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Transforming NSTP:A journey with PwCConsulting

October 2011

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Transforming NSTP:A journey with PwCConsulting

October 2011

Introducing Malaysia’s oldest newspapercompany

In July 1845, an editor called Robert Carr WoodsIn July 1845, an editor called Robert Carr Woodssingle-handedly edited and published the first issue ofwhat is known today as the New Straits Times.

The New Straits Times Press (Malaysia) Berhad(“NSTP”) is principally involved in the publishing andsale of newspapers besides being an investmentholding company. It publishes its flagship newspaper,the New Straits Times as well as other vernacularpapers such as Berita Harian and Harian Metro.

Today, NSTP’s newspapers collectively enjoy a dailyaverage circulation number of 655,000, withreadership amounting to 5.3 million.

The NSTP group also owns four printing plants andhas 16 branches nationwide. Although its digitalmedia subsidiary, e-Media, was set up in year 2000,NSTP only started to really focus its efforts on thesocial media landscape in early 2010.

In December 2010, NSTP became a 98% subsidiary ofthe Media Prima group, Malaysia’s largest integratedmedia organisation with businesses in television,

PwC | Transforming NSTP – A Journey with PwC Consulting

media organisation with businesses in television,radio, studio production and outdoor advertising aswell.

Let’s take you through the first two years of theirtransformation journey (dubbed Project Optimus)–the role PwC played and the transformationalleadership demonstrated by their CEO & seniormanagement team.

Introducing Malaysia’s oldest newspaper

The very first copy of ‘Straits Times and SingaporeJournal of Commerce’, or what news readers knowtoday as ‘The New Straits Times’

Gloomy days loomed ahead

“We extrapolated that if we did notdo anything radical by the year2012- 2013, we would not have asustainable business anymore”

– Dato’ Anthony

Turbulent times…

NSTP went on an expansion of its printing plants in1997 right before the Asian financial crisis hit.Straddled with debts of around RM1.5 billion, themanagement then focused its efforts on reducing thedebt levels through prudent financial management.

When Dato’ Anthony came on board in November2008, the previous management had successfullysettled most of the debts. Although left with a cleanslate to move forward, there were still inherentproblems in the company – the people were tired,unmotivated, inefficient and had no direction. “Weclearly needed to transform, and transform fast, if wewere going to stay relevant and in business in thecoming years” quipped Dato’ Anthony.

In 2009, management defined NSTP’s mainchallenges:

• Planning today for tomorrowJust like their newspapers, they knew what to

Turbulent times…


Just like their newspapers, they knew what toreport tomorrow, but not the next week nor month.The business was surviving on routine, and no onehad any long-term view of where they were headed.

• Newspapers... what’s that?Their readers were mainly above 40. The youngergeneration was not picking up their products.“With no new readers picking up our papers, whatwill happen to our papers once our current readersmove on?” asked Dato’ Anthony.

• The elusive Gen-YsThe average employee age across the company was38 (and 49 for leadership positions) with the oldestbeing over 70!. Gen-Ys only made up 19% of totalheadcount. There was a pressing need to attractyounger talent into NSTP if it was going to stayrelevant. Yet, Gen-Ys just weren’t interested injoining an “archaic, dinosaur” company.

Gloomy days loomed ahead

“We extrapolated that if we did notdo anything radical by the year

2013, we would not have asustainable business anymore”

’ Anthony Bujang, CEO of NSTP

• “We’ve ALWAYS been doing it this way”mentalityInefficiencies were everywhere. Everyone wasdoing things because it was just the way it’s beendone all this time. “Bad habits” such as working insilos and missing offstone deadlines were the normand none drew any serious repercussions. Thereweren’t any incentives for innovation and highperformance.

• The death of distanceThe internet made news real-time and borderless.Whatever that was printed in the papers wasyesterday’s news. NSTP struggled to align theirtraditional products to these opportunities andwere uncertain about how to monetise new media.They lacked the experience and capabilitiesrequired and were concerned that they would bemissing the boat.

“We were basically still operating

Realising that innovation and transformation werewhat they needed, Dato’ Anthony turned to PwC forassistance, “PwC demonstrated strong strategyexperience, passion for working together with us, andcommitted a strong team to help us on our journey”.Thus, NSTP and PwC embarked on this exciting andrewarding journey towards a better future. We calledit Project Optimus.

“We were basically still operatingwithin the parameters of the samebusiness model since ourinception!”

– Mohamad Ariff Ibrahim,Group Chief Financial Officer

Destination defined

At PwC, we strongly believe in a collaborative approachwith our clients to support longer-term sustainedchange. And we took this approach with NSTP.

With over 150 years of collective experience in theprint and media industry amongst NSTP’s seniormanagement, they shared good insights into theindustry and business – NSTP’s strengths, weaknessesand aspirations. PwC shared our insights into industrytrends, case studies and future outlook – their

Clear skies ahead…

trends, case studies and future outlook – theiropportunities and threats. Findings from PwC’sEntertainment and Media outlook further supportedthe project.

“I remember very clearly we worked throughoutRamadhan to brainstorm and chart our futuredirection. We were all geared up and excited to chartour direction” said Zafrul Hashim, Director ofCorporate Affairs, who was the main liaison workingwith PwC on the project.

PwC facilitated an idea generation and strategydefinition workshop to develop NSTP’s five-yearmission, strategic themes and action plans. Therewere no bad ideas – everything went into the IdeaBank for deliberation. “PwC mixed us all up intodifferent groups and the results were amazing – thiswas when we started to break down our silos andbegan to value collaboration and teamwork!” addedthe CEO.


“Wea Big Hairy Audacious Goal forNSTPgrand but achievable if we allworked together towards it”

Getting buy-in right from the start

At PwC, we bring our transformation experience tostrategy and focus on developing an implementablestrategy – not something that will sit on a shelf uponcompletion. After the strategy definition workshop,we formed working teams to start building thebusiness cases and implementation plans for theidentified strategic initiatives. These teams were ledby members of the senior management, but comprisedof NSTP’s talent and high performers – this wascrucial for the group to start getting the buy-in fromcrucial for the group to start getting the buy-in fromthe “implementers”.

The teams, facilitated by PwC, developed businesscases that projected the ideas, potential costs andbenefits, and key activities required for each strategicinitiative. These business cases were then presentedat a Strategy Prioritisation Workshop, where PwCfacilitated constructive debate and agreement on thebusiness case for each strategic initiative. Theinitiatives were then prioritised based on projectedbenefits vs. the implementation effort required.

Following the second workshop, we continued to worktogether with the strategic initiative owners to updatethe business cases into an actionable implementationplan with clear targets, activities, timelines, benefitsand resource-needs defined.

At the end of the strategy definition exercise, everyonefrom the middle management level and above wereexcited and geared-up to achieve the strategy. Theyknew exactly what they needed to do to kick-start theirProject Optimus journey.

“We worked with PwC to definea Big Hairy Audacious Goal forNSTP – something that wasgrand but achievable if we allworked together towards it”

– Dato’ Anthony Bujang, CEO of NSTP


Strategy Development inAction

PwC also worked with NSTP to develop four keyblueprints to support Project Optimus’ goals,including :

• ICT blueprint: Defining the overall structureand components to support NSTP’s new ICTenvironment

• HR blueprint: Guiding the human capital

Destination defined (cont’d)

Building ourfoundations

• HR blueprint: Guiding the human capitalfunction in achieving people end-states

• Circulation blueprint: Positioning andsetting the direction of the Circulationdepartment to enhance efficiencies and driverevenue through the sale of its 3 print products

• eMedia blueprint: Redefining the eMediadepartment’s role and direction to monetiseand create presence in new media and thesocial media scene

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NSTP’s strategy– “to get house in order” and“create new value”. The four supporting

blueprints served as the fundamental enablersto the strategy

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Destination defined (cont’d)

Snapshots of some of PwC’sdeliverables

NSTP’s End-States in 2014The illustration below shows the ten desired end-states for NSTP in2014 .Further elaboration ondetails of the end-states can be foundin 2.4.4 and 2 .4 .5 of this report.

NSTP’s 5-year journey to communicate and inspire others

10. We will unlock thevalue of our underutilised

assets

8. We will develop thenecessary operational

frameworks to support ourbusiness

9. We will enhance customerloyalty by understandingthem better and working

closely with our vendors

RM 1 bil

NSTP’s 5-year journey (cont’d)

NSTP’s 5-year journey

7. At the end of the day, wewill ensure that we are

attractive to our investors& shareholders

1. We will strengthen theperception of our core

products & enhance ourcustomer experience

2. Of the many new ideas,we will develop blockbuster

money spinners

3. We will theninnovatively

commercialise theseproducts

4. Internally, we will focuson increasing performance

and business efficiency

5. We will restructure ourorganisation for better

operational effectiveness& efficiency

6. We will alsocontinuously engageour customers & the

public to stay relevant

NSTP’s desired end-states presented in comic

High-level strategic plans elaborating initiativedescription, timelines and key enablers

Seeing is believing…

Decades of unfulfilled promises and underperformance hadcreated an air of cynicism amongst staff and affected moralevery badly. Change management was key to the success of thetransformation. “People needed to see and feel the changes tobelieve it, not just hear about it,” quipped Dato’ Anthony.Some examples of the visible changes include:

• “NSTP Under Transformation” was visible in every cornerof the workplace throughout 2010 in getting the staffgalvanised towards putting its house in order. This was

Prime Outcomes of Project

galvanised towards putting its house in order. This wasfollowed by “Winning in Progress” in 2011

• Within six months, all 16 regional branches were fullyrenovated with NSTP’s new branding. Renovation wasimplemented at regional branches before the headquartersto send a strong message that everyone plays a part in thetransformation, not just management

• In NSTP’s main office, walls that previously created siloswere broken down. Now, seven departments sit togetheron one floor in an open office concept to encouragetransparency and sharing

Sharing transparently…

The level of transparency was unprecedented –quarterly town hall meetings were held in all regions tocommunicate key targets, achievements and incentivesto employees if the targets were met. At the start of2010, Dato’ Anthony promised a stretch bonus of 7months to high-performing staff if the stretch targets


months to high-performing staff if the stretch targetswere met – this instantly created a sense of excitementand commitment from everyone. This was more than3 times higher than the highest bonus paid out in2009.

Moving into the last quarter of 2010, the managementshared with the staff that they were RM6million shortof their stretch target (and bonus!) and they neededeveryone to push them over the finish line. They gotRM16million instead and bonuses paid out werebetween 4 to 8 months, something the 166-year oldcompany had never seen before.

of unfulfilled promises and underperformance hadcreated an air of cynicism amongst staff and affected moralevery badly. Change management was key to the success of the

People needed to see and feel the changes to

“NSTP Under Transformation” was visible in every corner

Prime Outcomes of Project Optimus

Inspiration from the top

Dato’ Anthony played a key leading role in steering thetransformation. He chaired the monthly OptimusSteering Committee meetings to drive implementationof the projects. He also did walkabouts throughoutthe office, constantly engaging with his managementteam and the people on the ground, spurring people

implemented at regional branches before the headquartersto send a strong message that everyone plays a part in the

In NSTP’s main office, walls that previously created silos, seven departments sit together

team and the people on the ground, spurring peopleincessantly to work together.

Senior management played a crucial role in leadingand guiding the transformation. They committedthemselves to the implementation activities, thestretch targets and had department meetings to helptheir teams understand their roles in contributing tothe vision. Optimus led to significantly more inter-department collaboration, with teams workingtogether to exchange ideas and implementtransformation.

The regional branches were not left out – managementvisited them to keep them updated on thetransformation as well as to address their issues. Theefforts of senior management significantly boostedthe morale of the workforce. NSTP’s employeeengagement survey shot up from 39% in 2008 to 76%in 2010!

Savings savings savings…

Through NSTP’s Business Process Improvement (BPI) initiative, more than 39 projects were identified betweenJanuary 2010 and June 2011. This has resulted in RM20.7million of savings through initiatives such as improvingnewsprint yield, reducing waste and recalibration of ink. With the improvement mindset and processes embedded intoits operations, these savings continue year on year as other new BPI measures are introduced.

To encourage more BPI ideas and implementation, a total of RM170k of spot bonuses was paid out to rewardemployees who achieved their BPI targets.


Seeking new value and fresh talentThe NSTP strategy incorporated a strong focus on online and social media aspotential new revenue streamsNSTP had no real presence in.

In early 2011, NSTP launched itsStraits Times. ThreeMalaysia’s number one news portal app with 12,783 downloads.team also offers social media services for companies, which has beengenerating good revenues.

“One of the ideas we identified from our discussions with PwC’s Genwas the value a Genengagement with the generation,” saidWakaLab in 2011 and all the “rejuvenation” efforts have paid offquarter of its staff now consists of Gen

Winning attitudeA key driving force behind NSTP’s transformation success wasthe change in mindset of their employees. Project Optimus’


the change in mindset of their employees. Project Optimus’theme “Winning” became a company-wide passion and itcreated a high-performance culture. They constantly celebratedtheir achievements and were not afraid to continuouslychallenge themselves to hit the next milestone, going beyondwhat was asked. This winning mentality made NSTP a winner ofnumerous awards, amongst which are:

• Grand Prix Award, Gold Medal and Silver Medal, AdFest2011

• Bronze Lion, Cannes Lions International Festival ofCreativity 2011

• The Best Brand (Media/ Newspaper category), The BrandLaurette Awards 2011

• Best Print Media and Winner of Minister’s Trophy, DomesticTrade, Cooperatives and Consumerism Ministry Award2010

NSTP’s Business Process Improvement (BPI) initiative, more than 39 projects were identified betweenJanuary 2010 and June 2011. This has resulted in RM20.7million of savings through initiatives such as improvingnewsprint yield, reducing waste and recalibration of ink. With the improvement mindset and processes embedded intoits operations, these savings continue year on year as other new BPI measures are introduced.

To encourage more BPI ideas and implementation, a total of RM170k of spot bonuses was paid out to reward

Prime Outcomes of Project Optimus (cont’d)

Seeking new value and fresh talentThe NSTP strategy incorporated a strong focus on online and social media aspotential new revenue streams – this was to tap into a whole new market thatNSTP had no real presence in.

In early 2011, NSTP launched its iPad apps for Harian Metro and the NewThree weeks after its launch, The New Straits Times app was

Malaysia’s number one news portal app with 12,783 downloads. The e-mediateam also offers social media services for companies, which has beengenerating good revenues.

“One of the ideas we identified from our discussions with PwC’s Gen-Y teamwas the value a Gen-Y lab can bring to us – to spur innovation and encourageengagement with the generation,” said Dato’ Anthony. NSTP launched

in 2011 and all the “rejuvenation” efforts have paid off – more than aquarter of its staff now consists of Gen-Ys.

A key driving force behind NSTP’s transformation success was’

’

constantly celebrated

challenge themselves to hit the next milestone, going beyondwinning mentality made NSTP a winner of

Brand

, DomesticTrade, Cooperatives and Consumerism Ministry Award


The bottom line

In 2010, NSTP achieved RM77million of Profit AfterTax (PAT) – 28% higher than 2010’s budgeted PAT,and an amazing 100% higher than 2009’s actual PAT!

This success was also driven by the strong performanceof its advertising sales – revenue grew by 22% in 2010alone. Growth in the past was an average of 2.5%.Even the market’s ad revenue grew by only 15%.

For 2011, the industry outlook has not been as rosy –For 2011, the industry outlook has not been as rosy –with the Euro debt crisis, economic downturn in theUS and lack of major sporting events globally. Despitethat, NSTP is still progressing and are on track to hittheir targets for the year as well. However, given thatthe transformation is in its second year ofimplementation, NSTP’s senior management is awarethat is still has a lot to do to focus on achieving NSTP’send objectives.

“We are not in theprint business,we are a contentcompany”


New Straits Times,

Prime Outcomes of Project Optimus (cont’d)

RM77mil

RM76mil

RM60mil

RM38mil

NSTP Profits After Tax

The New Straits Times makeover– new branding and image

2009 Actual(Before Optimus)

2010 Targets 2010Achievements

New Straits Times, Berita Harian and Harian Metro iPad Editions

The NSTP-PwC partnership

From the first day that PwC stepped foot into NSTP to work together on this journey, both parties have never lookedback. The working relationship established between both parties contributed to the success that we’ve seen NSTPachieve.

“Our working relationship with PwCredefined the best way of working withconsultants to benefit both parties”

– Dato’ Anthony Bujang,CEO of NSTP

“PwC was open to sharing their viewsand latest industry trends – during andeven after the engagement”

– Zafrul Hashim,Director of Corporate Affairs, NSTP

“PwC’s Gen-Y team created anawareness within NSTP thate-Media and Gen-Ys have a strategic


The use of the logo and trademark of The New Straits Times Press (Malaysia)PwC on a non-exclusive basis.

e-Media and Gen-Ys have a strategicrole to play in our transformation”

– Cheryl Goh,Head of e-Media, NSTP

PwC partnership

From the first day that PwC stepped foot into NSTP to work together on this journey, both parties have never lookedworking relationship established between both parties contributed to the success that we’ve seen NSTP

“NSTP’s success was driven fromthe top. NSTP’s CEO and seniormanagement showed passion andcommitment in leading thetransformation”

– Dato’ Seri Johan,PwC Malaysia Executive Chairman

“We can see and feel thetransformation within NSTP,compared to when we were firstengaged over a year ago. NSTP’ssenior management took fullownership and were not afraid torefresh those strategies where andwhen required”

The use of the logo and trademark of The New Straits Times Press (Malaysia) Berhad in this case study has been duly authorised to

when required”

– Sundara Raj,PwC Malaysia Senior Executive Director

PwC’s Strategy Practice

Strategy into actionOur aim is to support corporations in designing, managing and executing lasting beneficialchange. We help our clients develop or appraise strategic business plans through therigorous analysis of the business market environment, competitive landscape and internalcapabilities.

By always evolving to respond to industry trends and management focus, and combiningour deep technical skills in response to our clients' changing needs, we are able to sustain aclosed-link relationship with them to continuously support them in improving the way theyoperate, innovate, reduce costs, manage risks, leverage talent, and change the way they dobusiness.

We can help you determine the right strategic priorities for sustainable profitable growthand offer support and practical solutions to achieve your growth objectives. The support we


Transformation segment• Strategic planning and development• Strategy validation/ alignment• Implementation planning

Organisation Realignment segment• Functional/ Business Unit strategy• Sustainability strategy• Innovation strategy

and offer support and practical solutions to achieve your growth objectives. The support wecan offer includes:

Practice

We deliver ourservices locally andthrough ourintegrated network ofmore than 1,300specialists in 30countries across the

Our aim is to support corporations in designing, managing and executing lasting beneficialour clients develop or appraise strategic business plans through the

rigorous analysis of the business market environment, competitive landscape and internal

By always evolving to respond to industry trends and management focus, and combiningour deep technical skills in response to our clients' changing needs, we are able to sustain a

link relationship with them to continuously support them in improving the way theyoperate, innovate, reduce costs, manage risks, leverage talent, and change the way they do

We can help you determine the right strategic priorities for sustainable profitable growthand offer support and practical solutions to achieve your growth objectives. The support we

countries across theglobe

Organisation Realignment segment• Functional/ Business Unit strategy• Sustainability strategy• Innovation strategy

and offer support and practical solutions to achieve your growth objectives. The support we

Sundara RajSenior Executive DirectorTelephone +60(3) 2173 1318Mobile +60(12) 235 [email protected]

Drop us a note or give us a

Yin Ching NgAssociate DirectorTelephone +60(3) 2173 1395Mobile +60(12) 345 [email protected]


© 2011 PricewaterhouseCoopers Advisory Services Sdn Bhd. All rights reserved. "PricewaterhouseCoopers" and/or "PwC" refers toindividual members of the PricewaterhouseCoopers organisation in Malaysia each of which is a separate and independent legal e

Andrew WK ChanSenior Executive DirectorTelephone +60(3) 2173 1282Mobile +60(12) 200 [email protected]

Drop us a note or give us a call

Yvonne Au YongManagerTelephone +60(3) 2173 1767Mobile +60(12) 334 [email protected]

© 2011 PricewaterhouseCoopers Advisory Services Sdn Bhd. All rights reserved. "PricewaterhouseCoopers" and/or "PwC" refers to theindividual members of the PricewaterhouseCoopers organisation in Malaysia each of which is a separate and independent legal entity.

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