JaySmall.com/old

In recent weeks, at least a half dozen acquaintances in and near the news biz have asked me about innovation in some form:

We want to start an innovation [program|team|fund] at my [newspaper|Web site|media company]. How do we do it?

How do you find and keep good people to manage an innovations process and team?

Resources are tight in my shop. We're cutting staff here or there. How do we set aside time and money for innovation and still [get the paper out|keep the Web server running|make payroll|see our families]?

How do you make build-vs.-buy decisions?

What about Scripps' (my day job) Entrepreneur Fund? How does that work, and how well is it working?

These are great questions that deserved better, faster replies than this tome. Still, I hope some of these ideas might help frame thinking about innovation at individual newspapers or media conglomerates. Even if you want to improve product development at another kind of company, you might find some nuggets of value.

First, know from whence I write:

• The Entrepreneur Fund in Scripps' newspaper division was not my idea. It started with Bob Benz, my boss. If you want to know about it, he described it nicely in an essay last year. The EF process was further nurtured by Innosight, the consulting firm whose practice is based on Clay Christensen's Innovator's Dilemma series of books.
• I also do not direct the EF's operations or participate in the board's deliberations. Eleanor Cippel runs the EF nicely for Scripps, and the board is a mix of internal executives and external subject-matter experts. My role is the "how" -- once the EF board approves funding to take a project to full trial, my team usually determines how that gets done.
• I won't reveal any inside secrets about the EF or Scripps. My opinions about innovation in newspapers come not only from our group's early experience with the EF, but also from my past jobs in product development at media companies, a large consumer electronics corporation, and an e-business consultancy. At any rate, my opinions and recommendations are only mine.
• I am not a computer programmer. I can and often do assemble various types of production-ready Web sites from software components that require some hacking ... err, configuration ... to do what I need.
• I have been a senior corporate manager for years now, but am neither an MBA nor a CPA. I have sold stuff, but never had a sales job. I have been an art director and creative director, but never went to art or design school. I grew up in a newspaper family, but so far have not been a publisher, executive editor or ad director.
• I talk a lot about "products" and "product development," but I realize that most mass or niche communications are really services, not products. Please realize I use the terms interchangeably. Ditto for my copious use of "customers" to mean, in different contexts, "readers," "site visitors," "advertisers," "participants" or even the awful "users."
• Your mileage may vary. Void where prohibited. All rights reserved. This call may be monitored. Caveat emptor. E pluribus unum. May the Force be with you.

Still with me? You're a brave soldier. Since I'm discussing innovation mostly in the context of newspaper companies, let's break this down the way a journalist would: who, what, when, where, why and how.

Who innovates?

It's easy to say everyone in the organization should be free to innovate. But get real -- it doesn't work that way.

Newspaper publishers I know want, badly, to be seen as innovators. But local publishers today aren't the same free-will owner/operators and power brokers common in the industry decades ago.

Today's publishers typically are hired to run local operating companies, by executives in conglomerates of many such companies. In those environments, publishers are rewarded more for success in continuing operations (in other words, making or beating plan), less for nurturing new ideas.

As a result, so are a publisher's direct reports. The only way innovative projects fit consistently into this system is if they can be slipped into the seams of continuing operations. In other words, Project X has to fit one of these criteria or it won't happen:

• It must pay for itself and become a cash flow contributor within the current budget cycle.
• Or it must be something that can be accomplished within the workloads of current staff and existing expense budgets, without sacrificing continuing operations.
• Or it must be such a sure bet, longer term, that the publisher is willing to go to the mat for it in budget season, or request a variance between cycles.

That's not exactly an ideal canvas to paint that masterpiece, eh?

It's why those of us who started "doing Web stuff" for newspapers in the mid-1990s remember those early days fondly. We had unusual liberty then to attempt innovations in online products. It didn't cost much to do new things online, and the industry was healthier then. So publishers found enough money to set a few of us aside to experiment.

That's important, because it broke two of those criteria I just gave. It did not pay for itself right away. And it did not heap new responsibility for innovation on existing operational staff, while leaving the rest of the workload there to demand attention.

Yet it fit the third criterion. Publishers felt "this online thing" was going to have legs, someday. And in the media culture of 12 years ago, it looked good for a publisher to say he or she had placed a modest bet on online.

The "who" of innovation at newspapers, as they are operated today, still should be a set-aside team that has incentives tied to frequency and intensity of pilot projects -- not to the financial performance of those projects, at least not during a pilot phase.

Such a team resembles the Corporate Research and Innovation unit at that consumer electronics company I worked for several years back. These were electrical engineers, mechanical engineers, physicists and chemists, not product managers.

They had expense budgets to meet, but they were not obliged to build things that could be marketed, or had to make money. They were rewarded for developing intellectual property, not for the financial performance of their inventions. They worked in labs with equipment suitable for their effort, not cubicle farms with sales managers peeking around the corner.

They were insulated but not isolated from the business side. R&I scientists participated in product development concept and brainstorm sessions, showing some of their own work and helping to find the best component ideas to build or enhance a product.

And that works because the people who develop innovative new products, or components, aren't necessarily the same ones who will manage those product lines after launch. R&I types and product developers either move on to the next idea or fall in love with their last one -- committing to a business-side role managing a product they've already developed.

Case by case, operating companies must decide whether to adopt and absorb new products that exhibit staying power, or let them run as free-standing entities. It may sound like a cop-out to say "case by case," but again, get real. Even if both Project X and Project Y launch successfully, X may dovetail nicely with existing operations and Y may be a classic square peg. If it don't fit, don't force it.

Maybe you're considering a series of organizational innovations -- changing the way you run what you have, as opposed to building new products. Even then, people outside those operations, but with experience in them, may be the best ones to lead change. Outside eyes don't see the sacred cows and don't hear all the gossip.

Why else would companies hire so many management consultants?

What are the innovations?

I am not suggesting every newspaper have a team of goalless, soulless scientists with an untouchable budget in their own R&I labs.

Believe it or not, the newspaper industry is in a luxurious position here: We are not obliged to develop new technologies to grow our business (much as it is tempting and even fun to try). News, information and advertising communications can ride -- do ride -- on the prevailing technology of any era.

Our role is to adopt and adapt enabling technologies, understand their life cycles and roadmaps, and make new products with them.

But we do need more people, with appropriate skills, set aside to:

• Do the research to help us understand consumer and business behaviors toward information and enabling technologies.
• Spend their entire working days thinking of new ways to aggregate, sort, package, search, retrieve, store and distribute many kinds of information.
• Take our new methods to market, armed with our evolving understanding of consumer and business behaviors, and grow good businesses from them.
• Lead organizational change so existing operating companies know how to adopt or absorb new product lines where appropriate, and keep them at arm's length when not.

That's four kinds of innovation: new research, new products, new marketing, new organization. Innovations in these categories don't have to stay fully and forever outside the mothership company, but I believe they need to start outside continuing operations.

How do we find people like that? No matter what you hear, our industry -- any industry, really -- has people who could take on those important roles. And I am certain if a company creates an innovations team and process, and commits to it, innovators will be available.

Innovators love the challenge, and our industry is one big, fat challenge right now.

I also believe customers can help -- even lead -- the innovation in all four categories. In Web circles we're talking a lot about user-generated content, social media, citizen journalism, participatory sites etc. All are different ways to say "customers help invent and improve products, sometimes even owning them with us."

Where does innovation happen?

Not every local newspaper needs to establish its own autonomous team, at least not for all four kinds of innovation. Newspaper conglomerates should play a role, too.

Corporate innovation teams working with multiple local newspapers carry several advantages:

• Economy of scale. Corporate technology contracts and shared services can take some of the cost out of common tools and methods. Smaller local entities get to "look bigger" by deploying products they could not have paid for alone.
• Reduced redundancy. Local newspaper executives and Internet managers read many of the same trade publications, e-mail lists and blogs. In practice, an idea that a local executive hears about and considers innovative is probably something other papers already have or are developing. Corporate product development reduces the number of "me-too" products in the pipeline.
• Knowledge sharing. A corporate team can study consumer or business behaviors and provide results that apply across multiple local markets. A product pilot in one local market can teach others in the chain how to adjust their new products and business expectations.
• Release valve for operating budgets. Some innovative projects simply take longer and cost more than a local publisher can afford to bankroll. Scripps' Entrepreneur Fund provides one example of how to break innovation out of operating budgets. It works like an internal venture capital fund: first round, research; second round, pilot launch; third round, ongoing operations.

In that set-up, what roles do local units play?

First, local market executives are often in the best position to identify new areas of opportunity: a fast-growing neighborhood or citywide demographic group; a category of business that is poorly served by traditional advertising means; special consumer interests such as travel, gardening, sports etc. that may have unusually strong local relevance.

Local execs can and should lead problem exposition, too: understanding what's behind declining circulation and advertising metrics; the challenges of diminishing resources; and local factors and effects in the overall shifting of consumer and business behavior.

Note that I'm not heaping responsibility on the locals to come up with the ideas that are going to meet those opportunities and problems. With both exposed, innovation teams (corporate, local or both) can then take the lead on idea generation, product development, project management and preparations for launch.

Here the local executives play another key role. I believe it is crucial for publishers to set aside a full-time specialist -- product boss -- for every product deemed big enough and good enough to take to market.

Say a corporate team is developing Product X. The product boss would start by occupying a "guest desk" amid the corporate team during assembly, for a few weeks or even a few months. Then the product boss returns to the local market, having contributed to putting Product X together and ready to run its trial and measure its performance.

In all my past product development roles, I've seen new products fail most often because local leaders felt they could absorb them in the workloads of existing stakeholders rather than appoint at least that one person who lives and breathes Product X.

This risk becomes acute when a manager asked to add the new product to existing responsibilities also happens to be the person, or one of the people, who came up with the original idea. People tend to fall in love with their own creative ideas and want to see them through.

A manager in this situation fights a little internal priority war. He or she loves the new product, but has targets to hit elsewhere in continuing operations and only so many hours in a day. The outcome often is a product launched with much effort and enthusiasm -- both of which ebb as other priorities weigh on the manager.

That product may well become a "ghost ship," to borrow a term my boss uses to describe something launched but poorly maintained and, ultimately, adrift.

If a product is not big enough and good enough to launch with a specialist boss, my guess is it's just an extension of something already in service -- or, as the Innosighters would say, a sustaining innovation.

Those aren't necessarily bad, but don't confuse incremental improvements with new, disruptive or radically different products.

When do we innovate?

The seemingly easy answer: Today. Tomorrow. Always. But I think it's better to think of "when" as "in what context."

Take a typical daily Page 1 planning meeting in a typical local newsroom. (For those of you outside the business, in this meeting, newsroom managers run through their lists of stories in progress and decide a preliminary roster of stories for the front page of the next edition.)

Is it innovative to invite the newspaper.com site manager to attend that meeting? Not really. Is it innovative to invite civic, business and/or political leaders to attend that meeting? Maybe. Is it innovative to invite them all, then shoot video of the whole thing and post it to the newspaper.com? I think so.

Think about what that creates: a new product (video of what should turn into a civic roundtable discussion on news topics), new behavior research (how local leaders interact with local media), new marketing opportunities (transparency and accountability) and new modes of operation (video production becomes normal, expected).

What other everyday contexts are ripe for innovation? Ad sales calls. Carriers on distribution routes. Executive team meetings. The building's reception desks and call centers. The press room. The server room. The break room. You can think of more.

One "when" answer I don't follow runs along the lines of, "when the [publisher|owner|group boss] decides we have something hot enough that he/she will invest in it."

One of the friends who asked me about innovation at newspapers said her publisher took a look at the Entrepreneur Fund concept and liked the idea overall. But then he told her he did not intend to set aside a fixed fund amount for innovation overall -- instead, if the local team pitched a good idea to him, he'd fund it.

That's better than no commitment, but not by much. It forces the processes of defining opportunities and problems, conducting research, brainstorming product solutions, and drafting a product plan all into the regular workload of already busy people. And it does so with no assurance that any amount of money is actually available for product development.

How does that executive decide what constitutes a "good idea"? And how do front-line managers find time and resources to do all the groundwork effectively?

The EF concept is a better way because everyone in the organization knows the size of the fund overall, and the sizes of funding rounds that have been awarded to specific projects thus far. People also know that EF funding typically includes a research round prior to any buildout, and in later rounds can even include enough money for project start-up staffing.

Why innovate?

I don't have to explain how the newspaper industry has been disrupted by Internet market forces. Innosight experts already did that.

The alternative to innovation for the newspaper industry, already wounded by generational changes in consumer behavior and now disrupted by the Internet, is to manage certain decline. Now I don't believe the printed newspaper business declines to zero in the foreseeable future. But without innovation it will decline to a set of niche publishing businesses at much smaller scales than present, not all that different from Ben Franklin running a screw press.

"Why?" is a search for motives. We already have several, right?

How do we innovate?

Answers to "how" may be a bit clearer based on the discussions of who, what, when, where and why. But since the "how" part is where I cast much of my energy these days, I do favor a certain series of steps:

1. Opportunity and problem exposition. Local executives can and usually should drive this, unless the opportunity or problem applies more broadly in the industry. Even then, the locals should apply their own market's indicators to the exposition.
2. First-round funding. Don't force operating staff to shape an idea to a ready-to-launch state before you decide whether it's worth funding. If you think you have an opportunity or problem big enough to warrant development of new products, put up enough money now to find out by conducting the next three steps.
3. Market research. Learn how consumers and businesses behave relative to the opportunity or problem area.
4. Ideation, open brainstorming and idea refinement. These steps should be led by either a local or corporate innovation manager skilled in group brainstorming and converting broad concepts to actionable product ideas. Use findings from market research as ammunition for brainstorming.
5. Product planning. The innovation manager should craft plans sufficient for executives or a steering board to make a decision on second-round funding, which should take the product through a pilot launch and a trial operating period. So the plans will need to include forecasts of development, operating, staffing and marketing costs; adoption rates and trends; revenues, if any, and trends; and decision criteria at the end of the trial period. In other words, a pro forma and high-level project plan.
6. Second-round funding. If the funding decisionmakers buy into the product plan, put up enough money now to make it happen.
7. Product development. I'd only rarely define an innovation as a product you can buy from a vendor, change the header and put out there under your own name. More often, this process will consist of either custom development ("build") or integration of available components to make your new product ("assemble"). Given the relatively high failure rate of new products, development should focus on products that can withstand usage enough for the trial period. It is not necessary to develop a product ready to handle the most wildly optimistic estimates of scale after three years. Rapid growth and the need to scale enabling technologies will be nice problems to have ... later.
8. Launch. This is not just a milestone where you throw a switch and the product becomes real to the rest of the world. Launches require effective ramp-up and post-launch marketing and promotions. And even the nature of a launch itself can vary by type of product. Many Internet start-ups build word-of-mouth interest in their products by opening invitational or public "beta" periods before full-on launch. Customers get to try the product and provide feedback, but they get no guarantee that it's ready for prime time.
9. Trial operations. A product needs to be in customers' hands for at least a brief period to determine if it meets their needs or wants. If a product plan was done right, it will include criteria the funding sources and product managers can use at the end of the trial to determine next steps. Use those criteria to measure product performance frequently during the trial. The plan should also include some latitude for product adjustments to respond to real-world usage during the trial period.
10. Review trial results, determine next steps. I agree with the Innosight folks that it's important to have an early opportunity to review a product's performance and adjust its trajectory -- even kill it if it just doesn't seem salvageable. Carry enough new products to market, and eventually you'll hit a few that will take off and become sustainable businesses. Fund the winners until they can pay you back. But even among the successes, almost all will need some adjustments. Among the rest, the important thing is to learn -- expect to learn, have a process to learn -- from even the failed products. Move on, but don't just move on with a shrug.

The product development phase seems to be the part people ask me about most, perhaps because my role in it these days is the "how."

People have very strong feelings about what they want to do and the methods they want to use. I think that's because product development yields the most tangible sense of accomplishment. Some people love the process of building or remodeling a house. Others are happy just to live in it.

As it relates to Internet-based products, I do have a bias on making build-vs.-buy-vs.-assemble decisions. Most of the time, I am an "assemble" guy, though from what I've said before I couldn't blame you for thinking I favored "buy":

Don't try to build what you could buy, license or form business relationships to share. Most of the required functionality and componentry for local search products is done already, by a choice of service providers in many cases. Why pay for and try to support a one-off solution if you can't point to a clear differentiator in the resulting software? Cool user interface tricks are fleeting competitive advantages at best. And the command-and-control mentality that leads to a "stick-built" development strategy usually also leads to software that arrives at Version 1.0 and never gets past it.

That guidance relates to online local search/directory products -- a category where much of the value proposition lies in the directory data itself, not the technology components that make it searchable.

In other product categories -- social/participatory sites, event guides, even general newspaper.com functionality -- the world of open-source software and componentry offers many alternatives to buying packaged software solutions or even turn-key consumer products.

Of late, I spend considerable time adapting well-supported open source packages to specific product concepts, from the EF and elsewhere:

• If the product concept relies on active participation from a large user base, I start from Drupal, which has a strong user profiles, roles and permissions system at its core, and interactivity built into every module.
• If the concept seems to be closer to an individual or group blog, I start from WordPress, my current favorite among a wealth of good blogware tools out there.
• If the concept is more transaction- or commerce-based, again, tools abound. Drupal has a well-supported e-commerce module. But some packages are built for e-commerce through and through: ZenCart and osCommerce are two leaders here.

Again, I am not a programmer, and that fact explains part of my bias toward open-source packages supported by large developer communities. I can configure and extend these to do my bidding, but I can't write programs from the ground up to do that. Programmers may have a different bias: in their eyes, those packages may not be developed the same way they would do them, or with exactly the same functions, or to their standards.

Technology developers have key roles in innovation, even in the newspaper world. Bought software or assembled components can't do everything you want, and by their nature, they may take projects away from innovative concepts and toward "me-too" features. Developers can build to specifications, and fill in gaps in available components.

But I think those roles apply best and most often after a product has passed its trial period and begun to scale. Custom developers may be the best way to get that last 10 percent of functionality that might not have been available in bought or assembled components. They may be the best people to redevelop or upgrade the product so it can stay stable and strong as usage grows.

It's easier to justify custom development when you have a hit product on your hands. Versions up to 0.9 can be assembled from components or bought. Version 1 may simply be the same functionality with some bug fixes and production hardware. Then, get developers working on Version 2 only when you're sure there will be need for a Version 2.

Conclusions

This long and winding essay does not represent everything I have to say about innovation, but it touches on most of my advice and opinions for newspaper operators based on personal experience.

I hope it generates some discussion, questions, debates and disagreements. I need to keep noodling this myself, listening to others' opinions, and refining my own. Sometimes it feels as though arriving at a method and mindset for innovation is as much trial and error as the product development process itself.

I wish us all good luck with that.