ABC managing director Mark Scott has succeeded by embracing change, writes Tom Skotnicki Few chief executives can include "school teacher" on their resume. The ABC's Mark Scott may have always been destined for the executive ranks, but he did not take a direct pathway. Apart from teaching, he worked as a political adviser, spent several years studying overseas and was education editor of the Sydney Morning Herald. His rapid rise at Fairfax ultimately caused some resentment, but few realised that Scott had management in his DNA. As the grandson of a former AIM chairman and with a father who has a Masters in management, his ascension to senior ranks was only a matter of time. The ABC had embraced digital media before Scott's arrival in 2006, but he accelerated the process. He told Mt that having heard the BBC had spent more than £100 million to develop a website that could stream archived programs, he decided he wanted something similar. As important as this move was for the ABC, it gained additional significance as the mobile revolution gained pace with more plays on iView generated from mobile devices such as smartphones and tablets than from laptops and PCs. Scott saw the development as a test of his leadership. "I have always read a lot on leadership and strategy. Looking at my desk now there is a copy of The Leadership Challenge by Jim Kouzes and Barry Posner. Leadership and strategy are critical to what I am doing here in a broad management sense. I was lectured at Harvard by Michael Watkins who wrote The First 90 Days: Critical Success Strategies For New Leaders and when I started at the ABC I got a bit hung up on where we as an organisation were going to land in five years. "I then realised that this is the media, so it is dog years out there, everything is changing so fast and the organisation did not need me to say, 'We will be precisely here in 2011', what it needed was to be told the future is this way. We broadly know the direction and we know the principles that will guide us and what the audience wants and we will calibrate as we go." Scott has a privileged background but he dropped out of a combined arts/law degree at Sydney University in favour of completing a Bachelor of Arts and Masters Degree. He was motivated by teaching and education (his wife is principal of Wenona girls' school in Sydney) and gained a Diploma of Education before spending two years teaching at St Andrew's Cathedral School in Sydney. He then ventured into politics and obtained a position working for NSW Liberal minister Terry Metherell before becoming chief of staff to Metherell's successor as NSW education minister, Virginia Chadwick. In the early '90s, still not 30, Scott headed for the US where he received a Masters of Public Administration from the Kennedy School at Harvard. He then spent a year working for a think-tank in Washington DC before being offered the job of education editor at The Sydney Morning Herald. "The Sydney Morning Herald pretty quickly moved me into news management. The feeling was that there were lots of people who could write stories but managing journalists was a rarer skill set. I became news editor, then deputy editor and then Saturday editor." He was then tapped on the shoulder by then chief executive Professor Fred Hilmer to join the Fairfax executive. He became director of organisational development (human resources) and was then appointed editorial director with responsibility for all publications outside the business division, which placed him on a direct line to becoming CEO. He says that looking back on his last few years with Fairfax he found himself "not only explaining the newsroom to the boardroom but the boardroom to the newsroom". In explaining the Fairfax culture, Scott refers to the work of Edgar Schein, a former MIT professor (and expert on organisational cultures). Scott says newsrooms can be tribal and suspicious of management, and part of the challenge at Fairfax and the ABC was to build a bridge between the organisations' strategy and future pathways and what this meant for newsrooms and creative staff. Scott says there is often reference to the daily miracle of newspapers and daily miracle of television production. This is one reason the management tends to be rigid and highly process driven and hierarchical – "The way we did it yesterday is the way we will do it today and the way we will do it tomorrow." Scott says the challenge was to reinvent that model, because business models or conditions have changed and there is a need to be more innovative. He admits he succeeded in securing extra funds from government for various projects. However, he said he never went to Canberra carrying a begging bowl. There are any number of other worthwhile projects and pressing needs, he said. "You need to frame a debate in Canberra about what you will achieve that is distinctive and unique and of value to the public ... We have framed our approach in terms of what we were in the best position to deliver and we have delivered on those, helped reinvigorate television drama with our drama funding and helped strengthen free-to-air television and digital adoption through our children's content and really being innovators in the online and mobile space." Scott acknowledges there is some ill feeling in parts of the political spectrum about funding of the ABC. "Our approval rating is close to 90 per cent with nine out of 10 Australians believing we provide a valuable or very valuable service ... approximately 73 per cent tune in or watch the ABC every week. It is a big organisation with a big reach into the heart of Australia. "We have tough journalists and they give robust interviews; politicians don't always have a happy time on our programs ... well, that's life," he says. "I think most mature politicians understand that, but we also have to look at our own performance. Are we fair? Are we balanced and impartial? At times we will fall short of our own standards and there are consequences to that." Media in the past decade has radically altered with pay-TV, internet broadcasting and declining newspaper circulations causing a fracturing of the commercial returns that helped prop up Australian content. "I believe the politicians feel we (at the ABC) can provide Australian content because we don't have to drive a profit return and, let's face it, news and current affairs is very expensive," Scott says. "If you are interested in a return, you would not invest in Four Corners or two hours of news and current affairs each night, or quality Australian drama." The ABC could afford to be innovative, Scott says, "because we are in the privileged position of not having to build a business case around every investment". He says, as a result, the ABC led the country in podcasting (more than 60 million downloads last year), was the first broadcaster to introduce catch-up programming (with iView) and first out of the blocks with a number of leading apps. He says there is very little support for the organisation accepting advertising in programming. "Overwhelmingly, the audience does not want commercial content on traditional ABC media," he says. He says the joke is that the only people who wanted it worked in the federal finance department. "Look at the public broadcasters that do offer advertising and they end up changing their service to accommodate advertisers." He says he admires the Canadian broadcaster, CBC, but to drive their advertising revenue they had an hour of US quiz shows in prime time – Jeopardy followed by Wheel of Fortune. "I would be run out of town if I did that at the ABC," he says. He also points out that free-to-air broadcasters would not want the ABC competing for advertising. Scott claims the big story at the ABC over the past 20 years has been how much more it achieved with declining staff numbers and a budget that has failed to keep up with inflation. "We are given a lot of money (annual revenue including commercial activities is more than $1.2 billion) and we do a lot with it." Scott says the ABC now operates four television networks, five radio networks, an indigenous radio network, a host of websites and apps and an international broadcast network. "It is very different to 20 years ago when it was basically a single television network and a few radio stations." There is an internal taskforce working on future digital media developments. Scott says there are no outside consultants because he is confident "the answer is in the room". One of the organisation's most successful developments, iView, also emerged from a taskforce when Scott heard the BBC was developing the iPlayer and had spent £100 million on the project. "I pulled a group of people together and I said, 'I want one, I need one but I have no money – give it your best shot'." Scott then quotes a line from Yahoo chief executive Marissa Mayer: "Innovation loves constraints." The most popular download on iView is the animated British children's series Peppa Pig. The total number of iView plays per month now regularly exceeds 15 million. Scott recently received a video of a 20-month-old navigating to and then watching an iPhone episode of Peppa Pig, which Scott says tells you a lot about the future of media – "It is about accessing content where and when you want it." He says the next step will be to determine how it can be delivered so it can be watched in a high-quality format on big screens (though Apple TV already allows iView users to switch between their tablet and television), how best to organise it for easier access and how to have a richer, deeper library (and this is where there could be a pay component like the subscription service offered here by the BBC through iPlayer). "On any criteria, News 24 has been another tremendous success," Scott says. In the week in which Kevin Rudd replaced Julia Gillard as prime minister, about 4.5 million Australians tuned in to News 24, Scott says. He says the live, around-the-clock service providing breaking news has resulted in a once-in-a-generation change in the television production model and the way news is made. This, too, was achieved without any additional funding. For children's channel ABC3, Scott says the pitch to government was that if it had 20 free-to-air channels then at least one of then should be a children's channel. "We argued to government that we were already the broadcaster that parents trusted and that we were confident that we could work with the independent production sector to produce quality children's programming. I think it was the biggest single driver to the take-up of digital television (and switch from analogue) in Australia." Scott's other key focus has been on drama, which has resulted in critically acclaimed programs such as Redfern Now and The Slap that have also generated strong audiences. "Kids love us and as audiences get older they come back to us, I sometimes joke that we own the retirement villages of Australia. However there is no doubt that the 20 to 50 year age group represents a risk for us as it does for all media organisations." To some extent this is being counter- balanced by the continued success of the Triple J radio network. Scott says Triple J has grown its audience reach by about 40 per cent since his arrival at the ABC. He says there had been concerns it was under threat from the introduction of digital radio but instead the radio network had "embraced it with a fever and are wonderful online, in mobile and social media and the brand has only got stronger". He says Triple J also has an echo with older audiences than its target market as demonstrated by the recent 20th anniversary of the Triple J Hottest 100, a significant social media event. Scott says younger audiences spend far more time with social media, which is why the ABC must continue to grow its social media presence and increase the opportunities for audiences to personalise their media experience and create user-generated media, because they are not going to easily migrate back to radio and television as they age. He suggests the future can be seen in the second-screen phenomenon, where people are watching a program but also interacting with others about its content using Twitter and Facebook. A prime example was Q&A, where thousands interact. "It is the concept of being together alone," Scott says. In discussing future challenges, he refers to a quote by US-based strategy guru Gary Hamel: "Are you changing as quickly as the world outside is changing?"