Innovation

"When I examine myself and my methods of thought, I come to the conclusion that the gift of fantasy meant more to me than my talent for absorbing positive knowledge. (Albert Einstein) "

Business Intelligence is usually the approach towards enhanced results. Normal logic and common sense will do the job. There are however situations that ask for a different approach. When the boundaries must be pushed, when something new must be introduced to solve the problem or out smart competition. We often refer to this as innovation, but what is innovation really.

The dictionary gives three possible interpretations;

Sense 1
invention, innovation -- (a creation (a new device or process) resulting from study and experimentation)
· creation -- (an artifact that has been brought into existence by someone)
Sense 2
invention, innovation, excogitation, conception, design -- (the creation of something in the mind)
· creativity, creativeness, creative thinking -- (the ability to create)
Sense 3
initiation, founding, foundation, institution, origination, creation, innovation, introduction, instauration -- (the act of starting something for the first time; introducing something new; ``she looked forward to her initiation as an adult"; "the foundation of a new scientific society'' )
· beginning, start, commencement -- (the act of starting something; ``he was responsible for the beginning of negotiations'' )

The first is the introduction of a radical new design mostly of a physical nature. The second refers to the creation of new concepts in thinking and the third to a change in appearance (age, organisation etc.) This is of course only part of what innovation is about.

There are situations where a status quo is reached and there is no need of radical change.

Is the renewal of a pricing schedule an innovation, is the change of packing material innovation or just a change in market approach. I would like to think differently.

Life Cycle Positions

Every product or service knows three lifecycle stages;
The technology stage ( based on the introduction of a radical new technology e.g. electricity vs. steam). At first small innovation steps leap-frog each other in rapid succession. Later on the dominant technical design arises and is no longer a competitive force.
The marketing stage (based on the company’s or product’s image). In this stage functional attributes are added and enhanced. They are competitive until even these enhancements die-out.
In the third stage it is all about production and distribution. The product price is the main driver so new production and distribution formulas will be developed.

In my perception innovation applies to the introduction of a radical new approach. At the end of a products life cycle when cost efficiency is the main driver companies have to find a way out of the snake pit. They are used to work with the dynamics of their own market and it is hard to think out of that box. Common sense is not sufficient to solve the cost/investment dilemma. It is time for creation. Time for something new.

It is well known that true innovations are seldom the result of activities of established companies. With the rise of new technologies the early adopters (often only one or two individuals) create the radical new design.

Can companies that are aware of their life cycle position create or facilitate an innovative environment? I truly think so!. But there are rules to follow.

Innovation process model

First of all you have to realize who you are and where you stand at any time so you will not be taken by surprise when your margins diminish. Secondly you have to have a vision of the future. A roadmap to achieve that future and a strategy framework that gives room and funding to move to forces within or without the company

When you plan to organize innovation you should apply a kind of innovation process model, in which you define steps, targets to achieve and parties to involve. You’ll have to be aware that internal sales of these activities and participation off key personnel are paramount. If you fail to install a mechanism that allows for participation and knowledge sharing you’ll probably end up spending money on a one off project instead of adding permanent value.

In my capacity as business development director for a Dutch based ICT company I had very good experience with my cooperation with communication and marketing staff. All innovations were presented both internally and externally, creating a sense of success with both customers and staff.

The figure above shows how a typical process model could look like. Every stage begins with the plan from the stage before and delivers intermediate management information and information exchange with the standing organisation.

Laws of innovation

I would like to add my laws of innovation in an arbitrary order. Of course this list is incomplete and does not apply to all circumstances. It is mainly meant as a source of inspiration;

Conceptualize ideas and then criticize them and put them to the test.
1. A launching customer is only the beginning
2. Human metrics dominate the success of new innovations
3. Adoption of new services / products do overthrow the market with the speed of human aging
4. Never innovate within the standing organisation, old and new will fade each other out, resulting in high costs and bruised egos.
5. Life cycle behaviour (innovate, optimize, consolidate, produce ) end of life cycle
6. Willingness of organisations to listen to its and other “consumers”
7. New innovations at the end of life cycle are almost always integrated value propositions, rarely created by the traditional market leaders

And specifically for media companies

8. The gravity of content reduces due to the introduction of newer / smaller and more divers carriers (Internet TV, digital TV are mainly theme targeted) e.g. content will circulate faster. BREAK UP THE CONTENT BUNDLES
9. Creator roles will be more distributed due to specific interest / target audiences

And what do you think of John Thackara’s laws posted at www.openingdoors.com . Innovation never sleeps!!
Power Law 1: Don’t think of a new product. - think social value.
Power Law 2: Think social value before tech.
Power Law 3: Enable human agency. Design people into situations, not out of them.
Power Law 4: Use, not own. Possession is old paradigm.
Power Law 5: Think P2P, not point-to-mass.
Power Law 6: Don’t think faster, think closer.
Power Law 7: Don’t start from zero. Re-mix what's already out there.
Power Law 8: Connect the big and the small.
Power Law 9: Think whole systems (and new business models, too).
Power Law 10: Think open systems, not closed ones.
Posted by John Thackara at July 18, 2006 02:54 PM

Open source innovation.

When radical new approaches are needed good logical thinking is normally not enough. New and creative angles have to be found. But how do you generate creativity. Can you stimulate people that run a ground in a complex situation to think differently about the challenges they are confronted with?

Of course you can, but I you need techniques and sources. Fresh views from outsiders, analogies from different markets, products, countries or, highly favoured in scientific circles find analogies in nature. The perception of someone confronted with a dilemma is usually limited to a small circle. Open source approaches can resolve this problem.

Workshops

When you know what or who you are you’ll probably know what to do. There remains one last question. How are we going to do it.

I advise companies to take time to think things over and work together on this issue. I have done many workshops with different types of companies in healthcare, finance, retail, publishing etc. We were well prepared sending questionnaires about the ten most relevant issues to key personnel. The results were always presented by the most senior officer at hand, preferably the CEO.

Although every company requires a different approach there are some issues that have a generic character.

When starting a workshop we always took time to change the group’s attitude, to have them think out of the box. We used poetry, arts, association techniques and made a lot of fun.

Secondly we established the rules of engagement.
o Everybody’s opinion counts .
o All participants are equal
o If you criticize you’ll have to bring in an alternative
And so on..

During the third stage of the workshop we went to the idea generating phase. Everything is possible and criticism is not allowed.

In the fourth stage we went through personal presentations of the current status and the personal views of all participants.

Finally we went back to the idea stage and projected the ideas on the current situation. This resulted in a vision of the future, priorities of change and in the end in a mini business case, which had to be enhanced after the workshop.

The business case was the framework for change and all participants had their share in creating it. All workshops came to the same conclusion.

o We whished we had done this before.
o Finally we had time for each other
o These were the perfect conditions to make us use our knowledge to our advantage
o Now we understand each others challenges
o This improves our team spirit

The execution of the business plan made is yet another issue. You’re your company must specialise in change management itself, because this is only the beginning. Be careful making your company dependent on other companies knowledge. We’ve all seen what the IT business is capable off

We stand at the beginning of an era in which customer relationships will be changing constantly. The company that stays closest to itself will have a competitive advantage

You must realise that these types of innovation are so important that you have to do it yourselves. Implement a change team, look at the governance issues and above all repeat the sessions on a regular basis and evaluate progress.

To address innovation inside a company key personnel must work closely together. In the last ten years I have facilitated workshops in various lines off business like: Health Care, Retail, Finance, Publishing, Logistics and Education.

Let me give you an example of the proceedings

Antwerp September 2003
Gathering of senior executives of a commercial bank.
Topic; Innovation

Quick Scan

We used a method that gives a brief overview of a company’s status regarding innovation. If you use this model, remember to ask your key personnel (ICT, Marketing, Communication, Strategy and Operations to fill out this form. When you aggregate the result into one form you can execute a gap analyses in the form of an open discussion with the professionals involved.

The quick scan addresses various fields like vision, strategy, goals, innovation process, knowledge, people and reward.

The results of the discussion will give insight in;
o Do we address innovation adequately on a strategic level
o What does my company think about its innovative performance?
o Do my people feel free enough to innovate
o What do we need to do next.

We had key personnel fill out the form for the current state and then repeat the same routine asking where the organisation should be.

The answers surprised us because the results differed. It was a fine start to creating the right conditions for innovation. We discussed the findings with the entire staff and drew up an action plan to increase the innovative capabilities of the organisation.

Once you have an idea on innovation organise it according to the two sets of laws I presented earlier.

Summary

Means : The true driver behind innovation is an open eye, an open mind and common sense. This implies the recognition that in certain situation common sense is not enough. Mobilise the right force within your reach.

Message : Innovation is a sign of strategic leadership. The why and how is the message to send. Include all stakeholders.

Media : The best way to facilitate innovation is to free the best minds available and resolve their possible financial worries.

Technology push

"The invention of new technology pushes functionality forward. It forces competition to innovate and find new product / market combinations outside day to day business."

The first personal media devices were introduced in the late 80’s. So called portable phones were available. They were large, they were heavy, they were ugly but they were the first tot deliver the promise of communication independent of time and/or place.

This apparently was so revolutionary that people took all the disadvantages for granted and started using the portable phones.

The new technology now overthrows the entire communications market. In the Netherlands the penetration of mobile devices is a staggering 102,9%. That is more devices than people!!

The innovations as seen in the market still lack too much direction to be certain of new dominant designs. Innovations can be seen in the areas of;
1. Basic machinery (Technology)
2. Business orientation (Business models)
3. Lifestyle orientation (Information distribution)
4. Entertainment (Leisure concepts)

But it seems evident that the ultimate personal media devices will emerge within the next 10 years. These are so personal that you will take carry them with you at all times (beach, bathroom, party, work, travel, etc). A nice current day example is the head band that transfer MP3 audio signals directly to the skull. Fantastic for outdoor activities under all sorts of conditions. Even swimming is possible.

I expect that these new media centres are to have functions like online music and video streams, Ability to project (wall, towel, paper etc.) and be hands free at all times.

Look for instance at the new Portable Play Station by Sony and realise yourself that this is just a first generation solution. Within 15 years at least two new generations will be introduced with superior technology, superior communication possibilities and superior and more diverse functionality. May be you can even read books online, chilling in you hammock.

Still a major shift in mobile devices lies ahead. Think of he promise that voice technology holds in using interactivity anywhere and anytime, without additional gadgets as keyboards, styluses.

This technology push will influence the interaction between media and its content on one side and the “consumer” on the other.

Technology has always enabled the rise of new media. The figure below shows the introduction of new technology and the resulting introduction of new or better media types.

ince the introduction of personal devices innovations have followed each other in rapid succession. What functionality will follow and how can old school media companies integrate this in their distribution channels. The life cycle theory states that there is still no dominant technical design in personal devices, not the machines themselves, nor the way they are connected. Wireless possibilities tumble over each other. ATF3, GSM, EDGE, UMTS. I’m sure that after these 3 generations a 4th and dominant distribution system will emerge with few providers to choose from. The same goes for the devices. From simple telephone to multifunctional device, incorporating a wide range of functionalities like; Telephone, Computer, Audio / Video player / TV, Book, Wallet, ID, Passport, Drivers license, Health records, etc.

In short all of you. Everything is possible. Fantastic in one way, a frightening thought in an other. Your complete profile stored in one place. The device will hold the key to everything. I will not go in to ‘Big Brother” discussions. But there is an urgent need for privacy legislation and privacy technology.

Technology push always behaves in the same fashion. In the period I was responsible for business development with a Dutch based ICT Company, we addressed the topic intensively. Central theorems were discontinuity and life cycle management. I will describe the latter in a separate chapter.

Discontinuity always follows the introduction of innovations. All supporting systems, all basic technology, all communication theory will be stirred up once more

But there is also good news. The introduction of new competition brings out the best in old school professionals. People hate change, they will find ways to defend themselves slowing the success of the new technology / medium.

Here’s a nice example

The introduction of a new energy source – electricity – took 60 years to overhaul steam technology in terms of market share. In these 60 years steam technology improved over 30% in efficiency. Something they hadn’t achieved in the 50 years before the introduction of electricity. Competition and new technology, an inspiration for us all.

Summary

Means : Expect strong and rapid innovation in the fields of infrastructure (the network), functionality (Webx.0 programs), and nodes (personal devices). Be cautious with investments and analyse the technology push and the status of life cycles. Best use lease constructions to service your digital needs.

Message : Show off your innovative actions, customers love it.

Media : There is no room for the introduction of new media left. May be holographic projection is one step further than second life and its look-a-likes. The information distribution network is complete but still limited in capacity.

Consumer behavior and media

“New communication techniques force communication professionals to focus on the individual consumer, and to create a comfortable “trusted” environment in which the advertising message plays a limited role”

Every marketer executes an analysis off current competition on a regular basis. The central question being: what or who are my competitors?

In the case of lets say - Coca Cola - you could say that competition is PEPSI, FANTA and 7-UP. Some would argue that when the time is there to consume Coca Cola others may choose wine or coffee thus expanding the definition of competition. You could also state that competition is every fluid that passes any consumers throat, making even water competition. Not an easy task competing with water!

What this says is that there is a maximum to a product a consumer can handle in a fixed amount of time. This also applies to media. Consumers have only a fixed amount of time to spend on media and news gathering.

Mobile phones and the internet were introduced as new media in the early ’90ties. The main differences with “old media” are the fact that they are personal and interactive. This may seem obvious, but the impact of these differences is immense. People were able to connect to each other in a different fashion in the invisible virtual world.

Young and old

The virtual environment has one aspect to it that makes it very different to get used to. Research shows that people of the pre internet generation have less affinity with the digital world than people grown up with mobile phones and the internet. These differences are very persistent. My daughter teaches my mother how to send an SMS message en again and again ends up sending it for her.

This difference in behaviour has been reason for marketeers and publishers to target new initiatives at the younger generation first.

This even accentuated the difference between young and old. Despite the “Internet Winter” in 2002 a new revolution unrolls itself meanwhile, incorporating young and old. Since these differences are diminishing I will leave this aspect out .

Virtual (=not real?)

From Wikipedia, the free encyclopedia
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Look up virtual in Wiktionary, the free dictionary.
The term virtual is a concept applied in many fields with somewhat differing connotations, and also, differing denotations.
Colloquially, 'virtual' has a similar meaning to ' quasi-' or 'pseudo-' (prefixes which themselves have quite different meanings), meaning something that is almost something else, particularly when used in the adverbial form e.g., "He's virtually [almost] my boyfriend". The term recently has been defined philosophically as, that which is not real, but may display the full qualities of the real.

Unlike in the physical world no roadmaps exist for the fast growing digital world, so who can tell what’s in it? Structure portals have grown in abundance, structuring the information on the net. Later search engines emerged, actively and automatically structuring information (but with a commercial motivation). Personal search agents are already available but not still not widely used.

As with the brain, virtual networks establish themselves. When a connection – or relationship – is satisfactory, the relationship will be used more frequently in the future, becoming a dominant path. This mechanism is based on a principle known as positive feedback. This principle is common in education, training and marketing. It influences behaviour in a positive way.

Once a path is dominant it will remain so since people are habitual and basically very loyal.

Still, the invisibility of information in new media requires a different approach towards customer behaviour. Customers have to de directed to or presented with the desired information. Other media are necessary to achieve the desired results.

Multi tasking

Media savvy people are able to use multiple media at the same time. This is like reading a book while listening to the radio. Recent research in The Netherlands executed by “Spot” shows that 64% of the time people are watching TV exclusively, while during the other 36% they have other activities besides watching TV. They state that other media have lower percentages of exclusive attention.
TV 64%
Surfing the Net 45%
Reading a magazine 39%
Mobile telephone 33%
Reading a News Paper 32%
Listening to the radio 7%
“Spot” is an organization that tries to attract as much advertising money to TV stations, so their research may be biased. Nevertheless, TV is as entertaining wallpaper, always there, while other media have a higher access threshold.

One has to ask oneself if multitasking is really possible. We all know how hard it is to do two things well at the same time. However clever, the brain has limited senses.

Since attention for a medium can also be expressed in media value (- or advertising income -) a market analysis for example for magazines should extend itself to all other media types available. Of course one could argue that the newly introduced media types are only frequently used by the younger generation. That it’s weight in the analysis should be seen in relation to its use. One has to bear in mind that the penetration ratio of these new types of media is gaining force rapidly.

There is a historical aspect to this all. Our society has developed rapidly after the Second World War We had to work together as teams to build up our lives on the rumbles of war. Broadcast behaviour and media were useful ingredients to find back our common identity. It took some twenty years and a new generation to realize that individual values like freedom of choice were at least as important as common values. It took a revolution of flowers in the western world to close the difference between generations. Nowadays individuality is common sense. Even young adults deliberately develop their own style and value sets. They even publish it in their own digital social networks.

I’m not educated to analyse sociological developments but there seems to be a strange correlation between the type of information distribution and the current social context. The broadcast media of the 50’s and 60’s and the social environment at the time, only one goal: rebuild society. The networked media of today and the individual perception of the younger generation have a more individual angle.

Broadcast media are losing their role as a trusted friend to media that are able to create more complex relationships such as the internet and especially the mobile devices. Let us compare media on the level of screens and see what role they play in people’s lives.

Screens

This matrix below lists types of screens versus distance which results in a span of attention (media value).

The same exercise is valid for paper means of presentation.
Poster – leaflet – catalogue - news paper – magazine – ‘blog’.
The reader’s attention extends itself over a longer period of time towards the end of the chain. I intentionally added the blog type at the end of the chain because I believe there is no paper alternative replacing or out-smarting the current day magazine on short notice. Two reasons follow;

The paper magazine as it is today is at the end of its life cycle. Only price and distribution are discriminators. Old brands lead the market and new introductions fail in rapid succession, but magazines and new paper are here to stay they will have to find their place and synergy with other media.

Browse vs. read

The difference between browsing vs. reading must not be left unnoticed. There is a relationship between the quantity and depth of information that is transferred from medium to user and the medium used. It is not easy to read long articles on a computer screen or the internet. It is virtually impossible to browse and understand a scientific dissertation on a mobile phone screen.
Although my lists of screens and paper media are incomplete they draw a picture of a long historic development that will come to an end shortly. The noun ’media’ became regular in speech and journalism in the 1920’s. The etymology of the word media, where intermediate is meant, is off course much older.

Online Etymology Dictionary - Cite This Source media
"newspapers, radio, TV, etc." 1927, perhaps abstracted from mass media (1923, a technical term in advertising), pl. of medium, on notion of "intermediate agency," a sense first found 1605.
Online Etymology Dictionary, © 2001 Douglas Harper

The claim of marketeers is that they sell products by drawing customer’s attention with the use of communication media. They have to influence the customer’s behaviour towards that specific end and will use the most effective way of communication.

They will invest in three main issues; First they’ll maximize the number of eyeballs or viewer ratings. Secondly they’ll try to maximize the span of attention (in actual minutes or in visit frequency). Thirdly they will send the appropriate message.

Types of marketing

The figure below relates types of marketing to the span of attention in the same way I related screens to the span of attention.

The introduction of new media on a historic scale show that until the beginning of the twentieth century media were only paper and mainly used for information exchange. The use of newspapers was reserved for the upper class. Marketing became evident when newspaper makers found themselves in a world full of competition and had to find new revenues. Although the word marketing is as old as the Middle Ages. The profession originates from the early 1920’s. Could there be a relationship between the use of the word media en the birth of a new profession?

Dictionary.com Unabridged (v 1.1) - Cite This Source
mar·ket·ing /ˈmɑr kɪ tɪŋ/ Pronunciation Key - Show Spelled Pronunciation[mahr-ki-ting] Pronunciation Key - Show IPA Pronunciation
–noun
1.
the act of buying or selling in a market.

2.
the total of activities involved in the transfer of goods from the producer or seller to the consumer or buyer, including advertising, shipping, storing, and selling.
[Origin: 1555–65; market + -ing1 ]
Dictionary.com Unabridged (v 1.1)Based on the Random House Unabridged Dictionary, © Random House, Inc. 2006

Now a days consumers are confronted with a wide range of information sources to choose from. The sources chosen are often habitual. Older people refer to newspapers while the younger generation relates to digital sources. The first mass newspapers emerged with the new printing techniques around 1900. Magazines followed shortly. Of course newspapers and magazines have been in existence long before that, but here I would like to apply the mass type of the product. (The first magazine was Gentleman’s Magazine in 1731.)

Introduction of new media has come to an end. Modern media can reach anyone, anytime and anywhere. What more can an info carrier achieve. From now on innovations will take place in the areas of context, media synergy and consumer participation. In other words; functionality – software – application?

Customers have to divide their attention between media. Their time is limited to an absolute maximum and they have a lot to choose from; News paper, Radio, Film, Book, Telephone, Television, Magazine, PC, Mobile Telephone, Internet, Personal Media Centre, PSP and so on…

This means that all these media have to compete for a share of attention or a share of mind. Compete with water so to speak. This also means that new competitors will come out of the wall they are never your regular competitors, because your competitors will likely follow your strategy..

Mega Consumer Trends

Marketing research defines six mega trends for the next two decades or so. Here they are;

o Back to the roots (time for your self)
o Clanning (participate, self confirmation)
o Being alive (consciousness, health, life)
o Cocooning (protection and comfort)
o Egonomics (consumers seeks recognition)
o Vigilante consumer (in search for value, guard quality, represent customers , environment)

These trends all show that the consumer is in the central position. They chose when and where to consume and under which circumstances.

According to trendwatching.com trends for 2007 are;

o Status lifestyles (show – off )
o Transparency Tyranny (bad producer behaviour will be punished)
o WEB + (consumer generated web environments web 2.0 etc may be up to 5.0)
o Trysumers (try before you buy)
o Global brain (join forces, social networking etc.)

These trends all show high consumer involvement. Share of mind is key in modern publishing and/or marketing. Publishers and marketeers need to innovate or they will lose their grip on consumer behaviour and thus on their own media value.

A whole new attention related economy will develop.

Summary

Means : Do follow technology trends and place them in the appropriate life cycle. Don’t fall for fashionable solutions but look at the true value of infrastructures. Web 2.0+ will be the driving force behind new introductions of network based applications, independently available of place, time and device.

Message : Marketing and communication initiatives should always aim at customer participation. Treat customers as equals. They are media sensitive and ask for proof. Make them belong. Don’t show off!!

Media : To generate enough eyeballs different media or communication strategies must be used to generate media synergy within one communication concept.

The changing media landscape

“Internet as a communication technology is just another duck in the pond, with specific characteristics. As soon as communication professionals realize that the context is so much stronger than the instrument it will take its normal place in the media mix.”

Life was easy when the herald shouted his message over the market place, reaching as many people as possible. Word of mouth was the only source of information since most people were illiterate. Only the upper class read books. The introduction of print changed this radically in the middle of the fifteenth century. Distribution of information became much easier because of the increasing number of books published. It took almost another 500 years before the first the first radios entered our lives around the 1920’s. The cinema came shortly after that and soon the first TVs entered our homes, followed rapidly by the computer, the internet and the mobile phone. Can you guess what’s next?.

It seems that the true media development (e.g. means of distribution) ends here. Ok, the technology push will enhance functionality of all media. Even technical synergies between them will be introduced. Audio books, portable media players with film etc. anything goes, but we have filled the media gap from eye to eye and from ear to ear. In networking terms this means that every peer has its node, the network is complete. Just give yourself time to realize that this is in fact a historical moment that will have an influence on all of us. The way we work, communicate, entertain ourselves. Now only logistics and price remain drivers for the “gadgets”. The network will improve in capacity and reliability but it is complete. It will be able to connect to all thinkable devices (cars, phones, PDA’s, coffee machines, the Hubble telescope and people).

There is, however, a parallel development. All these means of communication allows us to exchange information in a commercial context. From the early days when hunter gatherers shared the resources they had among the members of the group. First through trade, later at the markets in the cities centres and the travelling merchants of the middle ages. Today we see different types of communication (and marketing) when products and services are sold. Value based, product based, image and life style marketing are quite fashionable these days.

It appears that a firm correlation exists between the type of marketing used and the media involved. You could even state that marketing evolved with the introduction of new means of communication and that the type of distribution (the hardware, the technology push) is the determinating factor.

Development of marketing techniques


In this matrix I relate types of marketing to pay-off and effort. But you can replace the X-axis and Y-axis indexes with a few other developments.
For the X-axis you could use different attributes of the marketing techniques used. Like;
Communication device, more intricate marketing requires more sophisticated media
Pay-off,
1:1 – 1:many,
Infrastructure complexity,
Context dependency etc.

And for the Y-axis you could use different aspects to value the relationship
Effort involved,
Level of trust,
Span of customer attention ,
etc.

The paradigm shift shown in figure 4.1 comes down to the fact that the information distribution network is complete (all people are connected). This triggers a series of new mega trends that will lead to a change in customer approach in the future.

o Consumer behaviour trends are based on consumer participation, requiring trusted relationships
o Marketing techniques applied will be cross media, integrated messages with strong relationship building aspects.
o Technology will develop further. The network is complete. Consumer / customer devices will show rapid innovation over the next two decades or so.
o Business processes have reached the customer, allowing them to communicate directly with the supplier. The value chain is extended with CRM, Content Management, Identity
o Management, Customer services etc because customers can themselves add value to the company when facilitated properly.

If there is such a dependency between message and technology I think it is reasonable to assume that this relationship will remain. Although I stated earlier that development of media (hardware) is at the end of its innovation life cycle the development of hardware will not stop here, but in the next phase functionality and synergies will be sought out. (In the third phase price and logistics will be the only driver in the market.)

Will this apply to the development of marketing techniques also? The picture above indicates that there is more to it. With the traditional media types and marketing techniques we have always had a broadcast type of attitude.

“The times they are changing”. For marketing techniques this was the first lifecycle and as I see it we are standing at the beginning of a new era, a structural change in marketing approach. Not the way we distribute information is the prime driver, but the way we build and maintain relationships is key.

The first signs are already there. Spontaneous initiatives lead to high customer involvement. All profile sites, all my-space type initiatives. All video audio or opinion boards most of them small, but some of them worth a fortune. Almost all one-track ponies. They facilitate one single functionality, but manage to get high levels off attention which is translated in advertising income.

New and more sophisticated initiatives will be introduced shortly. Social networks off all kinds are already popular, but they will enhance their proposition towards value added communities. Momentarily profile sites facilitate a kind of internet presence for individuals (and companies). They facilitate communication. Future developments will bring other communities in which more functionality will be facilitated tuned to the needs of the community. Imagine an “expat”-community covering communication, family issues, schools and education abroad, pension, insurance and tax information etc. The context seems to be the best way to bundle and present information.

Traditional companies still have no answer to these developments, but they will have to learn how to use these new developments to their advantage.

Summary

Means : Most companies will outsource their external service infrastructures to ASP type suppliers. Hosting of web activities, Mobile phone and SMS services, VoIP, full service office facilities. Etc. The main driver is the strong and rapid innovation that forces companies to use specialists to optimize their earn-back period.

Message : Belong with us, be our partner. The age of loyalty relationships is over. The customers buy-in should be of more value, like true participation. May be even a shareholders relationship.

Media : Involvement requires interactivity and interactive media require networked infrastructures, solutions and business processes to service the customer.

The Publishers Dilemma

“The introduction of interactive media such as the internet and mobile telephony with an individual relationship create a shift in the way to approach target markets”

Recent developments in media have challenged leading specialists to comment on the position of old” media versus the “new” media.

In October 2005 Bill Gates (Microsoft) stated that “within 5 years consumers will satisfy their need for information through the internet, leading to decreasing advertising income”

Martin Sorell (WPP) “The media landscape is changing faster and on a larger scale than predicted. Media owners are losing control. Panic is probably the right word”.

The analysis that the media landscape is changing is as old as media itself. Radio would replace the newspaper, TV was the end of radio and the internet was to dominate it all. This belief resulted in high expectations and deep falls. Even the internet crash off late 2000 was based on the assumptions that media spending would shift from traditional media towards digital media.

Well…. people are still reading newspapers, and magazines. They are still listening to the radio and watching TV and will remain doing so in the future.

So what is actually happening here….

A simple explanation could be that consumers are confronted with, and challenged by, just one more type of media and have to divide their attention, resulting in less attention per media type and consequently a smaller share in advertising income per media type.

It is well known that traditional media like newspapers and magazines see their revenues decreasing. Advertising income is shrinking with 1 – 1,5% annually at least for the last decade. About 10 years ago newspapers were confronted with radical changes in income due to a mix of economic development and the rise of competition in the form of new media.

Innovations on how newspapers and magazines should work for the readers have dominated the printed media industry. Change in programming, look and feel (tabloid formats) add-ins, newspaper and magazines for the weekend.

Of course, these were all triggered by the introduction of new and promising possibilities to reach new customers. The publisher’s old concept was just the magazine or news paper and suddenly this was not enough anymore. The information distribution concept should be of a totally new design, incorporation of the different media. How do you do that?

First of all publishers should worry about their company’s performance and profit. Only those will remain that are able to produce an adequate product against affordable costs. (Also known as operational excellence).

Shareholders value must be maintained. This leads to consolidation in the market place.

Secondly publishers should realise that new media create other and perhaps stronger relationships with their audiences.

Thirdly the paradigm shift in consumer involvement. Consumers can react to, contact, no even better, maintain their own involvement and decide on what they want. Interactive media concepts enable consumers to participate whenever they want. This requires a different approach towards business processes, marketing and supporting technology.

This publisher’s dilemma applies to all companies that inform their customers through paper and digital means. The cross media approach can be very effective. On the other hand multiple media channels have to be maintained against a rise in costs for content management and distribution.

Cross media synergy influences customer relations with consequences for both publishing and administrative processes.

Publishers have to choose;
1. Consolidate, cut cost, find synergy in cooperation
2. Innovate, learn from new market developments, shift formats
3. Change the broadcast attitude

A difficult choice, once confronted with decreasing income. Investing in new developments new ways of publishing and relating to consumers may even affect the internal culture of the publishing company. Powers are shifted and people may become less effective.

Publishers, like any other company, will have to define an attitude towards these innovations. Whether to act or to watch, whether to facilitate or to coordinate.

Most of the times true business development is done out side the companies walls. There are actually two leading criteria opposing each other on what the best strategy might be.

Innovations inside the company are frustrated by “old school representatives” mostly for personal reasons, slowing down the innovation process.
Innovation outside the company may result in beautiful new initiatives, but lack alignment with the old business models and thus lead to loss of synergetic effects.

The real challenge is to be able to mobilise the right forces.

The force to mobilise is in fact the customer. Once they get on the move there’s no stopping them. Give them a place to participate. Some kind of portal that invites them to come back, to communicate with the content and its other visitors, but make sure you do it in the right format. Challenge, surprise, interact. Time to experiment?

Changing business models

What does a publisher sell? When you look at the income statements the dominant income stream is advertising income. Second by far is subscription and third is the income from of the shelf sales.

To understand the impact of this publisher’s dilemma it is necessary to understand two things. How the money flows and why.

Attention is worth money. This is what all publishers know. So they try to attract as much attention as possible. Subsequently they sell this attention to advertisers.

To maximise attention publishers use the mechanism of bundling information. You can see bundles of every size and shape in the world of information distribution. A CD is a bundle for instance, as is a newspaper. Even a subscription can be seen as a bundle that maximises attention. All bundles have a certain amount of consumers trust hidden within them.

Is this mechanism still valid?

When you buy a CD are you sure that you like all the tracks on the CD. Are you sure the quality of a newspaper will sustain over the length of you subscription?

In the online environment consumers are changing the way they choose interesting content. They make on the spot decisions on what to read. When they are not satisfied they are gone. Apparently bundling doesn’t work they way it used tot do. The effects on the business model are evident. Less trust is less attention is less income.
When consumers are turning away from subscription based behaviour and prefer to choose their media usage on the spot, advertisers will probably do the same. This goes for all media. Advertising exchange is becoming fashionable. Internet banner and advertising mechanisms are evolving rapidly. Distribution of advertisements in all online digital media like the Internet, the mobile phone and gaming is changing and in an increasingly intelligent fashion. (look for instance at Doubleclick, Right Media or ADSDAQ among others).

Aside the built in relationship (trust) there is the valuation aspect of it all. A subscription holds the promise of future income. But what happens if this built-in trust isn’t enough anymore to maintain the same level of attention.

Look at it from an investor’s point of view. They value a digital relationship/contact – in social network environments – easily at € 15 to € 50 each. Look at Google Adsense as a spot mechanism for advertisers. Many others will follow. Look at RSS type news streams when it happens and when you want it. Or newer developments like Technocrati self organising the information on the net.

The philosophy behind the bundling information will hold its value, but it remains to be seen if publishers, producers and editors can maintain their privileged position in a world where companies and consumers organise them selves in community type environments.

Summary

Means : The publisher’s dilemma is no longer a technology issue. It is the lack of knowledge how to deal with this new phenomenon. It is hard to divide attention between two different ways of working when you should be treating them as one.

Message : Break up the content bundle in smaller fields of interest and build strong communities around them.

Media : Although the market share of interactive media is still under 5% of the total advertising market. The online media are gaining force with a 40% annual growth. When you include all other activities related to online presence, interactivity has already won the advertising war.