Look Innovationinmedia

© Rightscom 2007 – All rights reserved

Innovation in media

Hugh Look

Senior Consultant

Rightscom Ltd

Innovation in media: Database Publishers Association conference September 2007


Any story about innovation has to begin somewhere: digital media circa 1979



Innovations



Lots of interesting innovations, BUT….

►We are often too concerned with innovations►As opportunities►As threats►As puzzles

►And not enough with innovation itself



Innovations…or innovation?

►The digital media sector is full of highly creative people►But is creation the same as innovation?

►How could digital media study innovation as a principle?►Can we see any underlying forces driving innovations?

►How do we organise at enterprise level to deal with them effectively?

►How do we organise at the sectoral level?

►Some achieve innovation►…and others have innovation thrust upon them

►Developing the capacity to deal with both



Schumpeter’s 5 types of innovations

► Introduction of a new product or significant change in an existing product

►Process innovation (new to an industry)►Opening of a new market (mainly in the

geographic sense)►Development of new sources of supply for raw

materials or components►Changes in the way an industry or companies are

organised►Schumpeter did not allow for marketing or

business model innovation



Innovation can be found at many levels

►The creative individual or team

►The enterprise

►Sectoral innovation

►Social innovation

►Innovation often begins globally, but has most effect locally (within individual enterprises)

►It’s deploying innovation that is hard



Systemic problems in innovation

► Infrastructure provision and investment problems► Including network infrastructure

► Transition problems► Firms encounter technological problems or face changes that

exceed their current capabilities► The transition from one paradigm to the next involves a high

degree of uncertainty

► Lock-in problems►Derived from socio-technological inertia, hampering the

emergence and dissemination of more efficient technologies►May prevent the firms from foreseeing the emergence of new

technological opportunities

► Hard and soft institutional problems► Formal rules (regulations, laws)► Social & company culture



Systemic problems in innovation (2)

► Network problems► Links in the network too weak or too strong► Blindness to the world outside the network

► Capability and learning problems► Insufficient human/organizational/technological competences

of firms ► Limits capacity to learn & adopt or produce new technologies

► Unbalanced exploration-exploitation mechanisms► Can generate ideas but not able to choose well ►Or can make choices but cannot generate ideas

► Complementarity problems: ► Competences of the system do not complement one another ► Competences not well-connected



Systemic problems in innovation (3)

►In other words, almost all the systemic problems are about implementation or deployment, not innovation itself



Media concerns

► We interviewed a range of European publishers in spring 2006 for the European Commission

► Little evidence of “disruptive technology” thinking► Much more evidence of “disruptive innovation” thinking –

encompasses business model changes, new legacy-free competitors, changes in roles between publisher and audience

► Companies very concerned with how their internal cultures could adapt successfully: ► Skills were the key issue► Continuous deadlines versus print publishing cycle► Handling different media types (video, audio)► Conceptualisation and monetisation of value added services for online,

mobile, IPTV► Managing content assets efficiently

► Major barriers seen as social, legal or economic – not technical



Models of innovation

► Invention/creativity based►Often accidental► Easy to get confused between innovation and creativity in

media enterprises

► “Systems of innovation” (Malherba)► Economic policy approach► Helps to understand innovations coming from outside the

sector

► Network models► “Recombinant innovation” (Hargardon)► “Horizontal innovation networks” (von Hippel)

► “4-D” (Christensen et al)►More sophisticated version of the familiar radical/incremental

model

► Each has its value for analysis and implementation



The 4-D classification

►Displacement ► Incremental sustaining innovation that can occur when

new entrants change a part of the value network that is not interdependent with many other parts; does not replace incumbents

►Example: desktop publishing software replaced phototypesetting, but did not change publishing itself

►Distraction► Incremental sustaining innovation that can occur when

incumbents change inter-related parts of the value network

►Example: radio replay websites do not create opportunities for new entrants to capture audience



The 4-D classification (2)

►Discontinuity►Radical, but still sustaining, innovation that is controlled

by the incumbents and affects most or all of the value network

►Example: shift to digital TV, SMS

►Disruption►Radical innovation that disrupts rather than sustains, as

it allows new entrants to replace incumbents

►Example: the rise in user-generated content in all its forms creates new audience interest and displaces significant areas of media content; new entrants command this activity and many traditional media enterprises lack the skills to enter



Discontinuous vs disruptive innovations

►What makes a technology or innovation “disruptive”?►It shifts the balance of power between users,

suppliers and all the others in the value chain►Was SMS discontinuous or disruptive?

►Who is disrupted?►Incumbents?►New entrants?►Users?

►What disrupts an incumbent may sustain a new entrant



Disruptive innovations: some examples

►Email

►SMS►Both gave users an alternative to speech

►Japanese motorcycles

►Digital downloaded music►The “track” economy is highly disruptive of the

business model

►Digital technologies may enable bundled pricing (journals) or dissolve it (music)



Christensen’s theory of why incumbents lose out to disruptive innovators

► They are too good at meeting the needs of their customers► They (and their customers) dismiss innovations that are

worse in features and performance► Typically originated by outsiders

► Their enterprise is designed for incremental innovation► The entrants find a new market with unmet needs at a

much lower price point► Gives a base for relentless incremental improvement

► Carried out very effectively within tight constraints► No legacy market to protect

► The incumbents wake up to find the tanks on the lawn



Possible cases

►Blogs

►Podcasts

►Mobile video

►Creative Commons

►Google Adwords

►…?



Examples of innovations that show an emerging pattern of value-chain disruption

►Creative Commons►Open Source Software►Collaborative development►Social networking►Flickr►YouTube

►Blogging►Decline in conventional advertising-

driven business models►Folksonomies and tagging



Content & context creation

Co-ordination Presentation Delivery Experience

Traditional media value chains



Content & context creation

Co-ordination

Presentation

Delivery

Experience

Usage

Behaviour

Reaction & response

An alternative: a value cycle



Innovation in production as well as consumption

►New models of production►Neither individuals, not chain of command

firms

►Complex projects

►Real-world applications

►Emerging from a network environment►Artefact of circumstance?

►Only possible once the network was there?

►Inevitable consequence of the network?



Innovation in production

►Linux►Huge, complex project

►Robust

►Depends on culture/mindset as well as rules

►Slashdot►Review/moderation authority & reputation management;

“karma” (automated)

►Xerox : Eureka►Mundane application, effective

►Says something very interesting about when a product is “complete”

► Inflicts some serious damage on concepts of authority



Advantages

►Costs less

►Often faster

►More robust►Problems are analysed and fixed very

quickly

►Transparent►You can “see how it’s done”

►More ethical?



Where do you find value in a networked world?►At the periphery - closest to the user, where

specialist expertise is needed and relationships developed►Control of the user interface► Individualised experiences►Small, precise “datapoints”

►At the core - where the shared infrastructure and expertise is►Generic►Benefit from scale►Content frameworks

►Not in the middle►Process and pipeline operators



How do we innovate?

►What comes from outside?

►What comes from inside?

►What is driven by competition?

►How much innovation is just “more of the same”?

►How do we recognise what is going to succeed?



Tools for understanding & managing innovations

►Immersion►Scenario planning►Delphi method►Deviance-watching►“Low probability/high risk” alerting►“No threat” alerting►Organisational architecture and

culture



Our responsibilities?

►To take care of the physical safety and mental well-being of our staff

►To prepare for new cultures

►To complete the work for mourning for the cultures that are passing

►Where might we fail?►To betray our people by denying or

obstructing change



Thank you - and I wish you a successful rebirth

Hugh Look

Senior Consultant

Rightscom Ltd

[email protected]

www.rightscom.com

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