LEADING TRANSFORMATIONAL CHANGE

R. Chandrasekhar wrote this case under the supervision of Professors Gerard Seijts and Jean-Louis Schaan solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality.

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Copyright © 2018, Ivey Business School Foundation Version: 2018-11-21

In July 2013, Lisa de Wilde was reviewing a report that just landed on her desk. The report had been prepared by consultants hired by de Wilde, the chief executive officer (CEO) of TVOntario (TVO), an educational media organization under the aegis of the Ontario Ministry of Education, in Canada. The consultants had outlined a five-year strategic plan aimed at igniting growth in TVO’s revenues.

TVO was originally created in 1970, as the technological extension of the public education system, at a time when technology meant television. TVO’s mandate was rooted in supporting the ministry’s social role of providing education—a crucial public good—to Ontarians of all ages. Over time, the mandate was broadened to include current affairs, documentary, and drama programming. But unlike its private-sector peers in the television industry who relied on commercial advertisements as a source of revenue, TVO depended on annual grants from the ministry of education to the extent of 66 per cent of its annual expenditure. For the rest, it relied on donors and on its own revenue-generating programs.

At the end of the 2012/13 broadcast year, TVO reached 83 per cent of Ontarians. However, new data showed that early adopters to Internet video were beginning to watch as much as 45 per cent of their television through non-traditional channels. These findings and other market conditions suggested three triggers for developing a five-year strategic plan.

The first trigger was the fact that if TVO could properly harness technology advances, it could strengthen its value proposition. Like in many industries, technological advances were causing massive disruption. For TVO, this disruption was manifested in learning. New openings were emerging around technology in the classroom and media, especially in journalism, which was being reshaped by social media and collapsing advertising-based business models.

The second trigger was a change in official policy, announced in March 2012, pertaining to government grants to public agencies. The provincial government had announced that TVO, like other public agencies, should reduce its dependence on government grants. The reduction had become necessary because the provincial government’s annual budget had shown a deficit of CA$15.3 billion1for the year ending March 2012. The deficit for the year ending March 2013 had also been forecast to prevail at the

1 All currency amounts are in Canadian dollars unless otherwise specified.

same level.2 Since pruning the deficit had become a priority for the government, there would be no increases in funding for TVO and, starting in 2014, TVO would see a cutback of over 5 per cent in its annual grant. In contrast to 2011, when the ministry of education had enhanced its annual grant to TVO by 16.2 per cent (from $37.6 million to $43.4 million), the grant would come down in 2014 by 7.8 per cent (from $43.4 million to $40.0 million).3

The third trigger was the fact that the net revenue from donors (individual and corporate) was declining— from $3.21 million in 2009 to $1.95 million in 2013. The need for self-generated revenues was urgent. It had placed TVO on the offensive.

Together, these three triggers provided the burning platform for the organizational transformation at TVO.

In accordance with the new imperatives, TVO had already made tough calls in the short term that created pain for different employee groups. For example, it reduced its operating expenditure by 5 per cent of the provincial operating grant. It discontinued three legacy programs—Big Ideas, which focused on contemporary intellectual culture; Saturday Night at the Movies, a weekly feature; and In Conversation with Allan Gregg, a weekly interview series that aired on Fridays with authors and artists. TVO also closed its Ottawa bureau and announced that it would let go 35 employees—nearly 10 per cent of its total workforce—by March 2014, when the financial year would end.

For the long term, de Wilde had to develop a strategy that would enhance TVO’s financial sustainability by increasing self-generated revenues and take it into a new growth orbit. That was her reason for hiring consultants in February 2013, as she explained:

There is a sense of urgency in moving forward. We must fundamentally transform ourselves as an organization. We have been good, traditionally, at educational broadcasting, journalism, kids programming series, and documentaries. For decades, we have been a “nice to have” television channel. We should now take action to position ourselves as a “must have” educational and journalistic service for Ontario citizens. The big picture I have is to enlarge our audience, hitherto outside the classroom, to those inside the classroom. Our programs should be more focused and their content should be rigorous. I envision a cultural change for the organization: We have to get out into the open and prove our value. And, yes, we should think about metrics. Accountability is crucial.

The brief de Wilde delivered to the consultancy firm asked for a strategic plan that would deliver four specific objectives: re-envision TVO around technology in the classroom; make TVO financially sound; empower TVO employees to generate value; and create greater impact for Ontarians.

LISA DE WILDE

In September 2005, de Wilde joined TVO as CEO, when the roles of chair of the board and CEO, which had been combined since TVO’s inception, were separated. Prior to joining TVO, de Wilde was president and CEO of Astral Television Networks, a subsidiary of Astral Media Inc., which was the largest

2 Sébastien Lavoie, Assistant Chief Economist, LBS Economic Research: Provincial Budget, March 27, 2012, accessed March 10, 2017, https://cebl.vmbl.ca/Economics/9/Ontario_Budget%202012_e.pdf.

3 TVO, Ontario Education Communications Authority, Annual Report 2011–2012, accessed December 20, 2017,

https://tvo.org/sites/default/files/media-library/About-TVO/Annual-Reports/TVO-Annual-Report-2011-12-English.pdf; TVO, Ontario Education Communications Authority, Annual Report 2013–2014, accessed December 20, 2017, https://tvo.org/sites/default/files/media-library/About-TVO/Annual-Reports/TVO_AnnualReport_2013-14_English_AODA.pdf.

broadcaster in Canada with 84 radio stations in eight provinces. It was also a major player in premium and specialty television at the time, until its sale to Bell Canada Enterprises Inc. in June 2013.

With bachelor’s degrees in arts and law from McGill University, de Wilde had worked as a lawyer for seven years with the Canadian Radio-television and Telecommunications Commission, the industry regulator, before moving into the corporate sector. Upon joining TVO, de Wilde was thereby armed with a 360-degree view of the Canadian broadcasting industry.

The first thing that struck de Wilde was that TVO had no digital infrastructure, which was essential for operating in an increasingly digital world. TVO had been an analog broadcaster for over four decades. Analog broadcasting was characterized by the transmission of audio and video signals through airwaves (such as radio broadcasting) resulting in low-quality sound and picture. Within four years, de Wilde had taken TVO into the digital world, making over $10 million in investments during that period, thanks in part to a one-time special capital expenditure funding, to build an end-to-end digital content production and management workflow. In August 2012, TVO switched fully to digital transmission, along with its peers in the Canadian television broadcasting industry.4

Digital broadcasting was characterized by high-quality sound and picture. Audio and video signals were transmitted through electromagnetic media (like micro waves). Going digital also meant lower distribution costs and higher economies of scale for TVO. It could finally create content and manage it, all in a digital format. Simultaneously, de Wilde also ensured that TVO was focused on developing more public education programs. This focus was in contrast to the pursuit of local news and entertainment programs by other television channels.

TVO was driven by addressing market failure—providing services that were essential to a prosperous and democratic society but not sustainable as a private sector business model. This gave TVO a purity-of- mission. Its children’s programming, journalism, and documentaries all answered to the highest standards of education and journalism, while not selling advertising. TVO’s businesses comprised two main areas. The first area was responsible for television and media, and included current affairs, documentaries, and children and parent programming. The second area was responsible for educational services, such as the Independent Learning Centre (ILC), and support for learners, such as the Homework Help program.

Commenting on her personal style of leadership, de Wilde explained her focus:

Leadership is all about providing clarity of purpose, giving people reasons to believe that they are making a difference and just…