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Robert Picard - Challenges of Innovationand State Support for Media Transformation
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Robert Picard - Challenges of Innovation and State Support for Media Transformation


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Presentatie gehouden op het seminar Innovatie in de Pers op 8 december 2009.

Presentatie gehouden op het seminar Innovatie in de Pers op 8 december 2009.

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  • We used to think of competition among newspapers or competition among television channels Abundance has created competition is among media Abundance has created competition between media and other leisure time activities: sports, concerts, socializing at caf és and pubs
  • Today competition is not institutionally and structurally defined but is being defined by consumers: the time and money they spend Competitive focus is on the attention economy and the experience economy
  • Trends are creating great cost pressures on media companies --more staff are working for more than one media outlet of their companies and many work cross-media --staff reductions --high outsourcing of many functions --much content is now outsourced --increasing use of freelancers
  • Trends are creating great cost pressures on media companies --more staff are working for more than one media outlet of their companies and many work cross-media --staff reductions --high outsourcing of many functions --much content is now outsourced --increasing use of freelancers
  • Each can change over tie the rapidity of movement toward innovation produces resistance as a counterforce
  • Transcript

    • 1. Challenges of Innovation and State Support for Media Transformation Robert G. Picard Media Management and Transformation Centre Jönköping International Business School, Sweden Reuters Institute Department of Politics and International Relations University of Oxford
    • 2. State Policy and Innovation
        • Support of cooperate research initiatives (state-higher education-industry)
          • Part of national science and industrial policies
          • Significant state activities in electronics, information technology, and biomedical innovation in past 4 decades
      • Tends to work best in developing new technologies and industries
        • Support for advanced scholarly research
          • Large scale research funding from state science and research funding organizations
        • Creation and support for research parks and industrial development zones
        • Incentives and subsidies for commercial research and development
    • 3. State Policy and Transformation of Established Industries
      • Typically designed to support productivity and competitiveness
        • employment and tax base preservation
      • Some support for technology transfer from electronics and information technology to existing industries
      • Some support for retraining, facilities reconstruction, and entering new markets
    • 4. Drivers of Need for Media Innovation Abundance
      • Dramatic rise in media types and units of media
      • Growth of media supply far exceed growth of consumption (temporal and monetary)
        • Average number of pages in newspapers tripled in 20th century
        • Number of television channels in Europe tripled in last 10 years
        • 4 times as many magazines available as 25 years ago
        • 1000 new books are published daily
        • 320 million hours of radio broadcasting annually
        • 123 million hours of TV broadcasting annually
        • 1.5 million new web pages every day
        • New information growing at a rate of 30 percent a year
    • 5. Drivers of Need for Media Innovation Fragmentation and Polarization
      • Audiences are spreading their media use across more channels and titles
      • Fragmentation produces extremes of use and non-use (polarization)
        • Tendency to individuals to focus use on 1 newspaper, 2-3 magazines, 1-2 radio station, 3-4 TV channels
        • Channels received in household and viewing
          • If 20 channels received average viewed in HH is 5
          • If 50 channels received averaged viewed in HH is 12
          • If 100 channels received average viewed in HH is 16
      • Advertisers are responding by spreading their expenditures and paying less for smaller audiences
    • 6. Drivers of Need for Media Innovation Power Shift in Communications
      • Media space was previously controlled by media; today it is increasingly controlled by consumer
        • No longer a supply but a demand market
      • Financing of all initiatives in cable and satellite TV and Radio, audio and video downloading, digital television, mobile media are based on consumer payment model
        • For every Euro spent on media by advertisers, consumers spend five Euro
      • Advertisers are reducing advertising expenditures (already only about 1/3 of their total marketing expenditures).
        • Money is moving to personal marketing, direct marketing, sponsorships, cross promotion, etc.
      • These changes fundamentally alter the underlying business model of media
    • 7. Drivers of Need for Media Innovation Power Shift in Communications
      • Technology facilitates production of consumer created content
        • Combines with creation software for audio, video, and web design
        • personal sites, blogging
      • Technology promotes peer-to-peer file sharing, social networking, and collaborative games
      • Increasingly shifting to mobile interactivity
      • Use choices are shifting significant time to alternative interactive media uses
      • These changes release the public from dependency on traditional sources of news and information
    • 8. Strategic Alternatives and Choices Facing Media Companies Today majority of media firms Declining Market Share Increasing Market Share High Market Growth Low or Negative Market Growth growth management service quality management innovation strategic planning diversification increased marketing product development innovation/new product development diversification planning for market exit or capital withdrawal some media firms
    • 9. Unique Characteristics of Media Affect Innovation Activities
      • Non-industrial nature of the industry
      • Well-established firms and organizational structures and processes
      • Negligible research and development activities
      • Limited experience with product change and new product development
      • Limited links to higher education institutions
    • 10. Innovation in Media
      • Declining sustainability of current operations provides the impetus for innovation
      • Technology provide innovation opportunities
        • Internet content provision
        • Mobile content provision
        • E readers and other new devices
        • On demand content services
      • The real challenges are not need or technology
        • Organizational structures, processes, culture, and ways of thinking in established firms limit change
        • Many are confused by the opportunities and don’t know what to do or how to do it
    • 11. Established firms have challenges not faced by new firms in media operations
      • Profit growth and opportunities in the existing business are difficult for established firms in mature markets
      • Firms must find new opportunities in emerging products and businesses
        • Need to avoid highly risky moves involving high costs that harm existing business
      • Have difficulty seeing short- and mid-term benefits of change
        • Tendency for new types of informational media to lower distribution costs, but also produce lower advertising and circulation/subscription income
      • Tend to be hampered by existing thinking and current strategies and product
    • 12. These create tensions in efforts for organizational innovation and change Resistance to change Push for innovation and change
    • 13. Media innovation requires not merely employing new technologies
      • It is not mere modernizing but fundamentally reestablishing media functions and forms
      • It requires a complete rethinking of the media activities
        • What content is provided
        • Where when and how it is provided
        • What new products and services should be provided; what existing ones dropped
        • What value the content provide to audiences and consumers
        • How content differs and is superior to that of other providers
        • How to establish new and better relationships with consumers
        • How the activities are organized and the processes employed
        • Relationships with partners and intermediaries
        • How activities are funded
    • 14. Organizational Persistencies Direct Strategies and Managerial Choices
      • Organizational evolution and cultures influence how companies operate and make decision
      • Structural inertia develops from the common outlook, norms, and routines that stabilize organizational structures and practices
        • It is an unintentional consequences of organizational evolution and history
        • Structural inertia creates persistencies in how an organization response to changes in the environment
          • Engagement in R&D, responses to new technologies and products, changes in consumer demand
        • The inertia produces a good deal efficiency and reliability, but it can inhibit flexibility, change, and innovation
    • 15. Strong Persistencies Can Create Organizational Path Dependencies
      • Path dependencies narrow the ability to take alternative actions
      • Organizations embark on a strategic and organizational path in search of success
        • When success is achieved, managers make choices to stay on that path to continue the success and increase returns
      • Self reinforcing mechanisms come into play that narrow the range of alternative actions that can be considered
      • Creates long-term or permanent lock-in that can make innovation and change impossible
    • 16. Path Dependency in a Newspaper printing posters operating bookstores printing books printing magazines creating and printing a newspaper printing other papers Creating and printing a newspaper Creating and printing newspapers printing other papers printing ad sheets Radio Television Cable Internet Mobile
    • 17. Persistencies and Path Dependencies Make it Difficult to See Opportunities Telegraph Long distance communication primarily for companies and governments Leading Company: Western Union Fixed Telephony Local communication primarily for individuals Mobile Telephony Communication for travelling employees Leading Company is Created: AT&T “ This devise is inherently of no value to us.” Western Union internal memo, 1876 Company rejected offer to buy Bell Telephone from Alexander Graham Bell for $100,000 Not seen as an opportunity for fixed telephone firms McKinsey Consulting advised AT&T not to enter the market in the 1980s; AT&T accepted the advice
    • 18. Hollywood’s Innovation Troubles
      • In mid 1920s sound recording for film was invented. Studios didn’t like sound because it limited mobility on sets, created new costs, and they were successful without it.
          • “ Who the hell wants to hear actors talk.” -- Harry M. Warner, Warner Brothers, 1927
      • Development of television in late 1940s was seen as insignificant and studios didn’t move into television production—allowing many new firms to enter and later become competitors
      • “ [TV] won’t be able to hold on to any market it captures after the first six months. People will soon get tired of staring at a plywood box every night.” -- Darryl F. Zanuck, Twentieth Century-Fox, 1949
    • 19. Recording Industry Change Problems
      • Opposed radio development (1920s-30s)
        • Refused to allow recordings to be played
      • Attempted to block home audio tape recorders (1980s)
      • Attempted to block digital audio tape records (1990s)
      • Attempted to halt digital distribution of music (2000s)
    • 20. Many Media Companies are Guided by Strong Process Orientations
      • Complexity of production, number of elements, and time constraints lead to strong structured and coordinated processes
        • Set work order, procedures, and schedules controlled by policies and handbooks
        • Especially in continual production media: newspapers, magazines, television channels, program producers
      • Depends on knowledge and skills resident in the organization itself and performance is measured by effectiveness of processes
      • Adding new product and activities or changing structures
        • increases complexity; threatens effectiveness of the processes
        • threatens the employment and career paths of personnel
    • 21. The state’s ability to influence media innovation is constrained
      • Limited ability to affect organizational structures, processes, culture, and thinking
      • States can provide
        • research to identify threats, opportunities and best practices
        • education and training to promote innovation and help implement change
        • incentives or subsidies for transformation costs
        • incentives or subsidies for new initiatives
        • coordination of activities across industries
    • 22.
      • [email_address]
      • www.themediabusiness.