How Hearst aims to tower again – with the help of AI

By Chris Middleton

October 6, 2021

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A hundred years ago, William Randolph Hearst owned the biggest newspaper, magazine, and media organisation in the world, the Hearst Corporation. His life, billions, and California castle were later satirized by Orson Welles in Citizen Kane, with the fictional Charles Foster Kane roaming the halls of Xanadu and dreaming of Rosebud.

In 2021, after more than 130 years in the business, NYC-headquartered Hearst Communications finds itself in very different times, with the founder's grandson William Randolph Hearst III now chair. Netflix, Google, Apple, Amazon, Disney, Tencent, and Facebook all preside over an increasingly mobile, on-demand media world. And while print isn't dead, it has become a more niche and upscale concern in the digital age. Many newspaper and magazine circulations are dwindling, however, and everyone is chasing their own Rosebuds in the cloud. Paywall, subscription, donations, advertising, sponsorship: which is the right sled to ride?

Yet Hearst remains a major player, with 2019 revenues of $11.4 billion, 20,000 employees worldwide, and a programme of aggressive acquisition. Its current holdings include Hearst Magazines (home to Cosmopolitan, Billboard, ELLE, Esquire, Harper's Bazaar, Marie Claire, O, and Men's Health, among others), local-stations network Hearst Television, Fitch Ratings, First Databank, website Digital Spy, a 20% stake in ESPN, growing interests in telehealth, and more. Step back and it still looks like a 20th Century business, but it is more nimble and agile than that.

The COVID-19 tipping point

When the pandemic hit, COVID-19 forced audiences even further away from traditional media, and into the arms of whoever could keep them connected, entertained, and - hopefully - informed. Yet the world has also been transformed for employees in many businesses, with Hearst not least among them.

In some industries, the shift away from bricks-and-mortar premises may become permanent, as companies realize that remote workforces and cloud collaboration not only work in many cases, but also help to slash capital expenditure and operating costs - particularly in sectors where margins are slim. But to work effectively, the supporting IT demands a measure of automation and built-in intelligence.

So, for Hearst today, the future can be expressed in a single term: AI. So says VP and CTO Mahendra Durai, who was promoted from CIO in March. He came onboard from CA Technologies in 2019, so much of his career at the conglomerate has been centred on the digital transformation caused by the pandemic.

But was it really just cause and effect? According to Durai, the transformation was already happening at Hearst pre-pandemic; COVID-19 merely gave it a push. Durai says:

It accelerated the transformation and the pivot. In terms of adopting AI, NLP [natural language processing] and ML [machine learning], all these capabilities were well on their way, even before the pandemic.

Two months after I joined Hearst, we had an executive retreat and I was asked to do a presentation on what the landscape would look like, and the general theme was AI. We did a mock-up of a digital assistant that would be able to deliver services - this was in April or May 2019. That was absolutely in our vision.

Herbie rides out

Today, Hearst runs its own bespoke chatbot and digital assistant, Herbie, courtesy of conversational AI and automation specialist, Moveworks. With an increasingly remote, mobile workforce, self-help in IT, finance, payroll, and procurement is essential, so Herbie is on hand to answer as many questions as possible before human agents step in.

The project began in IT support and is still centred there, courtesy of the Moveworks product's ability to understand IT jargon and terminology. But the strategy now is to roll out the chatbot across other support functions, says Durai. For example, Moveworks for Finance, launched in August 2020 and delivered via the Herbie persona, is "already performing exceptionally, with about 80% effectiveness" in terms of resolutions.

Overall, Herbie handles about 1,000 support tickets a month automatically. It solves 31% of these without agent intervention, with that number increasing towards a planned 70-80% as the bot learns from each interaction. To date, Herbie has helped more than 60% of Hearst's workforce, or roughly 12,000 people. That includes 1,300 first-time users in the last quarter alone.

Durai explains:

It's almost like a person, a human being who comes into the organisation with some technical capabilities, via Moveworks' understanding of IT jargon and language. As we provide more knowledge to the solution, it's like that person getting more comfortable as they learn the ropes and understand the nuances of the organization. It becomes more efficient and effective. That's what we've seen with our digital assistant, and it's been a great, great partnership.

Durai describes Moveworks as being like a chatbot itself, in that the company is always on hand to respond quickly and meaningfully to requests. But has there been any cultural resistance to this new world of remote collaboration, online chat, and self-help?

He says:

We try to bring a product focus to the solutions we give to both our customer base and our employees, and we bring the same mindset to their rollout. One of the focuses for us is to ensure that we have user adoption and get value from our technology investments.

So, we're doing well, and we haven't had any resistance per se. Overall I'm very happy with how it's been adopted, so now it's on us to go ahead and market the solution and drive its adoption.

An internal data economy

With 12,000 staff having used Herbie to at least some extent already, Hearst must be gathering a lot of data about problems and queries, gaining real insights into how well the organization is performing? Durai says: 

That is absolutely the case, to mine that information and see if there are new ways to solve issues. One is an initiative that's going to help us move quicker to a password-less environment, using biometrics and all those capabilities.

So, it gives us much-needed optics into where our hotspots are. Then, going beyond that, making the right prioritizations and investments to address them so they are taken care of better than before.

About improving the IT function and making it fit for a transformed world, Durai says:

When I joined, my focus was to evolve the organization to a customer-centric, service-focused one. We centred on improving productivity and profit, both for end-users and within the IT organisation, and to run efficient operations.

It was about how we could leverage emerging technologies, especially AI, to be able to enhance and deliver our services, and work closely with our businesses to optimize and drive the efficiency of their processes.

It was about transforming the organization, so it was a combination of evolving and learning, adopting an agile framework for delivery. Bringing user experience, concepts, and learning to the entire organization - design thinking, all those aspects.

Waking up in a new world

As for the changing media landscape surrounding a company that helped define the last century's top-down, broadcast, one-to-many publishing model, Durai says:

It's definitely been a challenge. The way the consumer is evolving and shifting is very real and has its unique challenges. We are pivoting to be able to not only remodel where we are, growing digital subscriptions, online newspapers, and magazines, but also looking at strategies like affiliate marketing, to be able to appeal to the moment, to a multi-generational customer base and how they consume information. So that's a big focus for us. Being able to deliver local content is also something we focus on.

The pandemic has brought forward opportunities in terms of how we can leverage automation and remote delivery to stand up our solutions for customers. We see changing patterns - including the opportunity of telehealth, which has become more mainstream with the pandemic and is another big focus for us.

It's about accepting and acknowledging the changing trends and being able to develop new approaches that are going to be relevant to the customer.

My take

Focus, focus, change, and adapt: that's the message from Hearst Tower in 2021, as this venerable yet still agile company grapples with a very different world to the one it was born into, aided by AI and automation.

Yet while its internal and workforce processes are being transformed to meet the needs of the 21st Century (as we, hopefully, emerge from the pandemic), the challenge to Hearst's core businesses needs to be met equally strongly.

Like countless others worldwide and across the economy, some of those businesses have suffered over the past two years, especially in the magazine and newspaper sectors that were hit by lockdowns, consumer fears, and logistics problems.

So, the question for Hearst now is, did the pandemic merely accelerate those changes in the market too, or are they just a temporary obstacle? Either way, Hearst seems well placed to understand the challenges and meet them head on.