Case 8 - Greg Dyke: Taking the Helm at the BBC (A) 1. What are the major issues facing the BBC as Greg Dyke takes over as director-general? 2. What are the major issues facing Greg? 3. Which key stakeholders should Greg be targeting in his opening address? 4. What should he say in his opening address?GREG DYKE: TAKING THE HELM A X V X -> C O File | C:/Users/User/Downloads/IM D286_pau.pdf E GREG DYKE: TAKING THE HELM ATTHE BBC (A) 5 / 12 70% + IND - 5 - IMD-3-1353 IND IMD-3-1353 The implications were huge. For the BBC, it was becoming more difficult to personal failure to resist the takeover. He had no need to take another job and provide programming for all. It was losing touch with younger consumers. For threatened to leave the world of television. However, in 1995 he took a less public advertiser-funded channels, lower shares threatened their main revenue source. role running Pearson Television. The issues would only increase: the government intended to switch off the analogue broadcast spectrum at the end of the decade." All homes would have to Over the years, Greg concluded that the most important part of his personal become digital and would have access to many more than five channels, both free management philosophy was: "Just be you." He believed passionately that people and paid for "premium" content. were the key to success: "The best companies are the ones that develop the best relationships with their staff." He also learned early on that style was critical: "[I] John Birt's team recognized early on that it could lose access to licence-payers in always say hello in the lift, take the route through the office where I can talk to this new world. The BBC increased spending on new free digital channels and people, get my own sandwiches." Friends described him as commercial, colourful content in the late 1990s. By 2000, it transmitted 12 television channels in the UK and charismatic. and 5 worldwide, compared with 2 when John joined (refer to Exhibit 1). It also boasted one of the UK's leading websites, which was growing twice as fast as the Greg's cheerful contempt for self-importance and hierarchy was in complete UK market, taking advantage of the rapid increase in Internet usage. contrast to the BBC management culture in 1999. He took risks, was financially astute and knew how to act quickly on important issues. He was determined to The BBC was recognized as a leader in digital content, but it faced intense win at whatever challenge he accepted. industry competition. The biggest hurdle was ensuring licence-fee payers knew about and could access the new digital channels. Companies that controlled AGEMENT at Memorial University of Newfoundland from 5/9/2022 to 8/9/2022. distribution of content to homes were gaining power--notably BSkyB. Along with The Appointment Process other channel providers, the BBC had to negotiate its position on BSkyB's electronic programme guide among the more than 140" channels now available. The BBC was a big challenge. In 1993 Greg had famously told the Daily There were early battles over BBC News 24, which competed head to head with Telegraph (a leading UK newspaper) that Saddam Hussein stood a better chance BSkyB's own channel Sky News. of running the BBC than he did. His remark was well founded--his varied experience had not fully prepared him for the tough road to becoming BBC Across the market, senior executives lay awake at night grappling with how to director-general. John Birt's plans to leave had become public in 1998 and the reposition their channels, content and brands to succeed in the digital age. search for the new director-general was officially launched in January 1999. Authorized for use only by Richard George in STRATEGIC MANAGEMENT at Memorial University of Newfound land from 5/9/2022 to 8/9/2022. Use outside the se parameters is a copyright violation. BBC senior management wanted an internal appointment, and they had powerful Use outside the se parameters is a copyright violation. Greg Dyke's path to Director-General allies in the "war" against Greg, who was the leading outside candidate. The Times (owned by Rupert Murdoch) accused Greg of being too close to the Labour Greg Dyke came to television late, after an early career as a journalist. In 1977 he Party, arguing that Greg's financial support for the Labour Party should rule him joined LWT, where he rose rapidly, recognized for his editorial talent, energy and out because he could not be the impartial editor in chief that the BBC required. leadership qualities. This led to his recruitment as editor in chief of struggling The Daily Mail (a leading UK tabloid) added that he would chase ratings and TVAM, a commercial breakfast television operator. There, his instinct for "dumb down" content because he did not understand the BBC's mission. connecting with audiences, particularly building up the iconic Roland Rat' character, turned the station's fortunes around. Fuelling some of the bitter accusations was Greg's turbulent history with Rupert Murdoch and BSkyB. Greg had briefly sat on the BSkyB board when Pearson In 1987 Greg returned to LWT as director of programmes, succeeding his former held a stake. He had also been the only director of Manchester United football boss John Birt. He shook up the schedule, introduced new popular programmes club to oppose BskyB's proposed takeover' and there was no love lost between and soon became managing director. This was the beginning of a successful the two men. "Greg Dyke was the last person on earth that Rupert Murdoch Authorized for use only by Richard George in STRATEGIC MA partnership with Christopher Bland, LWT's chairman, but the team was torn apart wanted to see as Director-General of the BBC, the most powerful rival by Granada's" hostile takeover in 1994. They cashed in their share options for broadcaster in the country."" millions of pounds, but this was little compensation for what Greg perceived as a BBC staff watched the race closely. There were six internal candidates, most of whom John Birt had encouraged to apply for the job." Some were competing The earliest estimate was 2007, but the BBC believed it would not happen until 2013 because of consumer resistance to buying new digital hardware. The government would sell the spectrum. Roland Rat was a grey nylon glove puppet with a loud, London attitude; initially introduced for Greg Joined the Manchester United board in September 1997, but resigned on his appointment as children, it quickly gained cult status with adults. By moving the times at which Roland appeared, BBC director-general designate. In the end, competition authorities blocked BSkyB's takeover of Greg managed to increase TVAM's overall audiences. the club, and this meant Sky's hold on UK football coverage was threatened. One of the two largest commercial broadcasters in the UK; its licences included the London "Several had been appointed to the BBC's executive committee in 1998 to give them the required region, where it broadcast ITV programming during the week (LWT had the weekend licence). experience. Type here to search O O a 2:45 PM 99+ 14- Jul-22 123GREG DYKE: TAKING THE HELM A X V X -> C O File | C:/Users/User/Downloads/IM D286_pau.pdf E GREG DYKE: TAKING THE HELM ATTHE BBC (A) 7 / 12 70% + IND - 7 - IMD-3-1353 IND - 8 - IMD-3-1353 openly against each other at management meetings-and in the press. The BBC in London. They toured local radio stations. In the local canteens, over lunch, he governors, now chaired by Christopher Bland," were split. The political issues simply asked, "How can I make a difference?" Many answers were "pathetically surrounding Greg made some uncomfortable, but the chairman believed Greg had small" in Greg's view. "Fix the roof, get new paint." The widespread sense of the right skills. There were weeks of serious debate. Some governors leaked their unhappiness that Greg had felt at the budget and performance meetings was deep. concerns about Greg to the media. But in June, Christopher Bland won. Greg was One group had even invented a new definition of 3-D: "despondent, down and to be the next director-general in the first-ever split vote, 7 to 5. The handover dismayed". There was also a strong anti-London feeling. period with John Birt was set at five months from 1 November 1999. The staff he met warmed to him: "He seemed slightly nervous at times, almost in BBC staff reacted with a mix of optimism and apprehension. Carolyn Fairbairn, awe of the place. This was unexpected. He kept his views private and did lots of director of strategy and distribution, noted: listening." At the top of the organization he also quickly gained respect. Mark Byford only met Greg after he started: Those who knew Greg were very excited [by] his reputation as an inspiring leader...who was instinctive...who would change the heavily analytical style. Those who did not felt he What I really like about him and me is we talk a lot about the wider BBC together, not just was too commercial, did not understand public service broadcasting and was too brash. World Service. He doesn't say everything he does is right, he asks, "What do you think?" University of Newfound land from 5/9/2022 to 8/9/2022 What Greg Found at the BBC From what he heard, Greg came to believe that the internal market was overdone. There were 168 separate business units trading with each other--the complexity Greg inherited some 25,000 full-time employees, divided into three major and confusion were enormous. He found production of major children's organization groups: Broadcast, Production and News (refer to Exhibit 2). His programmes was about to be moved from Television Centre in London to first days as director-general designate provided an introduction to the divisions at Granada (a competitor) studios in Manchester, while internal facilities lay idle. annual budget and half-year performance meetings. The most famous example was that getting a CD from the BBC library cost $15, but staff could walk down the road and buy it for El1.99. As he said, "Every MP Greg felt immediately that the approach to money was a problem. Divisions were (Member of Parliament] knows the story and it does us a lot of damage." competing aggressively to get a larger slice of the pie and too much of it seemed at Memo to go on overhead. At one meeting Mark Byford, chief executive of World The Big External Challenges Service, put up a slide that showed the division spent around 15% of its income on Authorized for use only by Richard George in STRATEGIC MANAGEMENT at Memorial University of Newfound land from 5/9/2022 to 8/9/2022. overhead and 85% on programmes and services. Greg liked it: it was simple but Use outside the se parameters is a copyright violation. What the BBC needed in ten years' time was clear: a portfolio of digital services Use outside the se parameters is a copyright violation. powerful. He wondered if he should set a similar target for the BBC as a whole. that provided BBC content to whatever devices licence-fee payers wanted to use, NAGEMEN He asked John Smith, director of finance, to calculate the BBC's overhead whether television or radio sets, home computers or mobile phones. The content percentage: it was 24%. would also need to allow the audience to personalize and interact with it. Part of the overhead was paper. As Carolyn Fairbairn put it: "The centre had Greg's problem was that spending money to build the right portfolio would be become very analysis-based, almost obsessively so. It...became a machine out of difficult while the BBC's flagship channel was in trouble. BBCI was losing control overseeing divisional decisions. The loss of trust between the centre and audience share, and many programmes had received poor reviews in 1999, even divisions was partly due to this process." Greg was overwhelmed by the sheer though the autumn schedule was widely acknowledged for some outstanding volume of paper. He commented, "There was a belief that writing papers was the programmes such as "Walking with Dinosaurs". Even before Greg started, the end product. Developing policy was not the issue; getting people to do things was heads of BBCI and BBC2 had asked him privately for more funds. In addition, the issue." He also noted that consultants seemed to be helping management run consumer surveys showed many licence-fee payers simply did not want to "go the BBC: it was spending around $20 million a year on them. digital". They said they would be happy with just the five current analogue channels for another ten years. They felt it was unfair to spend part of their licence Authorized for use only by Richard George in STRATE Immediately after starting, Greg launched an organization review of the Broadcast fee on services they could not receive. division, where he was acting chief executive. He had a feeling "there were too many hierarchies, there was half a floor of people that were not necessarily It was a "Catch-22"--and Greg was not sure how much money he would have to needed". The review was later extended to the whole of the BBC. make the trade-offs. A new licence fee settlement was due in February 2000. John Birt had made a strong case for an additional {3 billion' of income to fund the BBC's digital expansion until 2007. In 1999 a government panel" recommended Getting Out into the Organization It quickly became clear that working in an open plan environment with John Birt In 1999 the BBC spent around 200 million on digital services; it wanted to increase this to $500 was uncomfortable. So Greg took himself and his business manager, no million per annum, rising to around $700 million per annum by 2007. entourage, off on an extended "walkabout" away from the BBC's corporate centre Led by economist Gavyn Davies, who became chairman of the BBC governors in 2003. Type here to search O a 2:45 PM 199+ 14- Jul-22 123GREG DYKE: TAKING THE HELM A X V X -> C O File | C:/Users/User/Downloads/IM D286_pau.pdf E GREG DYKE: TAKING THE HELM ATTHE BBC (A) 9 / 12 70% + IND - 9 - IMD-3-1353 the introduction of a supplementary licence fee for digital viewers and the part- IMD-3-1353 privatization of the BBC's commercial businesses. Commercial broadcasters objected strongly, while the BBC protested that the additional income was a fraction of what was needed. The government was not happy, but knew it needed the BBC's help to convince the public to go digital. It commissioned an external audit of the BBC's finances in December 1999 and took more advice. Greg had not been involved in the BBC's original proposals. He had, however, UK government Public services funded by the Around the World Separate commercial channels whose profits help fund BBC met secretly with ministers to discuss his initial priorities, after John's early BBC World Service: 43 radio language services + online Animal Planet* (digital) departure was announced. There was no discussion of the settlement details, but People+Arts* (digital) BBC Prime (digital) BBC World (digital) Greg expected to receive an increase above inflation and he knew the BBC would (analogue/digital) UKTV* ( digital) BBC America public service get a seven-year deal. He also knew that Chris Smith, Minister for Culture, Media services and Sport, whose remit covered the BBC, would expect him to find a substantial part of the money to fund digital expansion internally. John was leaving at the end of January 2000, after becoming a Lord in the New Year's Honours list. Initially pleased, Greg soon found his preparations overtaken by a row over his Granada shares--a legacy from Granada's 1994 takeover of LWT. The governors had asked him to dispose of any interests that might conflict with his role by April, the original handover date. With the earlier handover, the UK press demanded that Greg sell the shares immediately. He was hurt by the Public services funded by the licence fee Around the UK Wales/Cymru local television implications of unethical behaviour and initially refused to give in to the pressure. BBC learning & education Scotland local television & England local television & He sold the shares two days later, admitting his mistake: "It was not worth Northern Ireland loca television & radio prolonging the row and damaging my first days." BBC websites & radio It was an early lesson in the constant politics and public attention that were part of radio radio his job. He explained that any change the BBC made, good or bad, would Use outside the se parameters is a copyright violation. Authorized for use only by Richard George in STRATEGIC MANAGEMENT at Memorial University of Newfound land from 5/9/2022 to 8/9/2022 Authorized for use only by Richard George in STRATEGIC MANAGEMENT at Memorial University of Newfound land from 5/9/2022 to 8/9/2022. Use outside these parameters is a copyright violation. The BBC's Services in 2000 Exhibit 1 automatically be criticized publicly simply because it was a change in the nation's - 10 - perceived heritage: "This is the only job where you get crap for winning and crap for losing." But he was passionately committed to it: What this place does has enormous value...as it helps to define our culture. People work at the BBC because of this value. Their commitment to the BBC, not necessarily to Radio licence fee management, is very strong-at a level other companies would only dream of. Public services funded by the The next six months would be the key to harnessing this commitment. He Asian Network believed it was important to move quickly: Five Live Radio 2 Radio 3 Radio 4 Radio 1 If you want to change things you need to do it within the first six months because otherwise you will lose the support of the people that brought you in. The Speech Greg stepped up to the stage. He knew what he would say, and how he would say * Joint venture with Discovery Networks it, but was looking forward to the question and answer session more. There would Public services funded by the Television licence fee be difficult questions, but it was important that the staff talked to a real human BBC One (analogue/digital) BBC Two (analogue/digital) * Joint venture with Flextech BBC Knowledge (digital) being, who was on their side, not the enemy. And he hoped they would laugh at BBC Parliament (digital) BBC News 24 (digital) BBC Choice (digital) the jokes. Source: BBC Type here to search O a 2:45 PM 99+ 14- Jul-22 123E GREG DYKE: TAKING THE HELM A X Type here to search GREG DYKE: TAKING THE HELM ATTHE BBC (A) -> C O File | C:/Users/User/Downloads/IMD286_pa.pdf - 11 - IMD-3-1353 Exhibit 2 The BBC's Organization Structure in November 1999 Central Services . Chairman: Sir Christopher Bland . Policy & Planning: Patricia Hodgson Board of Governors . Includes: 12 independent, part-time Governors . Finance: John Smith ate Affairs: Co . Role: Ensures BBC fulfills its obligations; agrees key strategic decisions . Personnel: Margaret Salmon . Technology: Philip Langsdal Executive Committee * Director-General: John Birt . Includes: Chief Executives of Divisions and Heads of Central Services . Role: takes all major decisions, determines policy and strategy O Broadcast Production News BBC Worldwide BBC Resources World Service Chief Executive: Will Chief Executive: Wyatt Chief Executive: Chief Executive: Chief Executive Matthew Bannister Chief Executive: Tony Hall Rupert Gavin Margaret Salmon Mark Byford Activities: Commissionin Activities: of content; scheduling; Activities: Production of Activities: Activities: Activities: transmission of all output content for Commissioning and Commercial Commercial Funded separately production of all on television, radio, online subsidiary to explo subsidiary to by Government television, radio, news content for BBC content and manage production grant; to operat m management of nations & online regions television, radio, rights beyond publ facilities, e.g. free radio and online; management service boundaries; studios, outside online services in 43 Key managers: of BBC News 24 e.g. magazines, broadcast; and to languages around (new digital videos, JV exploit BBC craft Alan Yentob, Director of the world Television; Jenny channel) television channels skills in the market, Abramsky, Director of with Flextech, e.g. post-production Radio; Mark Thompson Discovery Director of Nations & Regions; Nigel Chapman Director of Online; Jane Drabble, . Includes: Executive Committee plus c.20 others: key managers in Broadcast, Channel Controllers, Board of Management Director of Education Controller of Corporate Strategy (in Policy & Planning) Role: Considers major policy and editorial questions to be presented to the Executive Committee and/or Governors 11 / 12 O Source: BBC a Authorized for use only by Richard George in STRATEGIC MANAGEMENT at Memorial University of Newfoundland from 5/9/2022 to 8/9/2022. Use outside these parameters is a copyright violation. 70% 199 + + Sources IND "BBC estimate, as at July 1999. Q3 2002), UK television regulatory body. Birt, John. The Harder Path. London: Time Warner Books, 2002. Birt, John. The Harder Path. London: Time Warner Books, 2002. "Birt, John. The Harder Path. London: Time Warner Books, 2002. 2003 to cover the handover from John Birt to a new director-general. CO Estimates based on BSkyB reported subscriber numbers and ITC market size estimates. " Horrie, Chris and Steve Clarke. Citizen Greg. London: Simon & Schuster Pocket Books, 2001. "Estimates from the Independent Television Commission (ITC Multi-Channel Quarterly, Appointed chairman of the BBC Board of Governors in 1996; in 1998 his term was extended to - 12 - IMD-3-1353 Authorized for use only by Richard George in STRATEGIC MANAGEMENT a Use outside the se parameters is a copyright violation orial University of Newfoundland from 5/9/2022 to 8/9/2022. V 14- Jul- 22 2:45 PM 123 XGREG DYKE: TAKING THE HELM A X V X -> C O File | C:/Users/User/Downloads/IM D286_pai.pdf E GREG DYKE: TAKING THE HELM ATTHE BBC (A) 1 / 12 70% + IND - 2 - IMD-3-1353 IM IMD286 Background INTERNATIONAL v. 03.01.2006 The British Broadcasting Corporation (BBC) was set up in 1922, and it quickly captured the heart of the British community. Its first director-general, John Reith, declared that the BBC's role was to "inform, educate and entertain" and "to bring the best of everything to the greatest number of homes". GREG DYKE: TAKING THE HELM AT THE BBC (A) From the outset, to safeguard its independence and impartiality, the BBC was financed by a TV licence paid by households. By 2000, the licence fee for a colour television set was f101 per household, giving the BBC income of $2.3 dland from 5/9/2022 to 8/9/2022. billion per annum. The direct government grant for the World Service and Research Associate Tracey It was much worse than I expected. The organization was desperately contributions from the BBC's commercial subsidiaries took the total income Keys prepared this case under unhappy, with a real dislike of senior management. They thought that figure to some 3 billion annually. the supervision of Professor what they achieved, they achieved despite management. Peter Killing as a basis for Greg Dyke Over the years, the BBC grew in size and cultural status, but by the 1980s it was class discussion rather than to under attack over some programmes, which were seen as too controversial or of illustrate either effective or LONDON, 31 JANUARY 2000: Greg Dyke cleared his throat to poor quality. It also had management problems, leading to the first dismissal of a ineffective handling of speak, as 400 BBC staff in the auditorium and some 14,000 director-general. In 1987, when John Birt arrived from LWT (a London-based business situation. more on the internal TV feed waited expectantly. It was his third commercial television broadcaster), he experienced a major culture shock: "LWT day as director-general, and his first major address. had been full of contemporary, alert, fun-loving men and women. The centre of the This case series won the Public BBC was dominated by sober, careful, grey-suited, middle-aged, middle-class Sector Innovations Award in Greg had taken on a BBC that had come through tough times in men." No one was accountable; it was "a meeting of Mafia clans, not a team the 2005 C Writing the 1990s; costs and staff had been cut, management controls working for a common purpose". He quickly formed the opinion that "this bloated, bureaucratic monolith was wasting licence-payers' funds on a massive scale".! at Memorial Uni Competition organized by the implemented, and an internal market for services created. By European Foundation for 2000, morale was extremely low. The organizational changes of Management Development recent years had created a BBC that was deeply divided and, in All activities were funded and directed from the centre, with the advice of (EFMD). Greg's view, overly competitive. Core services were in trouble, Authorized for use only by Richard George in STRATEGIC MANAGEMENT at Memorial University of Newfound land from 5/9/2022 to 8/9/2022. thousands of support staff, while each programme-making department Use outside these parameters is a copyright violation. Use outside these parameters is a copyright violation. programme-makers felt undervalued and there was a lack of trust commanded its own facilities (e.g. studios, technicians), some of which were used at all levels. only a few hours a week. The costs of these facilities and support services were not charged to particular programmes, so no one had any idea how much it cost to During his handover period with John Birt, his predecessor, make a specific programme. Modernization was needed--but it would not be easy. GIC MA Greg had deliberately removed himself from the BBC's powerbase in London to visit the regional UK units and hear about the issues in person. His conclusion: "People were not Simplified Commissioning and Production Process in the Early 1990s yelling for more change but they did want some of the previous Example: Television changes reversed. Emotions were so strong that it was clear that I had to get people onside or I would be dead." CENTRE At the end of January, with John gone, Greg was free to start taking action--to make his presence felt. Today's speech would Authorized for use only by Richard George in STRAT be the first step. Demands for ands for resources Demands for resources allocation and funding and funding and funding and funding and funding and funding Copyright @ 2003 by IMD - International Institute for Management Development, Lausanne, Switzerland. Not to be used or reproduced without DEPARTMENTS Programme written permission directly from IMD. 45 Drama Delivery of e. Entertaintoes CONTROLLERS/ :=::147=> BBC PRODUCERS COMMISSIONERS Programme (PROGRAMME-MAKERS) resources BBC FACILITIES RESOURCES e.g Factual .E Sport Type here to search O O a 2:45 PM 14- Jul- 22 (22)