Systemic innovation at media companies is a 3-step process

By Sushil Kumar Tyagi

General Manager, Marketing

Ushodaya Enterprises Private Limited (Eenadu Group)

Delhi, India

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Across the world, there is a major shift in news consumption patterns, compelling news media organisations to reinvent themselves.

Legacy media organisations constantly face a challenge as new digital-only media enter the marketplace. Due to this, the media landscape is changing fast. Multiple media reports have also noted that, in the coming year, digital media will surpass traditional media.

The innovative approach adopted by these new entrants is the reason behind this anticipation. Innovations related to low initial investment, the adoption of the latest technology, and new approaches are the three key factors delivering an excellent consumer experience.

With this in mind, it is important to understand some of the basic concepts and approaches of systematic innovation that organisations may consider over their current ad-hoc innovation approach.

Innovation process

The importance of systematic innovation can be gauged from the fact that customers have lots of choices and can easily shift from one option to another. Following the traditional approach, organisations are finding it difficult to retain their market share. For example, sticking to their ad-hoc innovation has led companies like Nokia, Kodak, and BlackBerry to lose their edge in a competitive market over the past two decades.

We need to understand the patterns of those companies that are constantly innovating. We need to understand how, in a systematic way, they support innovation, structure their innovation process, and address the challenges posed by the key components of innovation.

Innovation is a circular process.

Companies need to:

1. Note the challenge, which can be called a trigger.
2. Then they need to consider the novelty or new concept, which they may have in use in some other markets.
3. After this, they need to experiment with the idea.
4. Finally, they must create benefits for the users or stakeholders.

Throughout this process, it is top management's responsibility to critically evaluate the organisational strategy, internal and external environment, market requirements, and priorities for innovation.

Innovation vs. invention

Normally, people are not clear about the difference between innovation and invention. The commonalities of both relate to the challenge and novelty of the idea. Inventions are ideas on paper and perhaps in the lab. But they haven't been implemented, and their utility and benefit haven't been seen.

All innovations are not based on invention. Innovation is a learning process, and it can be derived from any part of a business model (such as the process, product, implementation, or marketing). The innovation process includes an idea, experiment, implementation, and derived benefits.

Generally, we can categorise all innovations into two broad categories: incremental and radical innovation. These can be further classified into four dimensions: product, process, customer experience, and business model.

In an incremental innovation, regular and small changes are incorporated by organisations in their daily process. For example, innovation on the shop floor like a small machine tweak or a slight change in the supply chain to remove a bottleneck. The level of change is small, and so the impact on business is something that's the spice of everyday corporate life. These small ideas are very important, as they help in building creative confidence, employees get into the habit of innovation, and it develops an innovation culture in the organisation.

Radical innovation is significant change that requires a detailed process. It creates big impact, like the introduction of Lean or Six Sigma, a customer experience innovation, or a dynamic change is the business model. It is worth referring to the new wave of disruptive innovation, a term coined by professor Clayton Christensen of Harvard Business School in his book "The Innovator's Dilemma." The core of disruptive innovation is that it needs to come up with something very different, which opens up completely new markets.

Some well-accepted business models of innovation are the media model, disseminating information at a low cost, and generating revenues through advertisements. For example, the printer-and-cartridge or razor-and-blade model, where an organisation would sell a printer for a relatively low cost and generate revenues by selling cartridges, which is recurring revenue for the organisation. The freemium model offers the basic service for free and then charges for the premium services.

Barriers to innovation

Though the concept of innovation sounds fancy, there many barriers. One is the fear factor, which means if we pay attention to innovation, perhaps we will lose out on our quarter-to-quarter performance. Another is idea generation, which means organisations are not generating new ideas because employees feel it's not part of their job profile and they aren't encouraged to come up with new ideas.

Failure associated with the experiment means ideas need experimentation to validate various assumptions, and all experiments cannot succeed. Experiments need investments, which may be a barrier to innovation. Organisational culture may not be built to take ideas forward as big ideas if they come from low-level employees. Additionally, some management is only open to immediate benefit, meaning it will offer an immediate increase in revenue, profitability, or valuation.

Systematic innovation process steps

There are three key steps associated with the systematic innovation process.

The first one is the idea management process. We need to develop a process. This requires answering questions like: Who submits ideas? How do these ideas get selected? Who funds them? How does experimentation happen?

The three systematic innovation process steps are idea management, buzz creation, and training and development.

The second component is buzz creation. This is to attract employees to the innovation process.

The third component is training and development. This is like design thinking or inventive thinking. It is a process where people can learn different tools and methodologies associated with innovation.

It is very important to provide equal opportunity to all employees and motivate them to share their ideas. David Packard, co-founder of Hewlett Packard, had a three-hat approach to address this.

This first meeting was with the enthusiasm hat, which means listening to ideas with appreciation and excitement. The second meeting was with the inquisitor hat, which means asking pointed questions. Finally, the third meeting was with decision hat, which is when it was decided whether the idea was worth pursuing.

Innovation in media companies

However, to reap the maximum benefits of commercialisation process of the innovative idea, two important factors must be kept in mind. These relate to the imitability and complementary asset. If the idea is easy to imitate and complementary assets don't play an important role, the chances to make money are quite limited.

Thus, in the current media scenario, it is recommended that media organisations adopt a combination of platform and open innovation approaches to build systematic innovation in their organisations.

In the platform approach, we need to develop a core framework that can be applied to different applications or segments. Investments are used to develop one core process, which can be applied to develop multiple products. The key advantages of this approach is the optimal usage of resources, quick implementation, and excellent returns on investments.

In open innovation, the basic concept is centred around the idea, and organisations help each other to develop idea. The core benefit is that organisations share their skills and capabilities to come up with superior products or services, which they could not have done alone.

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About Sushil Kumar Tyagi

Sushil Kumar Tyagi is general manager of marketing at Ushodaya Enterprises Private Limited (Eenadu Group) in Delhi, India. Sushil can be reached at [email protected] or @SushilKumarTyag.

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