It’s better to disrupt yourself than having others disrupt you.

Pt 1 of a series about learnings from the digital transformation of the media industry, and how that can be applied today.

In 2013 Aftonbladet, the largest news media in Sweden, could boast that it had excelled at digital transformation. The term was coined by Capgemini in collaboration with the MIT Center for Digital Business, a mere year earlier. Aftonbladet had managed to keep growth during a challenging period for the media industry and in 2011 saw digital profit surpass print profit.

So what was the grand strategy behind (arguably)? the first successful digital transformation of a large Swedish corporation - and what can we learn from it?

When the writing's on the wall, that is when transformation is obviously called for - it’s better to disrupt yourself than being disrupted by others. This might sound straightforward but few business developers have the guts to suggest to the board that cannibalising your core business is the best route forward.?

This text? is the first in a series where I will walk you through my understanding of how Aftonbladet ended up winning and how a clear case of successful digital transformation came to be.

?In 2008 I was appointed Head of Innovation at Aftonbladet. We had a turnover of 2.1 BSEK, of which 1.8 BSEK stemmed from the daily newspaper. A daily paper with a circulation of close to 500K per day - which is a pretty impressive market share in a country with less than 10M inhabitants. Aftonbladet was hence a juggernaut and a cash cow business. But an internal trend analysis of the future of media and newspapers suggested that given the digital headwinds of the internet, and the general development of newspaper volumes across the world, maybe 100K per day was a more likely circulation in just a few years time...

The 300 MSEK, that was not generated by the newspaper, came mostly from online ad sales, aftonbladet.se was the largest website in Sweden at the time. The website was originally started as an exploratory project in cooperation with JMK (The Department of Media Studies at Stockholm University) where the monthly edition of Aftonbladet's culture magazine was converted into html and published in its entirety as early as 1994. It was a project characterised by editorial curiosity and by the will to explore the essence of an online tabloid, and journalists were happy to take part.

As the Internet grew, ads started appearing in the online edition and with the business perspective of the online newspaper came protectionism. A tendency to guard the golden treasure and a tendency to fight over the spoils of the online bounty. Journalists demanded reimbursement for articles to be republished online - “My employer earns money twice, for print and for online. While I only get paid once!”

This is when Aftonbladet made perhaps the most brilliant move of its digital transformation - the online edition was separated into an independent subsidiary. As a standalone business, with its own profit and loss, run by a managing director with the legal and the business implications that follows, the online company was forced to set internal politics aside and truly understand the logic of running an online news media. How to judge when to republish print stories and when to write fast, online-first updates, fit for the new medium the Internet? How to prioritise between ad placements and readability, and how to reward traffic in between site sections.

Aftonbladet later reiterated the approach when going into television, TV-production, and web-TV. They also started preparing to do so for mobile - but quickly understood that mobile business logic and model was very much inline with how the existing web business worked and therefore did not gain enough from independence to be worth the extra overhead of an independent company.

A few years later the digital business had grown strong enough to be prioritised on equal terms against the now struggling and, more humble, print business. The subsidiary was integrated back as part of the core business, and the extra overhead of running two companies could instead be invested in exploration of the next horizons for growth.

The brilliant move

Separation of the disrupting business into its own subsidiary to learn the logic of its new business model without fighting for resources? against much more mature initiatives in the current core.

Fellow Aftonbladare (employees of Aftonbladet) and people active in the digital transformation of the media landscape in 2005-2012, do you recognize this story and agree with the analysis?

Do you have examples from other industries where a similar strategy has worked or failed? Please reach out. I'd love to learn from your experiences!

I will be back with the next story - about experimenting your way forward - shortly, if you want a reminder once it's published you can sign up for the Rhubarbs newsletter here.