MAKING INNOVATION PAY - APRIL 2021 - Ownzones
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MAKING
INNOVATION
PAY
APRIL 2021 Enabled by
FOREWORD
OWNZONES is honored for the opportunity to sponsor the DPP’s Making
Innovation Pay research paper.
The insights gathered offer an intimate look at what drives companies to innovate.
Some thrive through a culture of innovation. For others, it’s the need to evolve that
drives change.
Media and entertainment is an experience led industry, and the technology used to
create and distribute movies and television is evolving at a rapid pace.
The entire ecosystem is undergoing disruption, and industry leaders are rethinking
how they do business and what to plan for the future. The stakes have never been
higher as traditional models have been turned upside down, and new giants have
emerged seemingly overnight.
One thing is for certain. The industry is constantly evolving, and behind all this
is innovation.
Bill Admans
COO/SVP Operations, OWNZONES
APRIL 2021
MAKING INNOVATION PAY 2
MAKING INNOVATION PAY
A SERIES OF THREE REPORTS
The media industry has never been more turbulent.
There is no blueprint for success.
Innovation has never felt more necessary – and never more risky.
That’s why it’s never been more important to understand what it takes to be an
innovative business.
Making Innovation Pay sets out to provide that understanding through the insights of
more than 45 media industry leaders.
In three essential guides you will find analysis and inspiration that will make you think
afresh about one of the most important, but least understood, words in business.
MAKING INNOVATION PAY PART 1 MAKING INNOVATION PAY PART 2 MAKING INNOVATION PAY PART 3
DEFINING BEING APPLYING
INNOVATION INNOVATIVE INNOVATION
Enabled by Enabled by Enabled by
1 2 3
The DPP would like to thank OWNZONES, who have made the extensive research
required for this project possible.
MAKING INNOVATION PAY 3
MAKING INNOVATION PAY
SERIES SUMMARY
For decades innovation in the media industry was synonymous
with creative innovation backed by a technical focus on resilience.
That all changed in 2007 with the launch of the iPhone and Netflix’s streaming video
service, shortly after the launch of the public cloud.
But most of the industry remained in denial.
The focus was on potential changes in modes of consumption that might come through
specific consumer technologies – such as 3D, tablets, Google Glass and VR.
In 2018, however, the whole industry began to realise change was being
driven by new consumer focused experiences and business models.
By this time, the media industry had embraced the notion of product innovation, and
the benefits of the cloud for rapid prototyping.
It has led the industry now to see innovation as a series of incremental changes in
technological capabilities, product development and business models.
Some believe such innovation is best driven by culture; others by formal innovation
structures.
But in reality such distinctions are more a matter of emphasis.
The most innovative companies may not talk much about
innovation – but they will be structured to ensure it is delivered.
And they are operating in a territory with huge potential – since the areas where
media now needs to innovate – around customer service and experience – have
advanced very little.
That’s the innovation that will really pay.
What remains to be seen is how this new innovation challenge will be met in practice
– and what that does to the media landscape.
MAKING INNOVATION PAY 4
THE CONTRIBUTORS
All the contributors to the workshops and interviews that formed the basis of this
research are listed below. We are hugely grateful to them. Their real-world experience
and observations have shaped the ideas and insight presented here. In addition, the
DPP also surveyed around 60 senior leaders in our Advisory Group. Their responses to
the surveys have been anonymised.
It must be stressed that while Making Innovation Pay has been informed by our discussions
with these experts, not all of them necessarily share all the views presented here.
Bill Admans Tom Evans
COO/SVP Operations, GM/VP EMEA,
OWNZONES SDVI
Richard Amos Simon Farnsworth
Chief Product Officer, CTO,
Skylark Discovery
Johanna Bjorklund Grant Franklin Totten
CTO, Head of Media & Emerging Platforms,
Adlede Al Jazeera
Oliver Botti Cristina Gomila
Strategic Marketing & Innovation MD Content Technology &
Executive Director, Fincons Group Innovation, Sky
Philippe Brodeur Marc Goodchild
CEO, Head of Digital Content Strategy &
Overcast Product for EMEA, WarnerMedia
Zoe Carter Pete Griffiths
Director of Business CEO,
Transformation CS&D, ITV Idonix
Paul Cheesbrough Simon Haywood
CTO and President of Digital, CTO M&E EMEA,
FOX Corporation Dell
Margaret Craig Paola Hobson
CEO, Managing Director,
Signiant InSync Technology
Niall Duffy Bradley Howard
EMEA Lead, ISV Managed Partners, Head of Innovation,
Industry Verticals, Amazon Web Services Endava
Laura Ellis Shriharsha Imrapur
Head of Technology Forecasting, Head – Communications, Media
BBC and Technology, Mindtree
MAKING INNOVATION PAY 5
Nazrul Islam Gabby Redfern
Senior Transformation Manager, EVP Global Operations,
Sky BBC Studios
Marina Kalkanis Steven Robinson
CEO, Director of Technology,
M2A Media PA Media Group
Larry Kaplan Daniel Robinson
President & CEO, Head of R&D,
SDVI Pebble Beach
Anshul Kapoor Ramki Sankaranarayanan
Strategic Business Development CEO,
Lead, Telecom & Media, Google Prime Focus Techologies
David Klee Tim Sargeant
VP Strategic Media Solutions, Head of Product, Video & Live,
A+E Networks USA BBC
Monica Landers Mike Shaw
CEO, Founder & COO,
StoryFit MediaSaaS
Alexis Martinez Niyati Shrivastava
VP, Global Solutions Architecture, Consulting Manager – Media,
Research & Innovation, SDI Media Communications & Technology, Cognizant
Michael Martinez Peter Sykes
Director, Ingest and Live Engineering, Strategic Technology Development
Facebook Manager, Sony
Danny Meaney Steven Thomas
CEO, Managing Partner,
UP Ventures UP Ventures
Paul Moore Maarten Verwaest
Global Media Strategic Business CEO,
Development, Atos Limecraft
MC Patel Richard Welsh
CEO, SVP Innovation,
Emotion Systems Deluxe
Giovanni Piccirilli Andy Wilson
CTO, Director – Media,
RTL Dropbox
Mark Rawlings-Smith
Portfolio Innovation & Development,
Media & Broadcast, BT
MAKING INNOVATION PAY 6
MAKING INNOVATION PAY PART 1
DEFINING
INNOVATION
Enabled by
DEFINING INNOVATION
Five key
takeaways
1
Three innovations have shaped
the industry today: file based media,
cloud, and video streaming
2
The first changed processes, the
second brought the product revolution,
the third changed business models
3
2007 was pivotal – Netflix streaming
video and the iPhone were launched –
empowering consumers
4
But it has still taken fear,
jeopardy and global catastrophe
to inject innovation urgency
5
The purpose of innovation is now
to provide consumers with great
services as well as stories
MAKING INNOVATION PAY > DEFINING INNOVATION 2DEFINING INNOVATION
Contents
1 What does innovation look like?
The innovations that have shaped the media industry since 1990
4
2 A peculiar business
Defining characteristics of innovation in the media industry
8
3 The shape of innovation
The types of innovation that matter in media
13
4 Catching fire
How the adoption of innovation happens
20
5 Conclusion
A little less conversation, a little more action
25
MAKING INNOVATION PAY > DEFINING INNOVATION 3What does innovation
1 look like?
The innovations that have shaped
the media industry since 1990
A dictionary would probably define an innovation as a new idea, method or product.
But since the 1980s the word has been increasingly associated with the application of
ideas to new or existing products or services in such a way as to add value. Indeed,
some feel innovation has been appropriated by the world of commerce to such an
extent that it has become dissociated from human ingenuity and creativity.
But even if we accept that we are discussing innovation in the context of building business
value, there are still debates about the distinctions between invention, R&D, innovation,
new product development, and product design. [Harvard Business Review; Rua Design]
What is perhaps most significant about these debates is that confusion about what
innovation means is reported to be a source of conflict between executives and the rest
of their business.
So what do media professionals mean by innovation?
Innovation is insightful association
Innovation insight
Not surprisingly, industry professionals have a business-focused view of innovation. But
no one mistakes it for invention. When the team at SDVI discussed it, they came up with
a shorthand that resonates well with the views of others that took part in this research:
It took us a long time to come up with this, but it’s insightful association.
That was our definition. You’ve got something over here, and you’ve got
something over there. And you have an insight that if you bring those
together in a certain way…wow! that’s unique! Innovation is a collection of
associations based upon an insight that if we associate particular things, we
can do something to solve a problem.
L ARRY K APL AN, SDVI
MAKING INNOVATION PAY > DEFINING INNOVATION 4Cross-overs between sectors create a similar kind of innovation through insightful
association.
Innovation is often from the outside. Like Apple coming at the music
industry – who would ever think Apple was going to do that? And then
there’s YouTube, and now TikTok, and the impact they have had on
traditional television. It’s interesting how stuff starts on the edge, and then
has an impact right into the centre, and then maybe back out again.
MARINA K ALK ANIS, M2 A MEDIA
The breakthroughs come, it was observed, when there is alignment across different
modes of innovation.
True innovation is characterised by singular points in time where business
mode, processes and products are fundamentally changed at the same time.
MA ARTEN VERWAEST, LIMECR AF T
But perhaps the most direct way of finding out how media people define innovation is to
ask them simply to identify examples.
When asked to name major media
innovations since 1990, two thirds of
responses are gathered around just
three innovations
Game changing innovation 1990-2020
We asked senior leaders from 60 different DPP member companies, of all kinds, to
identify a moment of genuine innovation from the previous 30 years.
Their responses are shown in the table below.
MAKING INNOVATION PAY > DEFINING INNOVATION 5MEDIA INDUSTRY INNOVATION 1990–2020
Survey of 60 respondents, March 2021
Others
Cloud
12 10
QUESTION 1
Smartphone
Can you provide an 3
example of a genuine,
game changing
Commodity 3
production 16
innovation that has 5
occurred in the m edia Streaming
Non-linear Video/OTT
industry in t he last
production
11
30 years?
File based media
These responses are significant for three reasons:
I There is a remarkable degree of consensus
Non-linear production and file based media can be taken as part of the same shift
towards end to end digital – thereby contributing a total of 16 responses. When those
responses are combined with the ones for streaming video and cloud, we have more
than two-thirds of all responses gathered around just three innovations.
None of the three leading innovations
was a direct response to customer need
II No customer asked for the biggest innovations
Contrary to the received wisdom that innovations should be the direct response
to customer needs, none of the three leading innovations was a direct response to
customer need.
When the Avid non-linear editing system appeared in 1988 it was a transformative
moment in the history of sound and pictures; but it wasn’t invented to stifle the pleas
from editors to free them from the tyranny of the Steenbeck. Quite the reverse.
Meanwhile, when Netflix was plotting the OTT revolution in 2007, consumers may have
had little love for Blockbuster’s daily DVD rentals but they were giving no signals they
were going to fall for monthly streaming video subscriptions.
MAKING INNOVATION PAY > DEFINING INNOVATION 6No one asked for non-linear editing,
streaming video or the public cloud
And as for the public cloud, which is usually dated from the release by Amazon on 25
August 2006 of its Elastic Compute Cloud (EC2) as a beta service, it was an innovation
tailored to developers precisely because it was assumed there was no real demand for it.
III Those unasked for innovations went on to disrupt the entire industry
If a greatest innovation poll had been taken in 1988, 2006 or 2007 none of these three
innovations would have got on the list; and yet, years later, they have all played a major
part in transforming our industry.
When it comes to innovation, hindsight
makes the heart grow fonder
It is worth looking at this list of ‘the 20 most important inventions of the last 30 years’
(while choosing not to quibble about invention versus innovation).
What is striking is that those inventions range from products such as the iPhone,
capabilities such as text messaging, platforms such as YouTube and Facebook, and
technological breakthroughs such as the International Space Station. And with the
possible exception of the iPhone, which set the world alight on Day One, no one would
have been certain at the moment these innovations occurred, just how important they
would later become.
When it comes to innovation, hindsight makes the heart grow fonder.
And that’s the magic and frustration of innovation: the next big thing might turn out to
have been today’s little thing; and today’s big thing (step forward 3D) might turn out not
to add up to anything much at all.
In Being Innovative and Applying Innovation we will look more closely at how companies
try to resolve this paradox, and ensure they make the best use of innovation, through
their innovation cultures and processes.
But our focus here will be on the particular nature of innovation in the media industry,
the categories of innovation that dominate today, and the drivers for them.
MAKING INNOVATION PAY > DEFINING INNOVATION 7A peculiar
2 business
Defining characteristics of innovation
in the media industry
When considering how to identify significant media innovation, what is striking from
these responses – and from the workshops and interviews we conducted – is that
industry professionals tend not to think about devices.
When considering how to identify
significant media innovation industry
professionals don’t think about devices
In our survey, just three people named the smartphone – although a strong argument
could be made that it warranted far more votes than that. (It is worth noting that
when we have asked conference audiences to name the device, rather than the
innovation, that has been most significant for our industry in the last three decades, the
smartphone has always been the overwhelming choice.)
The lack of attention we give to devices, and specifically to consumer devices, reflects
the fact that while the industry chatters about the impact of the latest consumer
technology, in practice it is focused on innovations that will serve the outcome of how
consumers deploy those technologies, rather than the technologies themselves. A
product, to the professional media industry, is an app, not a device.
A product, to the professional media
industry, is an app, not a device
MAKING INNOVATION PAY > DEFINING INNOVATION 8In fact this view is not confined to the professional media industry. This is why we
argued in our CES 2021 report that, as the Consumer Electronics Show becomes
increasingly business to business focused, the smartphone now hides in plain sight:
hugely impactful, yet barely discussed.
In the service of creativity
The present day focus upon innovation that responds to trends generated by consumers,
is an extension of a long standing assumption that innovation in media is led by content.
Innovation in the industry all begins with the audience experience. So when
I think of innovation, I’m thinking of folks like James Cameron who’s using
prototype cameras on the set, while they’re still being designed; I think of
folks like Pixar, who are designing new fur and lighting techniques on the
fly – and then it filters down to the technology in post production and on
through the supply chain. Experience is paramount.
BILL ADMANS, OWNZONES
It was similarly observed by our experts that content ambitions in television – such as
the desire to show several sports events at the same time – have driven the product
innovation required to make them possible.
Innovation in the industry all begins
with the audience experience
The continuity business
Historically this focus upon the creative output has generated its own paradox for
technologists: their primary objective has been to ensure that output never fails. So
while the production community focuses on innovation for the benefit of the audience,
the technical and operational communities have focused on not messing up.
The number one job for a broadcast engineer historically, it was observed, was to
ensure the image never went to black. That priority generated some powerful cultural
norms – not least a technological conservatism that inhibited experimentation.
MAKING INNOVATION PAY > DEFINING INNOVATION 9Historically the primary objective of
technologists hasn’t been innovation –
it’s been continuity
The enterprise space – and especially the media space – has traditionally
been known for its reliability, and access to everyone. I think it sometimes
goes a little bit in conflict with how fast you can now innovate in certain
cases. We have to acknowledge that if you want things new, that means that
sometimes they will not work – so that needs a clear understanding, and
defining of what stage of innovation it is.
ANSHUL K APOOR, GOOGLE CLOUD
Cloudy sky thinking
Our experts do feel there has been a shift, however, both in the industry’s
understanding of innovation and its ability to carry it out.
The secret to that change is revealed when our survey group was asked to name the
innovation that has made the greatest change to their own business. As the table below
demonstrates, a far greater range of innovations were now cited – but cloud was dominant.
MEDIA INDUSTRY INNOVATION 1990–2020
Survey of 60 respondents, March 2021
Others Cloud
19 19
QUESTION 2
Has there been an
innovation (either yours 3
or someone else’s) that Remote production 6 Specific
4 product
had a dramatic impact
Software defined
9
on your business?
workflows
If so, what was it? Connectivity/Internet/
Networks/IP
MAKING INNOVATION PAY > DEFINING INNOVATION 10The innovation with the greatest impact
on media businesses has been cloud
The significance of cloud in this context isn’t just the opportunity it created to change
how businesses were architected. It’s also because of how much easier, quicker and
cheaper it has now made innovation – something that will also have been true for
many of the respondents who didn’t list cloud, software defined workflows or remote
production as their most impactful innovation. (The ‘others’ group of responses
includes, for example API and IT based technology.)
Cloud enables almost everything else on the chart. The fact that today, if
anyone comes up with a new business concept they can set up an account
on a public cloud platform, they don’t need to own a server, they can use
any payment service around the world to accept money, and they can test
in only a few hours later.
BR ADLE Y HOWARD. ENDAVA
20 years ago, companies had to invest a huge amount of time and money
to conceptualise and build a prototype – and then more time to launch and
get feedback from the customers. It was all big bang, hope and pray! Fast
forward to today, you can just spin up a fully equipped environment on the
cloud, potentially spend one afternoon to give an idea some shape and test
it with customers instantly, learn from it and perhaps even launch a business
the very next day. Cloud has fundamentally altered the economics of digital
innovation, and that’s fuelling more innovation.
SHRIHARSHA IMR APUR, MINDTREE
Cloud has fundamentally altered the
economics of digital innovation
MAKING INNOVATION PAY > DEFINING INNOVATION 11The advantage major tech companies
have in media innovation is precisely
their lack of expertise
And here’s the irony: the advantage major tech companies have in media innovation is
precisely their lack of expertise.
Facebook actually is more of a generalist philosophy – you’d be really
surprised. ‘It doesn’t have to be invented here’. Take video as an example.
Not everyone in the organisation comes from a video background. The
team is made up of a mix of people from different backgrounds and people
steeped in video. This allows for real bottom up innovation because we
don’t have a single way of doing something ingrained into the culture.
MICHAEL MARTINEZ, FACEBOOK
MAKING INNOVATION PAY > DEFINING INNOVATION 12The shape of
3 innovation
The types of innovation
that matter in media
Innovation is typically broken down into three broad types:
Business model innovation:
a significant reimagining of a company’s approach to its market or customer base.
Process innovation:
a change in operations that increase efficiency, productivity or customer experience.
Product innovation:
the offering of new or changed products and services either to consumers or to
business customers. Product innovation might represent a breakthrough – a completely
new or strikingly different offering. But it is more likely to be incremental – a series of
iterative improvements that with time build to a distinctive offer.
In recent years there’s been growing
emphasis on incremental innovation
Incremental vs Breakthrough
In recent years there has been a growing emphasis on the merits of incremental
innovation – something we will look at further in Being Innovative.
MAKING INNOVATION PAY > DEFINING INNOVATION 13I actually don’t think originality exists. It’s just influence and iteration,
ultimately, for the vast, vast majority of business. And that’s why I always
struggle with incremental versus breakthrough. Because actually I don’t think
there’s anything else other than incremental. Some businesses create noise
about radicalism because it’s good publicity. But it doesn’t necessarily mean
the technology or the business is actually at that stage. Incremental is OK, in
fact incremental should be celebrated. You’ll then just have the structure and
process in a place that mean you can push through and accelerate.
STEVEN THOMAS, UP VENTURES
The authors of one recent book, The Innovation Delusion, would agree. They express
concern that the language of innovation has been distorted by what they call a Silicon
Valley fixation with novelty as the answer to all of society’s ills.
The startup mindset, they argue, is not necessarily appropriate outside the startup
space. Instead of always asking “what do you want to disrupt?”, we could be asking
“what do you want to preserve?”
Innovating to be the best at what you
already do may prove as transformative
as disrupting yourself
They make the case for ‘the maintenance mindset’, and although they focus this notion
around the benefits of good business values, it is also interesting to consider it in the
context of a company maintaining clear sight of its core purpose. Innovating to be the very
best at what you already do may prove as transformative as seeking to disrupt yourself.
Sometimes it’s about attracting yourself back to the simplicity of it. I think
that the idea that you go back and you say OK well what at the core is this
thing trying to achieve, and can we just build the basics of this? And to me,
that feels quite innovative. It’s like doing a really good renovation on a car
or house: you’re not making it any newer, you’re just trying to make it really
good. I think that’s what often gets overlooked in innovation is this idea that
you can actually just go and iterate back on something until you’ve got it to
something that’s quite pure.
RICHARD AMOS, SK YL ARK
One study actually put a measure on this assertion. It looked at data relating to US
economic growth from 2003–13. It found that improvements to existing products
accounted for around 77% of increases in growth, while creative destruction by new
companies or products accounted for only 19%.
MAKING INNOVATION PAY > DEFINING INNOVATION 14The LEGO Group provides one of the most famous examples of this approach. It came
back from the brink of bankruptcy in 2004, to become the world’s most profitable
toy maker in 2014. And it did it by implementing a structured system of incremental,
continuous product improvements.
Consumers may not even notice all
the incremental innovation gains
There is a strong argument for saying that innovation in the media industry is dominated
by incremental gains.
If you look at all the innovative stuff that’s gone on in the market, you’re
talking regular but small incremental gains. Outside broadcasts went from
eight cameras to 30 cameras, but they kept being added over a period of
time. Virtualised graphics have come in over a period of time. Then look
at what’s going on right now with innovation through virtual sets, whether
it’s the way the Mandalorian was shot, or virtual studio sets for football
coverage. It’s all back end technology driving the way video content is being
produced. If you actually look at it from consumer perspective, they’d say
‘what’s the difference?’
SIMON FARNSWORTH, DISCOVERY
The fact of the matter is, that evolution of back end technology, has a lot about it which,
while innovative, involves process and persistence.
There are three layers of innovation. There’s market driven innovation
which is iterative – the needs we’re seeing and hearing from our customers.
And that’s part of the iterative process of continuing to innovate your
experience and your product. There’s also platform driven innovation,
which is often a commercial need, where you have to refresh your products
on a relatively regular cycle, so that you can continue to get licence fees
and recurring revenue from our customers. It takes management, it takes
a lot of executive sponsorship as well, because it’s costly, and it has an
impact on resources. And the third type is the visionary innovation – Steve
Jobs reinventing the cell phone with no buttons and a screen.
BILL ADMANS, OWNZONES
MAKING INNOVATION PAY > DEFINING INNOVATION 15Business model innovation
The centrality of day to day iteration shouldn’t distract, however, from the significance
of changes in media business models.
Our survey identified three dominant innovations in media since 1990: file based
media, the cloud, and video streaming. We have argued how the cloud in particular
has supported faster moving, incremental innovation, and pushed the idea of product
development to the frontline of media businesses.
Video streaming is the innovation
that had the greatest impact on
business models
But video streaming is the innovation that had the greatest impact on business models.
We’ve had this conversation for maybe 20 years where you could see it
coming in the primitive days of audio streaming and video streaming on
the web and it used to be a conversation about multi-platform publishing.
I think only in the last three or four years it’s kind of flipped on its head to
mean more about survival than optionality.
PAUL CHEESBROUGH, FOX CORPOR ATION
The biggest innovation has been in the business model. I think its roots
were in Apple, who actually used content to drive purchase of devices, and
in order to do that they totally disrupted the business model in the music
industry. And it’s kind of flowed on from there, all the way through now
to the plethora of streaming companies, where there’s a different mindset
– a Silicon Valley technology mindset that is about throwing money at
driving customer adoption, and really maximising the revenue from those
customers. So, innovation in the business model is the fundamental biggest
innovation in the media industry in the last 30 years.
DANNY MEANE Y, UP VENTURES
These business model changes have brought with them a new kind of innovation in the
service of content and consumer. This is innovation around the content service offering.
MAKING INNOVATION PAY > DEFINING INNOVATION 16Suddenly the products are becoming
platforms, and the platforms are
becoming services
Innovation comes in waves. So, suddenly the products are becoming
platforms, and the platforms are becoming services and everything blends.
The thing that for me is going to be critical, will be the flow of data through
all that. To differentiate more on innovations on the services rather than
the products. I prefer to think service today and how we try to answer the
consumer need, rather than providing the physical product like before that
you could unpack.
CRISTINA GOMIL A, SK Y
There are a number of inspiring stories for disruptive innovation. Everybody
talks about Netflix and Spotify, but there are some really cool kids on the
block in the recent years. Companies like The Athletic, which entered the UK
market only last year is completely disrupting sports journalism. Substack
is connecting individual creators to consumers directly. Snapchat has risen
as the most innovative company in the world last year! Anything that really
challenges the status quo, changes the way consumers experience media,
and makes money while doing so is innovation worth noting.
SHRIHARSHA IMR APUR, MINDTREE
When it comes to innovation and reinventing the way we consume media and
the way we have to produce it, the form in which those media are presented
and distributed has huge impact. The form factor of 45 rpm singles
determined the music, and then the compact disk determined how music
was distributed. Netflix fundamentally changed the way we look at television
when all of a sudden, we were not restricted by a 50 minute documentary.
MA ARTEN VERWAEST, LIMECR AF T
It’s easy to associate this (relatively new) focus on service and the consumer
experience, with the emergence of completely new companies, platforms and
consumption models. But it is actually starting to impact day to day innovation for
established players too.
MAKING INNOVATION PAY > DEFINING INNOVATION 17For us, in news media, innovation is a means to an end. It’s a way of
delivering more value to our customers because unfortunately that market
is reducing as advertising revenue reduces. How do we get more innovative
to provide more with less? One of the biggest areas of innovation for us
is efficiency. So, we have used technologies to drive more efficiencies, for
example by using machine learning to understand and create new content,
or actually taking content and classifying it in different ways using AI to
improve the discoverability.
STEVE ROBINSON, PA MEDIA GROUP
People: the fourth innovation type
Most academic studies of innovation will devote extensive attention to people. But this
is usually in the context of how structures inhibit or release human capabilities. People
are not commonly listed as a form of innovation in their own right.
Assembling the right talent can be an
innovation methodology in its own right
But many of our experts were very clear that assembling the right talent can be an
innovation methodology in its own right.
People make products; people power processes; business models should
be built around the people who deliver them, and also the people they
serve. So, you have a situation in every business there the people have to
evolve on an individual and collective basis, to be able to get to the next
place. And if you’re not creating a culture around that, then you’re going to
plateau – you just are.
STEVEN THOMAS, UP VENTURES
You can talk about all these things as much as you want but it comes down
to execution. I remember in the early days of cloud computing moving
people from the old way of doing it to the new way, and there was no
pushback from anyone inside the company apart from the technologists.
They fought and fought it, and you had to be a pretty determined leader
to push through. I do agree that the culture and the climate, the team and
talent aspect of this, is critical.
PAUL CHEESBROUGH, FOX CORPOR ATION
MAKING INNOVATION PAY > DEFINING INNOVATION 18We sometimes fall into the trap of talking about technology transfer, and
we talk about the ideas that move. I think success sometimes comes when
you move the people: the people who understand it, the people who can
champion it and really push it and drive it. That’s why a company acquires
another company, not just for the idea, but for the people. And diversity
is also really important here. People from different perspectives, and
backgrounds – cross disciplinary teams with a diversity of thinking. It all
makes for a culture, and a good innovative environment.
TIM SARGEANT, BBC
Small businesses are particularly bad at identifying the kind of specific
talent they need, because when you’re a small business, you’re always
trying to get jacks of all trades. You don’t think, Oh I should hire someone
that is really good at this, because actually that’s a huge gamble.
RICHARD AMOS, SK YL ARK
The observations our experts make about the centrality of people are well supported
when looking at how the London Business School chooses to categorise its Real
Innovation Awards. These are awards given for, among other things, vision, big-picture
thinking, conviction, insight, resourcefulness and agility.
MAKING INNOVATION PAY > DEFINING INNOVATION 19Catching
4 fire
How the adoption of
innovation happens
In Being Innovative we will explore how innovation is promoted by establishing the right
conditions within a company. But, as it is widely acknowledged, innovation adoption
does not progress through business or society in a nice straight line.
Riding the curve
Many of us will be familiar with the distribution curves associated with adoption and
resistance around new practices. But few will be aware of their rather surprising
origins. They originate from a paper written in 1957 called The Diffusion Process. It was
a paper that summarised ‘how farm people accept new ideas.’
The findings were based on 35 research studies conducted over a 20 year period in
several US states. The conclusions were ‘presented in a framework which will be useful
to people who are faced with the problem of diffusing new ideas and practices.’ And
sure enough, this was when the world was introduced to terms such as ‘early adopter’,
and ‘early majority’.
Researchers have spent over 70 years
trying to normalise innovation adoption
into predictable patterns
Everett Rogers took this thinking forward in 1962 with his book Diffusion of Innovations.
He established a mathematical model for the adoption of new ideas and technologies
that has become known as the Rogers Curve – a tool widely used to this day.
MAKING INNOVATION PAY > DEFINING INNOVATION 20THE ROGERS CURVE
Everett Rogers, Diffusion of Innovations
2.5% 13.5% 34% 34% 16%
Innovators Early adopters Early majority Late majority Laggards
To the terminology of the farming study was now added the terms ‘late majority’ and
the delightfully pejorative ‘laggards’.
The specific challenge of marketing high tech products during the start up period,
and moving from early adoption to mainstream, were explored in depth by Geoffrey A
Moore in another book that has become seminal: Crossing the Chasm (1991).
Then from 1995, research and advisory company Gartner evolved the notion of an
adoption curve into a ‘hype cycle’. Their curve is not a standard bell curve, but rather
one containing a switch back – the superbly titled ‘trough of disillusionment.’ Although
Gartner creates individual hype curves for specific sectors and technologies, the curve
has common and distinctive characteristics that have also now become part of the
innovation lexicon.
THE HYPE CYCLE
Peak of inflated expectation
EXPECTATIONS
Innovation Trough of Slope of Plateau of
trigger disillusionment enlightenment productivity
TIME
Flaming innovation
As will be clear by now, researchers have spent more than 70 years attempting to
normalise innovation adoption into predictable patterns.
MAKING INNOVATION PAY > DEFINING INNOVATION 21When it comes to adoption curves,
there’s maths, and then there’s events
In doing so they have introduced a vocabulary that is widely used to this day – and was
evident in the conversations we had with our industry experts. But what was interesting
was that in discussing inflection points for innovation, those experts made far more
reference to historical triggers than to standard distribution curves.
There’s maths, and then there are events.
In the media industry we are generally innovative in a reactive and adaptive
sort of way, rather than just looking out at a blank sheet of paper and
creating something. So for example, there’s been a tonne of innovation
around the need to respond to the [coronavirus] pandemic.
MARGARET CR AIG, SIGNIANT
What really made file based media take off was a tsunami in Japan [in
March 2011 that destroyed Sony’s videotape factory]. We’re an incredibly
conservative industry and nobody really wanted to get off tape because
they just didn’t trust spinning discs. And then they had to trust spinning
discs, because there was no videotape available. And then we’re reaching a
similar story in cloud at the moment [with the 2020 coronavirus pandemic]
where companies that a few months earlier had every reason to distrust
the cloud within a matter of three weeks had to change their entire
business model around using the cloud. So there may be an initial spark
of innovation, an idea comes into place, and becomes available. And then
there’s usually a need, as Margaret says, that drives adoption.
BILL ADMANS, OWNZONES
So when looking at our three distinctive innovation moments – file based media, cloud
and streaming video – we can already relate two of them not so much to a slope of
enlightenment as a peak of panic.
MAKING INNOVATION PAY > DEFINING INNOVATION 22Distinctive innovation moments
are born more from panic
than enlightenment
Something similar happened with the third innovation – streaming video – but this time
tied not to a tsunami or pandemic, but more to the rising tide of Netflix subscriptions.
I do agree that there’s been a cultural change in media that has moved us
beyond just trying to stop the screen from going black. But that’s no longer
enough. The big shift has actually been a reaction to the ‘bad guys’ coming
over the hill – the Netflix hill, and the sense these streamer guys are
going to eat your lunch. By being forced into looking at the competitors’
strategies, the incumbents are actually driven to innovate. And sometimes
they innovate in a better way than the bad guys coming over the hill.
Market pull is almost always there, somewhere. It might not be a conscious
decision, but the market will pull innovation through. And when you get
this coincidence of added value to the end user; timing; and the Zeitgeist –
that’s when the most effective innovation happens.
DANNY MEANE Y, UP VENTURES
If you look at the macro level, what’s happened in the media industry
over the past five to six years has been so much consolidation in the
marketplace, where big media companies have bought other big media
companies – like ATT’s acquisition of Warner, Disney of Fox, Comcast of
Sky. When transactions like that happen, you’re constantly looking at the
way that you can scale your business to allow you to generate more content.
Innovation in virtual sets is a classic example of that. We’ve built eight
virtual studio sets around Europe. We can produce all the look and feel
centrally once. Boom. Whereas previously you’d have had set designers,
creative designers all around Europe. If you centralise and get efficient,
which ultimately means you can invest more in the content. And that’s the
game changer because what you’re seeing in the streaming services – and
Netflix set the bar for this – is a very, very content thirsty business.
SIMON FARNSWORTH, DISCOVERY
MAKING INNOVATION PAY > DEFINING INNOVATION 23Don’t mention it
Once the key driver for innovation becomes a strategic business imperative, then,
interestingly, no one any longer feels the need to discuss innovation
I haven’t used, and I haven’t heard, the i word for a long, long time. We use
the word creative, much more; we use the word disruptive; we use the word
growth; we use the word opportunity. In a company where you’ve got a
commercial focus those are things that matter. The journey that we’ve been
on feels like a story worth telling, but we never use that word innovation.
PAUL CHEESBROUGH, FOX CORPOR ATION
Paul Cheesbrough’s observation may explain why, for all that innovation has become a
buzzword, many contributors to this research commented how interesting they found it
to be asked to define innovation and how it operates.
Just as creators don’t stop to define creativity, innovators regard defining innovation as
a novelty.
MAKING INNOVATION PAY > DEFINING INNOVATION 24Conclusion
5
A little less conversation;
a little more action
On 13 May 1931, Neil McElroy of Procter and Gamble wrote a memo to his boss in
support of the hiring of a couple of additional staff. In it he laid out the attributes
required of a ‘Brand Man’ – and in so doing inadvertently invented product management.
It would be facetious to say that the media industry didn’t get that memo until 2007,
when the public cloud had just become available, and Netflix launched its streaming
video service. But not entirely so.
There’s an argument for saying
innovation came to the media
industry in 2007
For decades there were gradual improvements in production capability, punctuated by
moments of format change initiated by the broadcasters – film to tape, black and white
to colour, standard to high definition. Overall, however, the technology focus was on
continuity of service while the creative focus was on winning bigger audiences.
Something else happened in 2007. Apple launched the iPhone. Just as Amazon had
no idea the availability of public cloud would eventually bring product development
thinking to the media industry, and Netflix had no idea that streaming video would
transform the consumer’s relationship with content, Apple couldn’t have known they
were enabling consumers to start creating new media trends at the drop of an app.
MAKING INNOVATION PAY > DEFINING INNOVATION 25The purpose of innovation is now to
provide consumers with services as
well as stories
The result of all this? Well, ironically, innovation in media remains largely in the service
of audience experience – just as it was when viewers first got to see their TV world in
colour. But the meaning of audience experience has changed. They are no longer an
audience – they are consumers.
And those consumers value services as well as stories.
MAKING INNOVATION PAY > DEFINING INNOVATION 26MAKING INNOVATION PAY PART 2
BEING
INNOVATIVE
Enabled byBEING INNOVATIVE
Five key
takeaways
1
Business studies assert that a
systematic, structural approach to
innovation is essential. Real world
leaders are more conflicted
2
There is a strong belief in top down,
command and control leadership
of innovation
3
Such leadership should set the
objective and the jeopardy –
but not the answer
4
Scaling of innovation needs
structure – though this may be
seen as product development
5
A true innovation culture is so
structured for innovation that
the structure becomes pervasive
– and invisible
MAKING INNOVATION PAY > BEING INNOVATIVE 2BEING INNOVATIVE
Contents
1 Welcome to the great innovation debate
People have opposite views on the need for structured innovation
4
2 Innovation by the book
Received wisdoms about how to innovate
6
3 Customer first
Customer led innovation can make or break you
12
4 Success culture
Setting the tone for innovation from the top
17
5 Inspiring structures
Organising for successful innovation
24
6 Incrementally effective
Numerous, rapid innovations to deliver big changes
29
7 Conclusion
Now you see it, now you don’t
33
MAKING INNOVATION PAY > BEING INNOVATIVE 3Welcome to the great
1 innovation debate
People have opposite views on the
need for structured innovation
We’re in a time when most likely even antique shops talk about innovation.
So it’s hardly surprising that when we surveyed leaders from nearly 70 DPP member
companies about whether they regarded their company as well set up to innovate, most
replied that they did. (And those that didn’t feel able to give a positive answer would
almost certainly regard that fact as a problem.)
Almost everyone feels well set up
to innovate – but exactly how is
another matter
Would you say your company is
well set up to innovate?
Yes No
68 responses 86.8%
13.2%
But when we then went on to ask whether those companies had a formal process for
innovation, the responses were exactly split.
MAKING INNOVATION PAY > BEING INNOVATIVE 4Does your company have a
permanent, structured
Yes No
innovation process?
68 responses
50% 50%
This simple survey beautifully illustrates the great debate around innovation. Do
companies require formal innovation processes if they are to be innovative – or not?
Our poll above might suggest the answer to that question is indeed binary – a straight
yes, or no. But what we discovered when we discussed the question in more detail is
that the answer is something else entirely.
Innovation has to be a team sport,
and a leadership priority
One thing is for sure, however, every company now accepts that innovation is its
business.
Innovation is not optional. It’s not a department’s responsibility. The digital
department was the kind of fatal error where you can you look back now
and laugh. But there were also all kinds of companies and consultancies
that would teach companies to innovate. And what’s happened now I think
is that a) innovation is a team sport, and b) it’s a leadership, and cultural,
priority. Historically, innovation for media has been more about the what
than the how. But it really is now much more around the how.
PAUL CHEESBROUGH, FOX CORPOR ATION
MAKING INNOVATION PAY > BEING INNOVATIVE 5Innovation
2 by the book
Received wisdom about
how to innovate
Those who write guides to innovation, or undertake academic analysis, may not share
the view of some of our experts that a company can be well set up to innovate without
having structured innovation processes.
Business studies assert that a
systematic, structural approach
to innovation is essential
Business studies on innovation begin from the assertion that innovation requires
systematic, structural adaptations that pervade the company’s leadership and culture.
Perhaps the certainty of that view derives from the fact that leaders are not typically
happy with the innovation capability of their companies. While only 13% of DPP
respondents may have felt their company was not well set up to innovate, a 2015
McKinsey survey reported in Harvard Business Review found that an incredible 94% of
managers were dissatisfied by their company’s innovation performance.
It was a finding that led the authors to conclude “it takes a systematic approach to build
a systemic capability.”
So what do they mean by a ‘systematic approach?’ In the sections that follow we
summarise some of those approaches that seem of greatest relevance to the interests of
people in media.
Systematic approaches part 1:
Building the capability
One of the best studies of structured innovation was produced by McKinsey in 2015.
The Eight Essentials of Innovation was created from a multi-year study involving 2,500
executives and over 300 companies.
MAKING INNOVATION PAY > BEING INNOVATIVE 6Well established companies are typically
better executors than innovators
The analysis begins with the observation that innovation is difficult for well-established
companies. Such companies are typically better executors than innovators – more
focused on optimising existing businesses than game-changing creativity.
Here are McKinsey’s eight essentials for building innovation potential, in a much
condensed summary. Many of the points resonate remarkably well, even six years later:
McKinsey’s Eight Essentials of Innovation
1 ASPIRE
Quantifying an ‘innovation target for growth’ and making it an explicit
part of the strategy
2 CHOOSE
There are usually plenty of ideas, but which ones do you take a risk on?
Executives must create ‘boundary conditions’ so they can assess the ideas
to invest in. Have more than you can afford, so that some have to be killed
3 DISCOVER
Methodically scrutinise three areas:
• a valuable problem to solve
• a technology that enables a solution
• a business model that generates money from it
4 EVOLVE
As smartphones and mobile apps threaten to upend oldline industries,
business model innovation has become all the more urgent: established
companies must reinvent their businesses before technology driven
upstarts do
Why do most innovation systems so squarely emphasise new
products? The reason, of course, is that most big companies
are reluctant to risk tampering with their core business model
until it’s visibly under threat. At that point, they can only
hope it’s not too late.
McKINSE Y, 2015
MAKING INNOVATION PAY > BEING INNOVATIVE 7McKinsey’s Eight Essentials of Innovation (continued)
5 ACCELERATE
Cautious governance processes make it easy to stifle ideas. “Companies
often get in the way of their own attempts to innovate.” Cross-functional
collaboration, continuous learning cycles, and clear decision pathways
will all help enable innovation
6 SCALE
The seemingly safer option of scaling up over time can be a death
sentence. Resources, capabilities and suppliers must be marshalled to
ensure rapid delivery at the desired volume and quality
7 EXTEND
Innovation requires external collaborators. Successful innovators realise
their investment in innovation by accessing the skills and talents of others
8 MOBILISE
Embed innovation into the culture. Focus minds by setting financial
targets for innovation and defining market spaces. Organisational
changes may be required
The McKinsey study chimes with many of the insights of our media industry experts.
But buried right at the end of the piece is a revealing admission.
McKinsey observe that there is no
structural silver bullet for the
organisational changes needed
for innovation
“Organisational changes may be necessary,” say McKinsey, “not because structural
silver bullets exist – we’ve looked hard for them and don’t think they do – but rather to
promote collaboration, learning and experimentation” (emphasis added).
There is a huge irony in the insistence that there is no organisational blueprint to
support a structured innovation blueprint. But this may be why, as we shall see, there is
so much difference in opinion about what constitutes structured innovation.
MAKING INNOVATION PAY > BEING INNOVATIVE 8Systematic approaches part 2:
Power to the people
As soon as innovation studies turn to the subject of people, they are likely to deploy the
famous Steve Jobs quote:
It doesn’t make sense to hire smart people and tell them what to do;
we hire smart people so they can tell us what to do.
And in the next breath those same studies are likely to note that this doesn’t mean
letting your employees do what they want. Boundaries must be set: even empowerment
must be ‘formalised.’
“To be an innovator you don’t need a
crystal ball: you need a wide-angle lens”
One academic paper, from 2015, however, does put forward some useful ideas on how
to help employees to think like innovators. Employees, it argues, need to learn to:
Challenge invisible orthodoxies
Innovators distinguish “immutable laws” from “ingrained beliefs”
Harness underappreciated trends
Innovators tend to spot quietly accelerating trends that competitors haven’t noticed
rather than dream up new realities
To be an innovator, you don’t need a crystal ball: you need a wide-angle lens
GARY HAMEL AND NANCY TENNANT, 2015
Leverage embedded competencies and assets
Innovators see their organisation, and the world around it, as a portfolio of skills and
assets that can be endlessly recombined into new products and businesses
Address “unarticulated” needs
Customers have their own orthodoxies – asking what they want seldom yields
fundamentally new insight. Observing them raises better questions
MAKING INNOVATION PAY > BEING INNOVATIVE 9The same paper also argues for the need for people in leadership roles to be
appropriately trained, supported and equipped so that they can be held ‘100%
accountable’, with innovation targets that directly impact their remuneration.
Another study makes the observation that innovators need big and difficult goals if they
are to be pushed beyond their comfort zone. Put more specifically, the worst thing to
give people are SMART (specific, measurable, attainable, relevant and time-bound)
goals. Of 4,000 people studied, only 13% said they were going to reach their full
potential with such goals.
Too much structure and measurement
is antithetical to creativity;
too much creativity is antithetical to
structure and measurement
Writers that explore the extent to which employees should be led towards innovation
via corporate initiatives versus being encouraged to work freely, are constantly juggling
with a paradox. Too much structure and measurement is antithetical to creativity; too
much creativity is antithetical to corporate structure and measurement.
This is perfectly illustrated by a Chief Innovation Officer, who, in writing Why I
encourage daydreaming at work and how to turn it into innovation, finds herself arguing
for a complex set of programmes, metrics and initiatives to ensure all the specially re-
purposed ‘creatives areas’ deliver the outcomes they’re supposed to stimulate.
Systematic approaches part 3:
The barriers to innovation
Of course, what can kill innovation is just as important as what can make it thrive. A
recent summary exploring ‘8 deadly sins of stasis’ offers a useful checklist.
1 Lack of distance
All new business lines need the space to explore new opportunities with
fresh eyes
2 Lack of accountability
Legacy companies often view innovation endeavours as pet projects
rather than serious initiatives. An attitude of “... and if it works out, great!”
delegitimises a project’s importance
MAKING INNOVATION PAY > BEING INNOVATIVE 103 Inappropriate culture
Companies that don’t use their positions of strength to transform will miss
crucial market opportunities. Kodak, Xerox and Nokia are all famous examples
4 Lack of resources
Internal startups and innovation projects have to be given the room to breathe,
sufficient resources and the right executive sponsorship – or they will be
overshadowed by legacy areas
5 Wrong people and wrong role
Internal innovation teams may be led by people who are good at getting things
done in the larger company – but that doesn’t make them good innovators.
Back in 2008, Oscar winning Pixar director Brad Bird told McKinsey in an
interview about innovation:
I want artists who are frustrated. I want the ones who have another way
of doing things that nobody’s listening to. A lot of them were malcontents
because they saw different ways of doing things, but there was little
opportunity to try them, since the established way was working very,
very well. [At Pixar] we gave the black sheep a chance to prove their
theories, and we changed the way a number of things are done here.
BR AD BIRD, 2008
6 Unwillingness to listen
Ignoring warnings of the threats posed by competitors, new entrants and new
technologies can be fatal
7 Lack of political support
It is almost always politically expedient to starve innovation efforts in order to
feed proven revenue generators. Political support is needed to fend off other
parts of the organisation that would rather kill fledgling efforts
8 Lack of patience
Often innovations are ahead of the market, and potentially successful ideas can
be shut down too soon
As will be apparent by now, those who study innovation inevitably find themselves
categorising characteristics and capabilities into themes and lists; dos and don’ts; rules
and recommendations.
But to what extent do the experiences of leaders in the media industry bear out some of
this textbook guidance? That’s what we’ll explore in the sections that follow.
MAKING INNOVATION PAY > BEING INNOVATIVE 11You can also read
