The media needs to take a 360-degree approach and stop focusing on platforms.
By Mads Holme
Everyone likes to hold up Google as an example of an agile and innovative powerhouse full of seemingly endless growth potential. It’s not untrue. That success has its roots in Google’s “twenty-percent time”— a policy that harnesses the creativity and drive of Google engineers by giving them carte blanche to spend one-fifth of their work hours on their own projects. Gmail, AdSense, and Google News all had their beginnings in twenty-percent time.
Media companies are simulating Google’s startup culture by experimenting in various ways. Some study consumer preferences to aid product development, others run competitions for new ideas. There’s plenty of recognition that there’s creativity to be culled, but it’s also clear the lack of creativity is a systemic problem, not a conceptual one.
The need to innovate in new ways is becoming more time-critical. More players are encroaching on the space that media companies once controlled. Sports brands are developing their own TV channels, e.g. Adidas.tv and Fcb.tv, which is run by the German football club Bayern Munich. Food brands have business-to-consumer (B-to-C) magazines about health and other topics: Tesco Magazine, run by the grocery store and retailer, is the most read lifestyle magazine in the U.K., with a circulation of 5.65 million; Unilever has ViveMejor, a web-and-print lifestyle magazine for Hispanics.
And this is happening across industries and platforms. Toy companies such as LEGO are building learning solutions for kids—the brick manufacturer launched an online community this summer where users can play games with their friends and create profiles or a digital toybox—a growing irritant for media properties like Mickey Mouse magazine (largely focused on Donald Duck), a runaway success with sales of 250,000 copies a week in Germany. Even banks are getting into the media game: Denmark’s Jyske Bank now runs a web-TV channel to deliver financial news.
Companies are experimenting in smart ways but also need to look inward.
Media companies are still in the fight. The relationship with the consumer is moving to the forefront at least some of the time. The U.K.’s Telegraph successfully added gardening-related commerce to their website, while Politico, the free online news organization that covers Beltway politics, is launching a hefty paid service to compete in the subscription market.
With Kickstarter, a website where you pay money to enable strangers to fund their project, article, or research, the users has the authority (and more importantly the cash) to decide who writes what.
Companies are also getting aggressive about crowdsourcing ideas. Sanoma Digital set up competitions to tease out the creative potential of their employees and to gather outside input for new iPad apps. Axel Springer in Germany injected new blood into the organization by setting up a competition, “Ideen,” which generated about 1,200 ideas.
While these initiatives are a good start, it’s not clear how user-generated ideas will pan out—a more thoroughgoing and radical approach is needed. Here are three things to consider.
1. Establish a shared sense of direction that focuses on customers, not on platforms
We ran an analysis on media companies, benchmarked against tech companies such as Google, Apple, Yahoo, and Amazon, and found that the former still focuses on innovating around products and on traditional platforms—rather than on building the kinds of bread-and-butter services and partnerships that more nimble companies provide.
Media companies need to rethink the reader—and their value proposition—by integrating their products into cross-media services and brands. Readers need to be reconceived. They’re not just armchair travel-and-leisure readers. They want to be serviced 360 degrees—travelers want language courses, guides to taking better pictures, and details on the history and foods of a region.
In other words, let go of the brand. It’s about taking your expertise—gardening, Italian lifestyle, fly-fishing, headline news, automobiles—and applying it in a way that delivers added value to consumers. Companies need to be more invested in how their area of expertise makes a difference in people’s lives. Consumers will seek trusted authorities and brands to engage them in ways they never imagined—and they’ll buy into informative services that will make their daily lives less inconvenient.
The popularity of web startups like the social search engines Aardvark (now owned by Google) and Quora, which let users tap the know-how of experts by asking them questions directly, shows that there are many potential markets for products that can fill in the gaps between traditional media and services that bring traditional content to new platforms. Innovation from media companies needs to be equally nuanced.
So how do you switch the focus from platform-based content to developing new services? Leaders need to a way to ignite motivation and creative energy among the organization’s employees. While leaders might have the big picture in mind, they aren’t always plugged into things at a grassroots level—but developers and editors are. The right process requires a shared vision between the CEO and other managers and the employees who are fielding ideas and content on a daily basis. Incentivizing new ideas and expansive thinking is about creating a forum for possibilities—it’s not about some aha! moment that comes in a flash of inspiration.
2. Extend from the core and don’t worry about “breakthrough” ideas
In a high-paced publishing environment with few resources to do R&D, the Google model is challenging for media companies, which are better off extending their core products.
This can have countless iterations.
The Daily Telegraph turned their garden site into an e-commerce business.
Monocle magazine focuses on partnerships—it made its branded products (bags, pens, music, etc.) into a substantial part of its revenue. And its ads are masterfully and consistently co-branded with Monocle as advertorials (ads disguised as editorial).
The New York Times has through their Knowledge Network initiative, “toolified” education and learning services online—they created a new revenue source by pulling content and reporters from the Times and other academic or professional institutions.
Media companies can also find inspiration in the way large fast-moving consumer goods (FMCG) companies drive and manage innovation. For example, the spirits producer Diageo created an Innovation and Insight Unit to standardize the way processes and tools are folded into a single approach across all business units. The unit also produced a training book for step-by-step directions on how to define, measure, and translate consumer insights into value propositions.
In other words, there’s plenty of innovation waiting to happen internally, especially once there’s a process for developing ideas—at all levels—and putting them to work.
3. Make employees responsible: Incentivize risk while investing in training
Big media companies don’t hinge on a culture of collaboration. Companies like Hearst, Sanoma, and Bertelsmann have literally hundreds of business units. The business units won’t evolve without closer collaboration.
It will work if there are multiple people responsible for effecting change through both small- and large-scale processes, and more people responsible for the success of their own actions. So if you tweak a process from the bottom, how does that energize the rest of the process? If you change something that happens at the top, how does that impact what happens below? If a newspaper implements a paywall, will it change the way journalists write articles? If editors leave breaking news to the blogosphere and put more resources into investigative reporting or, say, regional coverage, such as Beltway politics, how does that affect distribution and paywalls? Someone needs to think this through.
Another reason why creativity doesn’t flourish in media companies is because of the way bonuses are set up. Most people in business are measured by short-term goals: What’s the cash flow? Are you profitable? While these measures are important for every business, they tend to kill the focus on the long-term. A smarter move is to reward leaders for taking risks. Not many people get praised for inventing and executing new ideas that the company can make money on five years down the road.
Companies also need to get better at encouraging long-term thinking. The first step is admitting that motivation should be rewarded. General Electric CEO Geoffrey Immelt’s 2005 Ecoimagination campaign was all about setting GE up for the future, creating developing technologies and reducing GE’s greenhouse gas emissions. Immelt was interested in a three- to five-year idea payback, not in short-term results.
The second is training. Bertelsmann’s corporate-education arm, Bertelsmann University, now teaches people to innovate by conducting fieldwork and problem-solving courses; those people then return to their divisions to run innovation projects. Hearst also just launched a training program around innovation. For Sanoma, innovation is now being treated as a discipline like accounting, which you can train for and master.
Other industries are ahead of the game—and it shows in their quarterly reports. When innovation is the driver, specialized divisions fall into step. The H. J. Heinz Co. opened an innovation center in 2005 to enable different people (chefs and package designers, botanists and technologists) to work together at every stage of product development. Samsung Electronics, too, created a Product Innovation Team (PIT) in 2007 to rethink a development process that was consumer-driven instead of engineering-driven—PIT trains people to implement ideas by making innovation part of each group’s core business process.
So when will media companies catch on to the fact that they need to change their perspective? We’re hoping this happens soon so their creativity can be harnessed more effectively.
Media companies are experimenting with ways to innovate.
In 2009, Bonnier launched the investment fund B. Media Invest AB (BMI), which invests with media space as expansion capital in small- and mid-sized companies.
New York Times
Launched in 2008, the R&D Group was built to help anticipate consumer preferences and devise ways of satisfying them; the group assists in product development across the company.