Pioneering strategies in the digital world. Insights from the Axel Springer case

Abstract

Digital technologies present some distinctive characteristics; they simultaneously enable pervasive connectivity, immediacy of interactions and wide access to data and computing power. Based on a detailed historical analysis of Axel Springer, we suggest that pioneering strategies in new markets created by the diffusion of digital technologies are negatively moderated by the fit between firms’ legacy core capabilities and those required to enter the new market. We then show that pioneering strategies in non-core legacy markets are instrumental in creating the capabilities necessary for the sustainability of first-mover advantages (FMA) in the legacy core markets. Finally, we show the role of managerial cognition as a key individual-level enabler in achieving pioneering advantages.

Keywords:

• First-mover advantage (FMA)
• digital technology
• core competences
• managerial capabilities
• Axel Springer
• publishing
• newspaper industry
• media

Notes

1. In this article we use first-mover advantages (FMA) and pioneering advantages in an interchangeable way.

2. Suarez and Lanzolla, 2007; 382.

3. Lieberman and Montgomery, 1998.

4. e.g. Porter, 2001.

5. e.g. Oshri, de Vries and de Vries, 2010; den Uijl and de Vries, 2013.

6. e.g. Benner, 2010; Gilbert, 2005, 2006.

7. Wall Street Journal online, December 2013.

8. Bloomberg Business Week online, April 2013.

9. e.g. Helfat and Peteraf, 2014; Jones, Ghobadian, O’Regan, and Antcliff, 2013.

10. Fosfuri, Lanzolla and Suarez, 2013.

11. e.g. Lieberman and Montgomery, 1998.

12. e.g. Suarez and Lanzolla, 2007, 2008.

13. e.g. Day and Freeman, 1990; Golder and Tellis, 1993.

14. Rumelt, 1987.

15. Lieberman and Montgomery’s (1988).

16. e.g. Giudici and Reinmoeller, 2012; Teece, Pisano and Shuen, 1997.

17. e.g. Klepper and Simons, 2000.

18. Tan and Vertinsky, 1996.

19. e.g. Schoenecker and Cooper, 1998.

20. Teece, 1986

21. e.g. Frynas, Mellahi and Pigman, 2006; Nehrt, 1998.

22. e.g. Dobrev and Gotsopoulos, 2010; Folta and O’Brien, 2004.

23. Arora, Fosfuri and Gambardella, 2001.

24. Suarez and Lanzolla (2007, 2008).

25. e.g. Bohlmann, Golder and Mitra, 2002; Christensen, Suarez and Utterback, 1998; Lanzolla and Frankort, 2016.

26. Michael Porter 2001, 44.

27. e.g. Giachetti and Marchi, 2010.

28. e.g., Gilbert 2005, 2006.

29. Datamonitor, 2004. Report “Publishing in Germany: Industry Profile.” Available from the authors upon request.

30. Diamond and Robinson, 2011.

31. At the time of submission, documents for the period 2008–2013 are available at: http://www.axelspringer.de/en/cw_investor_relations_index_en_40475.html. Sources for the period 2001–2007 are available from the authors upon request.

32. Axel Springer’s corporate divisions are identified with capital letters in the text.

33. Porter, 1985.

34. Weber, 2000, 11–15.

35. Axel Springer 2013 Capital Markets Day, 4 (Berlin, December 11, 2013): “Broadening the Scope and Building on Market Leadership in Digital,” Dr Jens Müffelmann, Head of Electronic Media.

http://www.axelspringer.de/dl/16097603/05_Mueffelmann.pdf

36. Ibid.

37. Ibid.

38. Axel Springer 2005 Annual Report, 2. “Foreword,” Dr Mathias Döpfner http://www.axelspringer.de/dl/24592/axelspringer_gb2005_eng.pdf.

39. Axel Springer 2006 Annual Report, 4. “Foreword,” Dr Mathias Döpfner http://www.axelspringer.de/dl/20165/01_axelspringer_annual_report_2006.pdf.

40. Axel Springer 2012 Capital Market Day Presentation: “Key to Digitization: M&A and Asset Development,” Dr Jens Müffelmann, Head of Electronic Media, and Oliver Schäffer, Head of M&A/Strategy. Market growth: Weighted market CAGR 2006–2012 based on data from ZenithOptimedia, PwC and HDE.

41. Axel Springer 2012 Capital Market Day Presentation: “Key to Digitization: M&A and Asset Development,” Dr Jens Müffelmann, Head of Electronic Media, and Oliver Schäffer, Head of M&A/Strategy http://www.axelspringer.de/dl/7921487/06_CMD2012_Mueffelmann_Schaeffer.pdf.

42. Axel Springer 2007 Annual Report, 2–5. “Foreword,” Dr Mathias Döpfner http://www.axelspringer.de/dl/20165/01_axelspringer_annual_report_2007.pdf.

43. Ibid.

44. Axel Springer 2008 Annual Report (Executive Summary) http://www.axelspringer.de/dl/98346/annual_report_2008.pdf.

45. Sweney, M. 2008. “Haymarket Media Group Chairman Heseltine Sounds Trading Warning,” published on June 30 by The Guardian online. https://www.theguardian.com/media/2008/jun/30/pressandpublishing.mediabusiness (accessed: July, 7, 2016).

46. Schibsted Investor Relations (January 30, 2009): “Profit Warning and Profitability Programme,” Jo Christian Steigedal, VP Investor Relations. http://www.schibsted.com/en/ir/Regulatory--and-pressreleases/Regulatory-and-Press-Releases-Archive1/2009/Schibsted-ASA-SCH---Profit-warning-and-profitability-programme.

47. The figures reported are consolidated results from Axel Springer’s official annual reports. Due to the significant and rapid amount of change in digitally-related initiatives – e.g. new acquisitions and internal reassignment of specific revenue streams – results are also reported pro forma as re-calculated by the company on a yearly basis.

48. Axel Springer 2009 Annual Report, 7. “Foreword,” Dr.Mathias Döpfner http://www.axelspringer.de/dl/300736/GB_ENG.pdf.

49. Axel Springer 2010 Annual Report, 3. “Foreword,” Dr Mathias Döpfner http://www.axelspringer.de/dl/431754/Annual_report_2010_Axel_Springer_AG.pdf.

50. Ibid.

51. Axel Springer 2012 Investor-/Analyst Conference Call (Berlin, 6 March 2013): “Annual Result 2012,” Dr Mathias Döpfner, Chairman and CEO, and Lothar Lanz, CFO and COO http://www.axelspringer.de/dl/14843813/Annual_Report_2012_Axel_Springer_AG.pdf.

52. Axel Springer 2012 Annual Result, 4 (Berlin, 11 December 2013): “Broadening the Scope and Building on Market Leadership in Digital,” Dr Jens Müffelmann, Head of Electronic Media.

53. Axel Springer 2012 Annual Report, 3. “Foreword,” Dr Mathias Döpfner http://www.axelspringer.de/dl/14843813/Annual_Report_2012_Axel_Springer_AG.pdf.

54. Axel Springer 2013 Annual Report, 4. “Foreword,” Dr Mathias Döpfner http://www.axelspringer.de/dl/16944123/Annual_Report_2013.pdf.

55. Axel Springer 2013 Capital Market Day Presentation: “The CEO Keynote,” Dr Mathias Döpfner http://www.axelspringer.de/dl/16097603/01_Doepfner.pdf.

56. Diamond and Robinson, 2011

57. Suarez and Lanzolla, 2007; Lieberman and Montgomery, 1998

58. Lanzolla and Anderson, 2010.

59. e.g. Suarez and Lanzolla, 2007, 2008.

60. Gilbert et al., 2012; Harreld, O’Reilly and Tushman, 2007.

61. Helfat and Peteraf, 2014; Jones et al., 2013.

62. Helfat and Peteraf, 2014, 845.

63. In line with established research on corporate and managerial attention, e.g. Cho and Hambrick, 2006; Eggers and Kaplan, 2009; see for a review Helfat and Martin, 2014. Figure 6 is based on a content analysis of Companies’ annual reports. Managerial attention was calculated as the cumulative number of times the keyword(s) ‘digit*’ appeared in the annual Letter to Shareholders whereas corporate attention as the cumulative use of the same keyword(s) in each Annual Report. We excluded the use of the keyword in subsidiaries’ names. shows that Axel Springer also outperformed its peers in terms of corporate and managerial attention dedicated to digitisation throughout the whole period of this case.