Digital Media and Innovation

Management and Design Strategies in Communication

Richard A. Gershon

• Publisher: SAGE Publications, Inc
• Year: 2016
• ISBN:
  9781483322544
• Edition: 1
• Topic: Languages & Linguistics
• Subtopic: Communication Studies
• Index: Languages & Linguistics

Digital Media and Innovation takes an in-depth look at how smart, creative companies have transformed the business of media and telecommunications by introducing unique and original products and services. Today?s media managers are faced with the same basic question: what are the best methods for staying competitive over time? In one word: innovation. From electronic commerce (Amazon, Google) to music and video streaming (Apple, Pandora, and Netflix), digital media has transformed the business of retail selling and personal lifestyle. This text will introduce current and future media industry professionals to the people, companies, and strategies that have proven to be real game changers by offering the marketplace a unique value proposition for the consumer.

Chapter 1 Innovation and the Power of a Good Idea

If I have seen further it is by standing on the shoulders of giants.

—Sir Isaac Newton

There is one thing stronger than all the armies in the world, and that is an idea whose time has come.

—Victor Hugo

Introduction

The lessons of business history have taught us that there is no such thing as a static market. There are no guarantees of continued business success for companies regardless of their field of endeavor. In 1942, economist Joseph Schumpeter introduced the principle of creative destruction as a way to describe the disruptive process that accompanies the work of the entrepreneur and the consequences of innovation. In time, companies that once revolutionized and dominated select markets give way to rivals who are able to introduce improved product designs, offer substitute products and services, and/or lower manufacturing costs.¹

The resulting outcomes of creative destruction can be significant, including the failure to preserve market leadership, the elimination of a once highly successful product line, or in the worst-case scenario, business failure itself.² The history of media and telecommunications is replete with examples of companies that were once high flyers (the best of the best) but who failed to plan for the future. Companies with iconic names like Eastman Kodak, Blockbuster Video, and BlackBerry wireless, to name only a few, have been greatly reduced or are no more.

Today, the international business landscape has become ever more challenging. Global competition has engendered a new competitive spirit that cuts across countries and companies alike. No company large or small remains unaffected by the desire to increase profits and decrease costs. Such companies are faced with the same basic question; namely, what are the best methods for staying competitive over time? In a word, innovation. This book is about the power of good ideas. It’s about those business enterprises that have harnessed the power of good ideas to become real difference makers in the field of media and telecommunications.

When we use the word innovation, there is a tendency to think of it in present-day terms. Companies like Apple and Google are considered innovative companies. Similarly, the term innovation often is linked to companies that are engaged in digital media. From Sony’s Akio Morita and the invention of the Walkman to Steve Jobs and the development of the iPhone, one of the goals of this book is to show the full measure of creativity and entrepreneurship both past and present. While there are numerous books on the subject of innovation (and specific corporate histories of well-known media companies), there are few books presently that are fully focused on the linkage between innovation and media and telecommunications. What has long fascinated me about the work of innovators like Walt Disney (Disney), Steve Jobs (Apple), and Jeff Bezos (Amazon), to name only a few, is the opportunity to examine how such companies and individuals create groundbreaking products and services while addressing the challenges of staying innovative over time. This book represents a unique opportunity to look at the importance of innovation and innovative thinking to the long-term success of today’s leading media and telecommunications companies. Specifically, it will address four sets of questions. First, what does it mean to be an innovative media business enterprise? Second, what are the different types of media innovation, and who are some of the players who have proved to be real game changers in shaping the business of communication? Third, why do good companies fail to remain innovative over time? And fourth, how do the best companies foster a culture of innovation within their own organizational settings? This book will examine some of the people, companies, and strategies that have transformed the business of media and telecommunications.

What Is Innovation?

Renowned scholar Everett Rogers (1995) defines innovation as “an idea, practice or object that is perceived as new by an individual.”³ In principle, there are two kinds of innovation, namely, sustaining technology versus disruptive technology. A sustaining technology has to do with product improvement and performance. The goal is to improve on an existing technology or service by adding new and enhanced feature elements.⁴ A computer manufacturer, for example, routinely is looking to improve on basic design elements like speed and throughput, processing power, and graphics display. For most companies, sustaining technology (or incremental innovation) is the most common form of innovation, often receiving more than 80 percent of the organization’s total research and development budget.⁵

Sustaining technology is extremely important because it provides the steady and necessary improvements in product design that guard against rival product offerings. It also demonstrates a commitment to brand improvement. Such examples might include incremental improvements in Microsoft Office software or the steady progressions made in the Apple iPhone. The goal of sustaining (or incremental) innovation is to try and realize as much value as possible from an existing product or service without having to make a significant change in product design and/or a major retooling in production. By doing so, a company can preserve market share, extend brand awareness, and maintain profitability for a long period of time.

In contrast, a disruptive (or breakthrough) technology represents an altogether different approach to an existing product design and process. It redefines the playing field by introducing to the marketplace a unique value proposition. (See Table 1.1.) Consider, for example, the impact that MP3 file-sharing technology has had on the music industry. The speed and efficiency of Internet-delivered music using MP3 file-sharing software has fundamentally changed the cost structure of music recording and distribution on a worldwide basis.⁶ The combination of the Apple iPod and iTunes media store created the first sustainable Internet music business model of its kind. It would redefine the way music is distributed and recorded forever more and give rise to the principle of personalized music selection. It was an absolute game changer and the quintessential example of a disruptive technology.

The Power of a Good Idea

There are any number of terms that we use in our day-to-day experience to describe the power of a good idea. Such words and phrases as inspiration, compelling vision, and natural insight are just a few of the lexicon of terms to describe that moment in time when a good idea takes hold. The best innovators have natural curiosity about their environment. They are keen observers of human behavior and one’s natural landscape. They are willing to juxtapose various idea combinations to see what happens.

As author Steven Johnson (2010) points out, a good idea is really a network of possibilities. A good idea spawns infinite connections and opportunities.⁸ One of the important themes in this book is that the best innovators work in environments that allow them to be creative. From the original AT&T Bell Labs to the present-day Googleplex, there is a natural synergy that occurs when a project team combines talents and skills toward a common effort. A good idea has to be malleable; that is, it must be capable of adapting to various designs and configurations. As Ideo’s Tom Kelley (2005) describes it, the best projects and design configurations are a collaborative effort; they never finish where they began. He characterizes it as the “magic of cross-pollination.”⁹

The Serendipitous Discovery

From the original telephone to Post-it Notes, it sometimes happens that the scientist or engineer winds up creating something very different than what was originally intended.¹⁰ As sometimes happens, the discovery is more accidental than planned. Probably, the most famous example was the invention of the telephone itself. In setting out to create the harmonic telegraph (multiple Morse code signals on a single wire), inventor Alexander Graham Bell wound up creating something far more compelling and futuristic than the original concept. Bell’s extensive knowledge of sound (and sound waves) enabled him to consider the possibility of transmitting human speech electronically.¹¹ Both he and Elisha Gray are credited with independently having designed the first prototype devices that would later become the telephone. The telephone became the foundation for an entire system of communication that would take more than fifty years to build and require telephone exchanges (including operators, switches, and routers), long-distance lines, and assigned numbers. In time, the future AT&T would become the largest corporation in the world.

Research and Development

The words research and development are 20th-century terms that owe their beginning to the original industrial lab concept promoted by men like Thomas Edison, who built one of the first of its kind in Menlo Park, New Jersey (now called Edison in his honor). Menlo Park was home to one of America’s first research and development (R&D) labs, which created products such as the phonograph and the incandescent lightbulb as well as an estimated 400 patents. The laboratory’s open floor plan allowed for easy communication among Edison and his associates. The layout created an informal environment that Edison felt would foster creativity. Edison had no rules for work and no time clock. But his team worked long hours and was highly successful in their endeavors.¹² In time, other high-tech companies would one day follow suit and create their own version of the industrialized R&D lab. One such company was AT&T.

AT&T

The traditional R&D model assumes a more formal approach to research and product development. The goal is to enhance current product design as well as solve problems related to its implementation. Such R&D groups are assigned an annual budget with which to conduct research pertaining to product development as well as pure research (i.e., creating, new knowledge) that may not have immediate benefit. One of the best examples of a successful R&D model was AT&T Bell Labs, established in 1925. Bell Labs would prove to be an extremely fertile ground for the development of new and enhanced communication technology. Bell Labs had more PhD’s under the roof of its 21 branches than any single university could claim in the field of engineering and turned out more than 19,000 patents since it began in 1925. As an R&D facility, Bell Labs could boast a number of firsts, including the first transistor, first laser, the first efficient communication satellite known as Telstar, early prototype designs in cellular telephones, as well as telephone switches and fiber optic communications.¹³

Bell Labs was unique for its time because it enabled its people to pursue pure research. One Bell Labs researcher described it as “managed anarchy.” Pure research is an unpredictable path, with many hidden twists and curves. As so often happens, one discovery may not be useful for the moment but may eventually lead to another that is. Consider, for example, the work of Bell researcher Clinton Davisson, who won the Nobel Prize for physic...