a new product set which likely has different content generation and content distribution channels. Concerns regarding revenue are central to this – new digital products may initially return limited revenue in comparison to established media channels; the challenges of monetising digital offerings are well documented and as-yet unresolved.

It is apparent that the mindset of traditional media leaders differs significantly to the 'digital natives', with the revenues achieved through traditional media working to hold back change. By way of example – the digital turnover achieved by the Guardian Media Group in FY09/10 was circa £30 million against a turnover of £280 million for GMG's continuing businesses. To a traditional media baron, the relative comparison suggests the transition to digital must be slow and measured. However, digital natives within organisations which have yet to return a positive balance sheet (YouTube, Spotify and Ocado among them), would see this as a huge return and one which should spark further investment and growth.

3. Organisation

How do I organise to take advantage of digital? How do I acquire, grow and nurture digital talent? What are the capabilities I need?

Organisational structure is an obvious consideration for leaders in embedding digital within traditional media organisations. Beyond this, recruitment of new digital talent (potentially from outside the industry), is recognised as being essential to achieving successful change. Subsequent retention of new recruits is dependent on leaders establishing a work environment which recognises and nurtures digital talent; the entrepreneurial approach and work habits of whom tend to differ significantly from the typical traditional media organisation. The adoption of different, digital ways of working will provide leaders with the opportunity to consider whether organisational capabilities must be maintained in-house, or can be achieved through successful partnering.

Leaders need to identify how the structure of their organisations must change to accommodate digital as a core offering. Organisations have previously tackled this in different ways, although within the population that we interviewed it is now widely recognised that digital and hard-print organisations must be fully integrated, or at least very strongly linked to achieve greatest efficiency of working and to safeguard brand integrity.

"Interestingly, integration [of print and online] has led to some changes in working practices, including different working hours ... But everybody now understands that the whole offering – the combination of the print and digital product – is important."

Rona Fairhead, Chief Executive Officer, Financial Times Group.

It is evident that recruitment and retention of digital talent is recognised by leaders as being critical to success. Big gestures in the appointment of digital representatives at board level are reinforcing the importance of digital, yet recruitment below this is more complex: digital talent typically originates from outside the traditional media industry, tends to be young and can struggle with the alien corporate hierarchy of large media organisations.

"The sourcing and recruiting of talent is now becoming more open-minded for media organisations ... employees don't need to have blue-chip experience any more, they need to be entrepreneurial and are increasingly likely to come from smaller, niche companies."

David Pearce, Chief Financial Officer, BBH.

Leaders need to consider how best to integrate very different working styles and working practices to form a coherent whole that combines creative dynamism and commercial reality.

"The real challenge is not in finding talented individuals, it's making sure they can be effective within the business. You have to work hard to ensure you have a cohesive organisation ..."

Simon Waldman, Group Product Director, LOVEFilm.

Key to retaining talent is adopting an approach where business units and the individuals within them are empowered to make their own decisions, to experiment with new ideas and to promote lean, value-creating practices.

From an organisational perspective, the impact of digital extends beyond the boundaries of the organisation; there is strong awareness that partnerships and collaborations with so-called 'frenemies' will be critical to long-term success. Leaders need to consider what capabilities they must build within the existing employee population, versus what capabilities they might source though successful partnering.

"It's all about working in collaboration with people with whom you are also in competition – we work in partnership with Google but on the other hand we are lobbying to contain them ... Apple and Amazon for example, are companies that we buy from, sell and supply through and partner. It's very complicated and not what management are used to dealing with."

Carolyn McCall, Former Chief Executive, Guardian Media Group.

4. Innovation

How do I create an environment where innovation drives my organisation forward?

Fundamentally, innovation underpins progress in the digital age, and the need to be innovative now touches the majority of organisational roles in some form. The challenge for leaders is in achieving an environment where innovation is channelled so as to be as cost effective and efficient as possible, without being stifled.

In this digital era, innovation is a key organisational capability; fundamental to building new structures, creating new products and services, identifying new business models, launching new offerings and ultimately to establishing a new position within the digital market place. The theme of 'innovation' extends through digital product and service offerings to the customer experience; BSkyB face the cultural challenge of encouraging the 9.5 million homes who are used to dealing with BSkyB on the phone to move to an online help model.

"This is about retraining our customers to use the internet as their first port of call."

Mike Darcey, Chief Operating Officer, BSkyB.

Related to this, it is important to note that innovation is no longer the domain of the organisation's 'creatives', and is arguably now a core competency for the majority of roles in media organisations where digital has any level of impact. For example, in a digital world underpinned by technology, IT specialists are key to turning good ideas into new digital revenue streams.

"I see software engineers being as creative and important and critical as the editorial creative talent."

Erik Huggers, Director Future Media and Technology, BBC.

By its very nature, innovation invokes a degree of trial and error and 'feeling the way'. This is a significant departure from the linear and planned production processes of old and marks a step-change to established methods of working within traditional media organisations. The user-informed evolution of BBC iplayer is one example where user consumption/ activity has guided the process of product development, necessitating a fluid production process but achieving an end product which is arguably stronger and more popular as a result. As the BBC's Erik Huggers observed:

"The iPlayer isn't simply about wrapping some technology around the programme ... it's about creating a new user experience."

The leadership challenge here is to create an environment where innovation is accepted and encouraged, but to strike an appropriate balance between innovation of new ideas and control of spend. It was an express concern for many that we spoke to, that the process of innovation is managed in such a way that it achieves 'best value' for return on investment.

"There's a need to avoid seven year old kids on the football pitch syndrome."

Rona Fairhead, Chief Executive Officer, Financial Times Group.

Google has adopted a different approach to managing this challenge. They famously give a large number of employees one day a week to work on 'personal' projects, thereby encouraging entrepreneurialism and innovation. Efficiency of working is achieved through an 'ideas market' where individuals choose which projects they want to work on – everyone wants to work on the innovative, exciting ideas, such that bad ideas simply do not get off the ground and available skills are put to best use. The institution achieves control through the 'wisdom of crowds' – a fantastic example of individuals demonstrating leadership at all levels.

To read this document in its entirety please click here.


1 See New Shapes and Sizes

2 Paper to be published in Spring 2011

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