ORGANIZATIONAL

TRANSFORMATION AT
THE BBC

Group 5

BBC Transforming
Mr

Mark Thompson
Mr Greg Dyke
Real and Radical Changes
Restructuring of BBCs executive committee
The Executive Committee:
Creative
Journalism
Commercial

Cost

cutting and improving efficiency

BBC Journalism College
Analyst were confident about Thompsons capability
Big range thinker and not a short one

Inside BBC
Our

mission

To enrich people's lives with programmes

and services that inform, educate and
entertain.
Our

vision

To be the most creative organisation in the

world.

Case Highlights
Created

on Oct 22nd 1922 as British Broadcasting Company

Mission : to inform, educate and entertain
1927- BBC with a Royal Charter under UK Govt. ( objectives,
powers and obligations)
12 member Board of Governors and Executive Board led by a
Director General
No competitor; had a license fee of 10 Shillings set by the
British parliament and paid for by radio owners
1932- started broadcasting outside Britain (BBC Empire
Service) ; no commercial activities like ads
Nov 1936- BBC Television Services and issued 8.5 million radio
licenses (98%)
1946- Television Services commenced after II World War
BBC Empire/External Service 40 languages
Its news was impartial and authoritative

Contd..
1946-

The Third Program

Combined license fee of 2 for radio and TV
Wireless Telegraphy Act for TV users
Till 1950s radios dominated 12 million licenses for radios and
350000 licenses for TV
Coronation of Queen Elizabeth II royal ceremony 20 million
viewers (estimate)
Sept 1955 Independent TV (ITV)- not funded through licensesfirst commercial channel
Market Share of BBC fell 28% in 1957
BBC came up with a lot of innovative programs
1964- BBC2 to provide experimental and new kinds of programs
1967- Color broadcasting
1971- Radio licenses were abolished
BBC saw its popularity and income increase subsequently

Need for Restructuring

Until

1982 BBC1,BBC2,ITV and Channel 4

Terrestrial Broadcasting
Early 1980s Satellite broadcasting
1982- News corporation purchased it and re-launched in 1984 as
Sky Channel
March 1990 British Satellite Broadcasting(BSB) ; both
companies lost huge amounts BSkyB to compete against BBC
Cable Television end of 1990 124 licenses to independent
cable operators
BBC faced pressure to reduce cost of operations
Sir John Birt was appointed as Director General
Reduced workforce, merged the news divisions, expanded
overseas by JV, sold home transmission division, offered BBC
News 24 without and subscription fee, imported hit serials from
US, etc.
Late 1990s- Digital Technology in UK far superior in terms of
picture quality and number of channels, accessing internet, etc.

Contd..
1997

BBC Online website & BBC Worldwide (involved in global

channels, content and production)
1998- BBC Choice (complete digital broadcast)
1993 criticism for Producer Choice concept- abysmal act of
vandalism by media and industry observers
In another effort to restructure Birt separated the production
and Broadcasting divisions
He felt that audience views was not considered (producer
controlled organization)
Birt made BBC bigger with 190 business units
New department called Corporate Centre to provide key
strategic services (legal, planning,personnel)
Used services from around 5 management consultancies (22m)
No cooperation between the various departments

Contd..
Audience

share fell from 51% in 1981 to less

than 38% in 2000
Employee morale was at a real low
Analysts cautioned about the huge effect on
corporates revenue
The insisted on abandoning the license fee
Take up commercial advertising, privatization
through share holding, etc to fund BBC
Analysts felt that BBC should generate more
revenues through advertising rather than
through license fee

BBC Under Sir John

Birt
Measures, McKinseys 7S Model and Criticism of Birts
measures

Measures Taken by Sir

John Birt
1992

Reduced workforce by 4000

Saved $ 465 Mn
Merged- News divisions of Radio, Television and BBC
World Service
JV with Public Broadcasting System based out of US

1997

Sold Home Transmission for 244 Mn

Started BBC24 (No Fee), later 4 subscription Channels
Imported Hit serials like X-Files, ER and sold to channels
in other countries
Launched www.bbc.co.uk

7s Model for Birts Measures

Structur
e
Strategy
JV Public
Broadcasting
System
New Product
Developmen
t

Hierarchy
Centralized

Systems
Digitalization

Shared
Values
Accountable
to the public

Skills

Style

Innovation

Bureaucratic

Staff
Lacked
Cooperation
Morale was
low

Criticism Of Birts
Measures
Producer

Choice

Producers favored outsiders

Described as Abysmal Act of Vandalism

Separation

of Production and Broadcast Division

Broadcast Commissioners had little faith in in-house

production
Started

Corporate Center

To provide key strategic services to BBC

Lack

of Cooperation between various

departments
Revenue Model

BBC Under Greg Dyke

Measures Taken, McKinseys 7S Model & Criticism

Measures taken by Greg Dyke

Greg

Dyke became DG on Feb 1,

2000
Organizational structure extremely
complex with too many layers and
bureaucracy.
One BBC program was launched
with the ideology that everybody
should enjoy their job and are
inspired and united to make great
programs and delivering outstanding

One BBC
The

Rational Goal Model

The Managerial Process Model
Organizational Development Model
Structural Functional Model

7s Model for Dykes

Measures
Structur
e

Strategy
Leveraging
costs
New Product
Developmen
t

Revamping
the
organization
al structure
and giving
more power
to top
managemen
t

Shared
Values
Increase the
number of
viewers

Skills
Innovation

Staff
Division
Heads were
given full
Autonomy
Collaboratio
n issues
between

Systems
Digital
terrestrial TV
and
interactive
TV and radio
service

Style
From
Bureaucracy
to One
BBC

BBCs Org. Chart

under Dyke

Criticism of Dykes
Measures

Hutton Report
- Editorial system at the BBC was defective
- The BBC management

Critics from various newspapers

- The Times Blizzard of blame chills BBC
- The Guardian Crisis cuts through the
BBC

Decrease in number of listeners

Committee led by Neil

BBC Under Mark

Thompson
Measures, McKinseys 7S Model and Criticism of Thompsons
measures

BBC Under Mark

Thompson

British media executive

Editor of broadcasts (Newsnight,Panorama)
Director-General of BBC from 2004 to 2012

BBC, a more creative and

efficient digital broadcaster

Simplify the
organizational
structure

The restructuring of the BBCs executive commitee

Job cuts in departments that were not involved in
program making.
Reduce costs by 15% in each departments and
outsource some of other jobs.

Modernise the corporations production and

archiving methods
Investments in developing programs to attract new
Prepare the
audience. (especially the young audience).
BBC for the Investments in developing programs where the BBC
digital
transformation was strong.
Involvment of independent producers in making
some programs.

BBC's Digital Media Initiative

Aimed to modernise the corporations
production and archiving methods.
A big move to reform the 82 years old BBC
and get ready for a completely different
world.
Project partly outsourced (Siemens and Atos).
It lasted 5 years with a spend of almost 98
M.

http://www.youtube.com/watch?v=ok7wIkdgfIY

Leading the
Digital
Transformat
ion
Improving
Governan
ce

Reforming
License fee
payment

Original
Programs

CHARTER
MANIFES
TO

Public
Value Test

Fostering
Partnersh
ips

Transpare
nt BBC
Expandin
g out of
London

BBC Journalism College

Launched in June 2005, 5 million investment

Interactive e-learning sessions, seminars,
workshops across the globe
Five editorial principles mentioned in the Neil
report
Training passports after completion of training
Training mandatory for promotion
In-house course material, except for material
used in external training activities
Ethics and value at the editorial level

Criticism
BBC

Journalism College

Core journalistic skills improved amidst

the employees
Values and Ethics imparted to the
employees
Helped journalists to get accustomed to
the growth in new technology

Creative Future Strategy

Sport

Comedy

Music

Kids
&Teens

Drama

Entertainm
ent

Knowledge
Building

Journalism

Creative Future Strategy

The
Active
Audien
ce
Findab
ility

Martini
Media
The
Young
Seriou
s
About
Entert
ainme
nt

Criticism
To

deliver public service content in whatever

media and on whatever device, whether they
are at home or on the move
Websites directly targeted commercial
websites like MySpace to draw the attention
of the youth
69.2 million into the bbc.co.uk website
although a colossal investment, proved to be
worthwhile
Thompson foresaw the interests, the likes and
the dislikes of the next generation audience

Organisational Structure Under

Thompson
Finance

Future media and

Journalis
Technology
m

Operatio
ns

Marketing
Communication
and Audiences
BBC
Vision

Worldwide
and BBC
Resources

Audio
and
Music

BBC
People

SWOT ANALYSIS
STRENGTHS
Leader with a Strategic frame of
mind, attacked big issues in
television.
Framework to assess quality and
value of programs before launch
BBC Website ensured
transparency of information
BBC Journalism College
training for journalists to impart
accurate, world class news
In 2006, Creative Future Strategy
made content more appealing,
easily available to the young
audience.

WEAKNESSES

Hutton Report exposed

BBCs vulnerable editorial
process
Criticism of being a copycat
Size of the broadcast channel
was huge, which threatened
jobs of employees in both
program development and
other activities leading to
poor employee morale
Criticisms on over-payment
to top executives beyond
salary norms

SWOT ANALYSIS
OPPORTUNITIES

Sir John Birt 1990s Popularity of daily soaps,

serials ER, X-Files etc.
which were popular world
over
To overcome the worst crisis
in BBCs 80 year old history
Opportunity to expand to
new genres education,
cultural, and other activities
& appeal to young audiences

THREATS

Digital Technologys
superiority compared to
analog in terms of picture
quality and number of
channels offered

Poaching of BBCs
employees by independent
production agencies and
other television channels.

7s Model for Thompsons

Measures
Structur
e
Strategy
Fewer
Reruns
Original &
Quality
Content
Transparenc
y

Fewer
Layers
Independenc
e to
Governors

Shared
Values

Systems
Digitalization
State of the
art Digital
Broadcaster

Building
Public Value

Style

Skills

Partnerships
Collaboratio
ns

Creative
Innovation

Staff
Job Cuts
Rigorous
Training

THE ROAD AHEAD

Compensation of Top
executives
Conflict with cutting costs
Remained same or increasing every year
Television viewership decreasing
2004-05, 20 30% hike in Basic pay,

responsibilities
Thompson waived his incentives(135,000P in

2005)
Reduction in size of Executive board(546,000P in
2003-04 to 320,000P in 2004-05)
Reduction in incentives - 30% to 10% of Basic pay
Later increased to market standards

License fee & BBC Trust

Analysts, politicians,
Cries to reject BBCs

competitors
proposal to

increase license
Overstating of cost, while understating
savings, overplay funding
requirements
Not different from Board of Governors
Conflicting roles of governing and

regulating
Elaborate, complex and more

Re-Telecast & Employee poaching

Re-telecasts

increased by 88hrs in

2004-05
24,000hrs of re-telecasts across BBC
channels
Re-telecasts(15k to 30k pounds) while
Original series(500k to 600k pounds)
Rejection of BBC proposal, Cost
reduction
Poaching

by independent production
companies

Creative Future
Launch

websites of high quality audio

and video in sports, music, etc for
attracting youth
Against commercial websites
MySpace
Questioned rationale of using public
money
Commercial website would hit online
and regional newspaper industry
69.2 million pounds spend in 2004-05
on bbc.co.uk

Appreciation for
Thompson
Earlier

never targeted young

audience
Funding of advertisers for the new
generation
Able to see a world where all media
products will be delivered and
accessed by internet
Changed the old mind set into new
Clearly understood what needs to
be done

Kotters 8 Step Change

Model
Create
urgency

Build a
guiding
team

Make
change
stick

Create a
vision for
change

Dont let
up

Remove obstacles /
communicate

Create
shortterm
wins

Empower
action