In­no­vat­ing in dis­rup­tion

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Ev­ery year Forbes an­nounces the top 100 in­no­va­tive com­pa­nies in the world, and while most peo­ple prob­a­bly think they would be dom­i­nated by the tech sec­tor, tech­nol­ogy com­pa­nies make up less than 15% of the win­ners.

From con­sumer pack­aged goods, to con­sult­ing ser­vices, phar­ma­ceu­ti­cals, re­tail and hos­pi­tal­ity, the gamut of com­pa­nies that have sep­a­rated them­selves from the pack is highly var­ied. But nowhere is there a sin­gle news­pa­per or mag­a­zine pub­lisher – nope, not even the highly es­teemed and of­ten praised, TheNewYork Times.

It’s no won­der the in­dus­try is strug­gling so much in face of con­tin­ual dis­rup­tions in tech­nol­ogy and so­ci­ety. They don’t have the strate­gic, man­age­ment and cul­tural es­sen­tials to suc­cess­fully in­no­vate to win.

DNA of high-per­form­ing in­no­va­tors

Ac­cord­ing to a re­cent study by McKin­sey & Com­pany, in­no­va­tion is a chal­lenge for most es­tab­lished cor­po­ra­tions be­cause they are bet­ter at ex­e­cut­ing rather than in­no­vat­ing and typ­i­cally suc­ceed by op­ti­miz­ing ex­ist­ing busi­nesses rather than through trans­for­ma­tive cre­ativ­ity.

Through in­ter­views, work­shops and sur­veys with over 2,500 ex­ec­u­tives, McKin­sey found eight crit­i­cal at­tributes that are in­her­ent in high per­form­ers in prod­uct, process and busi­ness­model in­no­va­tion. High-per­form­ing in­no­va­tors…

1 Be­lieve in­no­va­tion-led growth is crit­i­cal and cas­cade tar­gets that re­flect that be­lief down the or­ga­ni­za­tion

2 In­vest in a co­her­ent, time- and risk-bal­anced port­fo­lio of ini­tia­tives with suf­fi­cient re­sources to win

3 Have dif­fer­en­ti­ated busi­ness, mar­ket and tech­nol­ogy in­sights that trans­late into win­ning value propo­si­tions

4 Cre­ate new busi­ness mod­els that pro­vide de­fen­si­ble and scal­able profit sources

5 Beat the com­pe­ti­tion by devel­op­ing and launch­ing in­no­va­tions quickly and ef­fec­tively

6 Launch in­no­va­tions at the right scale in the rel­e­vant mar­kets and seg­ments

7 Win by cre­at­ing and cap­i­tal­iz­ing on ex­ter­nal net­works and part­ners

8 Mo­ti­vate, re­ward and or­ga­nize peo­ple to in­no­vate re­peat­edly

There is no doubt that a few pub­lish­ers prac­tice some of th­ese be­hav­iors, but too many of them don’t be­cause they are par­a­lyzed by their in­abil­ity to look be­yond their ex­ist­ing in­stalled base of users and in­no­vate to per­form man­age­ment’s fun­da­men­tal task, which ac­cord­ing to busi­ness vi­sion­ary, Peter Drucker, is “to cre­ate a cus­tomer.” By fo­cus­ing on at­tain­ing value from cus­tomers, they lose the abil­ity to cre­ate them.

We see this all the time in pub­lish­ing, where me­dia ex­ec­u­tives try to hold on to legacy print sub­scribers with ex­ist­ing prod­ucts, busi­ness mod­els and dis­tri­bu­tion chan­nels rather than serv­ing the needs of to­day’s con­sumer – a con­sumer they be­lieve is out of touch with the re­al­i­ties of mon­e­tiz­ing con­tent, of­ten pre­fer­ring click­bait lis­ti­cles over long-form jour­nal­ism.

Is it hubris or ig­no­rance that causes pub­lish­ers to draw such er­ro­neous con­clu­sions? I don’t know. But what I do know is that the 100 top in­no­va­tors on Forbes 2015 list don’t share those sen­ti­ments for a sec­ond!

Let’s take a look at just one – num­ber 29 on Forbes list: Mar­riott Ho­tels.

Mar­riott Ho­tels

Now I know that ho­tels and pub­lish­ing don’t seem to have all that much in com­mon on the sur­face, but look un­der­neath the cor­po­rate hood and tell me this doesn’t sound fa­mil­iar…

Start- ups, en­trepreneurs and dis­rup­tors are ba­si­cally chang­ing the game be­fore most of us hon­estly can even learn how to play it. They are hon­ing in on com­pla­cency in ar­eas where the con­sumer has been over­looked or egre­giously un­der­served.”

Matthew Von Ert­felda, VP of in­sight, strat­egy & in­no­va­tion, Mar­riott Ho­tel

Sound fa­mil­iar? Both in­dus­tries are fac­ing a rise in...

- Mil­len­nial and Gen Z con­sumers who want the op­po­site of what th­ese tra­di­tional busi­nesses are of­fer­ing

- Non-tra­di­tional com­pe­ti­tion that is eat­ing their lunch

- The shar­ing econ­omy, which is sig­nif­i­cantly de­creas­ing de­mand for their ex­ist­ing prod­ucts

Th­ese mega-trends aren’t run-of-the-mill prob­lems for man­age­ment to solve. But devel­op­ing a strat­egy for mas­sive change is no walk in the park – it re­quires a fun­da­men­tal shift in fo­cus and cor­po­rate cul­ture at all lev­els. So, how do com­pa­nies that have re­lied on scale for so long com­pete in a mar­ket that is so dis­rup­tive? How can they lever­age their size and turn it from a li­a­bil­ity into an as­set?

In the case of Mar­riott, they:

- Launched their Blue­print for In­no­va­tion ini­tia­tive 3 years ago

- Es­tab­lished the Mar­riott In­no­va­tion Lab in their cor­po­rate head­quar­ters

- Be­came a “Peo­ple Com­pany” by repo­si­tion­ing it­self around tech­nol­ogy, in­no­va­tion and a higher ap­pre­ci­a­tion of guests and em­ploy­ees

- Ex­per­i­ment reg­u­larly on in­no­va­tive ways to trans­form Mar­riott brands so they can “cre­ate mil­len­nial cus­tomers”

- Last year, it was also ru­mored that Mar­riott may have been con­sid­er­ing a part­ner­ship with Airbnb that would cre­ate a redemp­tion pro­gram for its Mar­riott Re­wards mem­bers.

And their ef­forts are pay­ing off. Be­sides be­ing named one of the World’sMostIn­no­va­tive Com­pa­nies in 2015, Mar­riott…

- Won the Fred­die Award for “Best Ho­tel Re­wards Pro­gram in the Amer­i­cas” eight years in a row

- Has been on Fortune’s Best Com­pa­nies to Work For list for all of the 18 years the list has been in ex­is­tence; con­se­quently, they en­joy a very high re­ten­tion rate for em­ploy­ees

- Ac­quired Star­wood ho­tels (num­ber 93 on Forbes most in­no­va­tive com­pa­nies), mak­ing the merged com­pany the world’s largest and most in­no­va­tive ho­tel chain with a mar­ket cap of over $30 US bil­lion


Look­ing across the pond, in­no­va­tion con­tin­ues in the hos­pi­tal­ity space at Ac­corHo­tels. Faced with dis­rup­tions caused by the shar­ing econ­omy, the largest Europe-based ho­tel op­er­a­tor has em­braced op­por­tu­ni­ties that come with col­lab­o­ra­tive con­sump­tion and new busi­ness mod­els. It re­cently pur­chased three di­rect com­peti­tors to Airbnb and HomeAway - Oa­sis Col­lec­tions, Square­break, and Onefines­tay to bet­ter serve its cus­tomers. Th­ese ac­qui­si­tions are part of a much larger busi­ness strat­egy for the hote­lier. Trans­form­ing them­selves from a provider of rooms and beds into a “travel com­pan­ion”, the com­pany has been in­creas­ing its in­ter­ac­tions with guests five-fold and is heav­ily in­vest­ing in dig­i­tal tech­nolo­gies that help them max­i­mize en­gage­ment with guests across mul­ti­ple touch­points. For ex­am­ple, Ac­corHo­tels…

- As part of its PLANET 21 pro­gram, made eco-friendly com­mit­ments such as en­cour­ag­ing eco-de­sign, pro­mot­ing green build­ing and choos­ing sus­tain­able prod­ucts/tech­nolo­gies (e.g. choos­ing dig­i­tal pub­li­ca­tions over print for guests)

It would be ab­so­lutely fool­ish and ir­re­spon­si­ble to fight against any new con­cept, of­fer, or ser­vices like this, let alone fight­ing against the shar­ing econ­omy. This is where the world is lead­ing us. All of those new ser­vices are very pow­er­ful and very well im­ple­mented and ex­e­cuted. You need to em­brace it.”

Sébastien Bazin, CEO Ac­corHo­tels

- Has com­mit­ted to in­vest in 10 in­no­va­tive start-ups

- Bought an ag­gre­ga­tor of e-tick­ets for trains, buses, mu­se­ums, events, etc. and in­te­grated those ser­vices into their mo­bile app, in­stantly pro­vid­ing more lo­cal value-added ser­vices to their guests

- Was an early part­ner with the TripAd­vi­sor In­stant Book­ing sys­tem and is com­mit­ted to be avail­able wher­ever their guests make their travel plans (even on com­peti­tor sites)

- In­vested in a video com­pany that pro­duces con­tent for young mil­len­ni­als

- Changed the cor­po­rate cul­ture by ty­ing man­agers’ com­pen­sa­tion to guests’ per­cep­tions of the brand and prop­er­ties

- Al­lows mem­bers of LeClub Ac­corHo­tels to earn loy­alty points by tak­ing sur­veys and shar­ing their opin­ions on­line

As a re­sult of th­ese ef­forts, in 2015

- Ac­corHo­tels’ prof­its in­creased by al­most 11%

- Le Club Ac­corHo­tels loy­alty pro­gram grew to ~26 mil­lion mem­bers and was a four-time win­ner at the 2015 Fred­die Awards

- Ac­corHo­tels re­ceived 19 ac­co­lades at the 2015 HM Awards for Ho­tel and Ac­com­mo­da­tion Ex­cel­lence

DNA of high-per­form­ing pub­lish­ers

When it comes to in­no­va­tion in pub­lish­ing there are some me­dia ex­ec­u­tives who are stick­ing their toes into the water, such as TheNewYork Times’ foray into Vir­tual Re­al­ity, but the real deep div­ing is only be­ing done by a select few.

The Wash­ing­ton Post

When TheWash­ing­tonPost was pulled from the ashes in 2013 by Jeff Be­zos and trans­formed from a news­pa­per pub­lisher into a tech­nol­ogy pub­lish­ing com­pany, many me­dia ex­ec­u­tives were skep­ti­cal about the Ama­zon Man’s abil­ity to un­der­stand the busi­ness that took them years to grow up in.

To­day those naysay­ers are eat­ing their words as the benev­o­lent dig­i­tal dic­ta­tor proved once again that the se­cret sauce to suc­cess is not about circulation and ad­ver­tis­ing rev­enues; it’s about putting peo­ple first.

Be­zos broke all the rules by…

- In­te­grat­ing ed­i­to­rial and tech­nol­ogy rock stars in the news­room

- Syn­di­cat­ing con­tent (a sin of the past) from so-called com­peti­tors (e.g. Buz­zFeed, Huff­in­g­ton Post, etc.) on its web­site

- Open­ing up op­por­tu­ni­ties for peo­ple to post their opin­ions un­der “PostEvery­thing” while other pub­lish­ers (tra­di­tional and dig­i­tal pure plays) where slam­ming the doors on com­ment­ing

- Fos­ter­ing in­no­va­tion and ex­per­i­men­ta­tion in the work­force

- Li­cens­ing its ARC Dig­i­tal Plat­form for Me­dia plat­form to oth­ers

- Dis­tribut­ing con­tent ev­ery­where their read­ers are

It’s all about au­di­ence

Ex­ec­u­tive edi­tor Martin Baron re­cently said that suc­cess of ThePost lies in its abil­ity to put read­ers first; and that news­pa­pers were at the cen­ter of the me­dia ecosys­tem; pub­lish­ers should not be afraid to fail.

It’s no won­der 2015 was a break­out year for ThePost as it achieved year-on-year growth of dig­i­tal traf­fic in Q1 that out­paced all other US pub­lish­ers. By De­cem­ber 2015, ThePost had done the un­think­able, edg­ing out The NewYorkTimes, by at­tract­ing 78.5 mil­lion unique vis­i­tors – grow­ing its au­di­ence by 78% in less than a year, with no ev­i­dence of slow­ing down.

In­ter­est­ingly, in Fe­bru­ary this year, the NYT leapfrogged ahead again, mak­ing one won­der if the year-end re­sults lit a bit of a fire un­der The Gray Lady.

In­no­va­tion-in­fused cul­ture

In ad­di­tion to grow­ing au­di­ence ThePost is con­tin­u­ally launch­ing in­no­va­tive new prod­ucts such as, to name a few, … FlexPlay – makes video ad­ver­tis­ing load faster and more in­ter­ac­tive

Ban­dito – per­forms A/B tests on head­lines and images and au­to­mat­i­cally pushes read­er­pre­ferred ver­sions to the site

PostPulse – de­ter­mines what kind of stories read­ers seem to en­joy, based on their read­ing his­tory

Re-En­gage – mo­bile web rec­om­men­da­tion en­gine (not un­like Ama­zon’s) that is trig­gered when read­ers be­come idle or start scrolling down the page too fast, of­fer­ing up sug­ges­tions for other Post stories

Un­der Be­zos’ lead­er­ship, TheWash­ing­ton

Post is dis­rup­tively trans­form­ing it­self into a tech­nol­ogy-driven, au­di­ence-cen­tric me­dia busi­ness where “lead­ers start with the cus­tomer and worked back­wards.” It’s proven to be a rock solid strat­egy be­fore for him and odds are the tech ti­tan will make it work again.

As a pri­vate com­pany we are not privy to The Post’s rev­enues or prof­its and it is highly un­likely that ei­ther are what tra­di­tional pub­lish­ers would con­sider even tol­er­a­ble. The jury’s still out on when those num­bers will start to make sense to us, but given his pas­sion for tech­nol­ogy, hand­soff ap­proach to ed­i­to­rial and au­di­ence-cen­tric vi­sion, I’d put money on this mis­un­der­stood mav­er­ick.

Star Me­dia Group

I bet you didn’t ex­pect to see this pub­lisher show­cased as an in­no­va­tor in the in­dus­try, but they de­serve to be here.

Star Me­dia Group Ber­had is a Malaysia-based com­pany that started in the pub­li­ca­tion of news­pa­pers and mag­a­zines just like thou­sands of other tra­di­tional me­dia com­pa­nies. But un­like the oth­ers, Star Me­dia Group isn’t wait­ing and hop­ing to weather the storms of dis­rup­tion; they are dis­rupt­ing them­selves by con­tin­u­ally di­ver­si­fy­ing their rev­enue streams be­yond news­pa­pers and mag­a­zines to in­clude:

- Mul­ti­me­dia of­fer­ings, such as videos and pod­casts, pho­tos, SMS for break­ing news, blogs, In­ter­net TV and broad­casts of ra­dio sta­tions

- Events, train­ing, ex­hi­bi­tions, in­te­rior and the­matic busi­ness seg­ments

In June 2015, it also launched its Au­di­ence In­ter­est Mar­ket­ing ser­vice, the first by a Malaysian me­dia com­pany that con­nects ad­ver­tis­ers di­rectly with their tar­get mar­kets, tai­lor­ing on­line ad­ver­tis­ing to match the pref­er­ences of me­dia con­sumers.

Be­cause di­ver­si­fi­ca­tion is such a large part of Star Me­dia Group’s strat­egy for mas­sive global reach and rev­enue growth, the com­pany re­branded it­self in 2015 to bet­ter align its var­ied port­fo­lio of prod­ucts and ser­vices to, as Chair­man Datuk Fu Ah Kiow as­serted, “Stay in front of change.”

Re­ward­ing re­sults

- The Star was the first Malaysia me­dia com­pany to hit the six-fig­ure ePaper sub­scriber mark and also the first to in­tro­duce an app that com­bined news and video con­tent.

- In May 2015, the pub­lisher reg­is­tered a 78.2% in­crease in prof­its in the first quar­ter com­pared to the same pe­riod the pre­vi­ous year.

- De­spite the eco­nomic cri­sis that oc­curred in Malaysia in 2015 and the con­tin­u­ing de­cline of print rev­enues, the stal­wart pub­lisher was able to more than weather the storm. Due to the suc­cesses of its non-tra­di­tional busi­ness lines, Star Me­dia Group in­creased sales from the pre­vi­ous year and en­joyed prof­its of ~13%.

- Star Me­dia Group won Malaysia Best Em­ployer Brand Award in 2016.

Are you an in­no­va­tor

Steve Jobs once said that “In­no­va­tion dis­tin­guishes be­tween a leader and a fol­lower.” Are you an in­no­va­tor or a fol­lower? Are you cre­atively trans­form­ing your busi­ness or just op­ti­miz­ing it?

If you don’t know, then I highly rec­om­mend you sit down and hon­estly ask your­self if you are prac­tic­ing the eight es­sen­tials of in­no­va­tion. Rank each of your an­swers on a scale of one to five and add up your score.

Above 30? Then I’d love to share what you’re do­ing with our read­ers in the next is­sue of The In­sider.

If you score be­low 20, take heart in know­ing that you are not alone. Most com­pa­nies, es­pe­cially large es­tab­lished ones, don’t eas­ily trans­form them­selves into lead­ing in­no­va­tors. Shack­led by de­fen­sive, in­wardly-fo­cused bu­reau­cracy, very few are able to com­mit to con­tin­u­ous in­no­va­tion.

But it’s not im­pos­si­ble. Start with one small change in mind­set – be in the busi­ness of pub­lish­ing, not pub­li­ca­tions. Then make cus­tomer-fo­cused in­no­va­tion your rai­son d’être. With those changes in mind­set and fo­cus, you can start to recre­ate your busi­ness plan re­flect­ing the eight es­sen­tials of in­no­va­tion ev­ery step along the way.

Be not afraid. The risk isn’t in mak­ing dra­matic changes; it’s in stick­ing to the sta­tus quo.

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