An investigation into the disruption of the media business

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What the heck is innovation anyways?

In innovation on March 11, 2012 at 10:18 am

Innovation is widely regarded as a critical factor to a company´s competitive edge and performance. Schumpeter (1934, 1939, 1942) pointed to technological competition (through innovation) as the driving force behind economic growth and innovation. Early technological innovators will be rewarded with profits, and imitators will soon “swarm” the industry or sector hoping to get their share of the benefits. This will in turn fuel new cycles of innovations. Both in the business world and in academics, the loosely defined term “innovation” is often substituted for creativity, change or knowledge.

Still, “Innovation” isn’t just the invention of a new process, product, technology or service. As Schumpeter point out, the concept of innovation is closely tied in with value added — an innovation doesn’t occur until someone successfully implements it and makes money from it.

New technology can offer enticing value propositions, but the return on investment on any given technology or innovation is notoriously difficult to pinpoint. In 1993, Erik Brynjolfsson popularized the “productivity paradox,” which noted the apparent contradiction between the remarkable advances in computer power, heavy IT-investments, and the relatively slow growth of productivity at the level of the whole economy, individual firms and many specific applications. The concept is sometimes referred to as the “Solow computer paradox” in reference to Robert Solow’s famous statement “You can see the computer age everywhere but in the productivity statistics.”

Since then, McAfee and Brynjolfsson (2008) have done extensive research, tracking performance data for all publicly traded US companies from 1960 to 2005, noting that a new competitive dynamic has emerged (2008, p. 100), because new technologies that enabled companies to improve operating models exponentially. In this view, the mere existence, or availability of new technologies is not a fundamental driver of change. Rather, technology and organization is seen as dynamically interacting; IT serving as a catalyst for innovative ideas and an engine for delivering them.

This notion of technology-enabled opportunities mirrors Leonard-Barton (1988), who argues that as technology is implemented, a process of mutual adaptation between the technology and the organization occurs where developers and users strive to wring productivity increases from the innovation. The diffusion of technology includes changes in organization as well as the technology itself, and the outcomes are not always predetermined.

Leonard-Barton proposed that implementation misalignments between technology and organization fit into three categories: Technical, delivery system, and value. Of special interest is the latter, which is a mismatch between technology and organization, where technology disrupts and reforms the organization in fairly unpredictable and situation-specific ways. The significance and impact on job performance criteria can work on different levels. The author mentions end-users, organization managers, business managers and corporate management. Discrepancies between these four “reward systems” may strongly affect the success of technology implementation.

This project will examine how value is created in the aforementioned interplay between organizational, technological and market forces, and specifically how misalignments between technology and organization may affect value.

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Organizational learning and evolution

In convergence on March 11, 2012 at 10:15 am

Theories of organizational learning, evolution and adaption address the question of why and how organizations change. The need for organizational change can be triggered by a number of internal and external factors – disruptive technologies being one potent force. Increasing globalization, new technology platforms, changing competition, open markets and fast-paced product cycles, means that many news companies are finding that relentless, continuous change is a crucial capability for survival.

Newspapers have traditionally been very profitable businesses, but also rigid, hierarchical organizations, with sharp job divides around functions and specialized tasks. As is typical of mature organizations operating in stable environments, news organizations have focused on efficiency gains through incremental improvements of existing processes. Managers favor projects that sustain and replicate the core business rather than allocate resources to explore new vehicles for growth. Successful organizations tend to disregard practices, people and structures regarded as peripheral to their current recipe for success – in effect breeding inertia. Organizational inertia is characterized by the following:

  • Dense, tightly coupled interdependencies among subunits
  • Efficiency as a core value
  • Focus on short-run adaption rather than long-run adaptability
  • Institutionalization as a restraint on action
  • Powerful norms embedded in strong subcultures
  • Imitation as a major motivation for change

In 1985, Tushman and Romanelli proposed the punctuated equilibrium model of organizational evolution, which sees organizations progress through convergent periods punctuated by reorientations that demark and set bearings for the next convergent period. These convergent periods are characterized by incremental changes, short-time adaption, effective performance, and organizational alignment. This would seem to fit with the characteristics of inertia proposed above, suggesting that convergence leads to inertia. A reorientation occurs in the event of a discontinuous change, where strategies, power, structure and systems are fundamentally transformed. The introduction or emergence of a disruptive technology would seem to fit into this model.

Tushman and O’Reilly (2004, 1996) later argued that to counteract inertia, organizations and managers must become ambidextrous, balancing the need for both exploratory and exploitive activities. Organizations must strive to be both evolutionary and revolutionary; pursue both incremental and discontinuous activities. Managers must be like “jugglers” that balance these contradictory needs, creating a culture that celebrates both stability and change.

The project will apply the punctuated equilibrium model to investigate how “reorientations,” or discontinuous changes, have disrupted strategies, power, structure and systems, and to which extent organizational inertia affects innovation in news organizations.

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Technology as a disruptive force

In Determinism, Disruptive technology on March 11, 2012 at 10:09 am

We have become accustomed to seeing advancing technologies change the way we live. Determinists argue that technology follows a predictable, traceable path largely beyond cultural or social influence. Technology is an independent or moderating variable that impacts environments such as organizations, acting as an agent of change and a driving force in history. Technologies “suddenly” appear, causing important things to happen.

For the purpose of this PhD-project, one particularly relevant theory is that of disruptive technologies. The term was coined by Harvard professor Clayton M. Christensen in the mid-90s, referring to technologies that initially underperform existing market standards, but with steady improvements meets or exceeds demands. Over time, disruptive technologies may sink industry leaders, who are focused on existing, profitable markets and customers and don’t see the “threat” coming until it is too late. One example is the personal computer, which started out as an inexpensive alternative to large mainframe computers, which at the time were costly and required expert handlers. The earliest PCs could not handle complicated tasks, but over time, the technology matured to a point where PCs transformed the computer industry and our daily lives –in both trivial and profound ways. Tablets may very well be the next wave of technological disruption – displacing the PC. Christensen has later revised his theory, putting in question the inherent “disruptiveness” of technologies. The same technology, take Internet as an example, can be disruptive to incumbent firms (such as “brick” bookstores), but offer great opportunities for others (such as Amazon.com).

The project will investigate to what extent digital technologies disrupt the media business, and the impact of these technologies.  At what point does a technology become disruptive, and to whom? The project will draw on Danneels (2004), who offered a critique and agenda for revising the theory of disruptive technologies. Research themes include:

-       The definition and identification of disruptive technologies

-       The predictive use of the theory

-       Explaining the success of incumbents

-       Merits of being market-oriented

-       Merits of creating organizational spin-offs for exploring disruptive innovations

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