Paul Clarke has an excellent post in which he talks about the importance of having a purpose when trying to measure things. That’s not quite the point of his post, … Continue reading Measuring with purpose
I was struck last week by the story of the Netflix customer revolt — it shows that even young companies have problems managing change.
To review: Netflix want to shift their business to video streaming, and away from DVD delivery. As part of this they’re reducing the service to DVD customers so that you can no longer add to your wishlist (aka queue) from devices which also allow streaming. There is much wailing and gnashing of teeth.
What’s remarkable about this is that Netflix is only young (14 years old) and yet it’s having problems transitioning from a now-legacy position to something more current. The irony is that Netflix itself was once the radical disruptor and dramatically changed the film rental game. It would like to change the game again, but it’s not so easy this time around.
The darlings of the tech media are the young startups — what innovation! What promise! And the cutest stage-school darlings are the lean startups — thrill as they pivot when faced with insurmountable problems!
But these media darlings too often lack a certain… revenue stream. Or reliable customer base (which is what Netflix has). Or any other success factor that’s generally considered meaningful. And as soon as any business hits on that then they’ve got something they need to protect. And that makes change really difficult. All that promise and innovation and game-changing energy is suddenly anchored by the need to retain that success factor — that thing they’ve worked so hard for for so long.
That’s why any successful business is a legacy business.
There is one thing which will prevent this, and that’s if the business is explicitly designed to continually change. Otherwise even very young companies will find they’re facing similar problems to very old ones.
The other week I joined a number of peers at IndigoBlue‘s November Second Wednesday breakfast to discuss the subject of critical success factors in complex projects. As usual it was … Continue reading Critical success factors in complex projects
There’s a short piece on eBay over at the Wall Street Journal that’s hugely instructive about strategy and technology in a non-technology company. So many lessons in such a small … Continue reading Lessons from eBay: Using technology to push your business
I’m amazed and disappointed that it’s still acceptable for people who run major companies to show wilful ignorance of technology. And I don’t mean what firewalls do or how to get wifi working on your laptop. I mean what it means to the companies they run, how it impacts their people and their customers, and how to make sure it’s an asset rather than a liability. And there was an exemplary demonstration of this on last week’s edition of The Bottom Line on Radio 4.
The programme is a straight discussion of business issues with Evan Davis and a number of business leaders. It’s not dumbed down (any more than it has to be edited down) and is a consistently excellent listen. Last week the guests were Luke Johnson, chairman of Risk Capital Partners, Vincent de Rivaz, chief executive of EDF Energy, and Jacqueline de Rojas, UK and Ireland vice president of McAfee. And they dealt with two major topics: organic growth versus acquisitions, and problems with IT. Luke Johnson in particular seemed to really have problems with technology, and to me there was overwhelming evidence that some of the causes might be rather closer to home than he might like to think.
Coming up is some criticism of what Luke Johnson and (to a much lesser extent) Vincent de Rivaz say, but don’t mistake it for a criticism of them as individuals. The point of what follows is that their attitude is representative of so many board leaders. Even though there are many board leaders who have a very confident grasp of technology issues it’s still remarkable there are so many others who handle technology as if they were wearing boxing gloves.
Problems with technology
As the resident IT expert it was Jacqueline de Rojas who was asked first about her own experience of IT problems, and in particular the bad software update that her company issued in April which disabled many of its customers’ computers. Notably, she responded to a technology-related question with a positive and human answer: “The key in a crisis like that is how you respond; that’s how you’re judged”. Then Vincent de Rivaz was asked if he had ever had any IT disasters, and before he could finish his response (along the lines of “no actual disasters, but we have had problems”) Luke Johnson cut in:
LJ: “Every business I’ve ever come across has always been having problems with [its IT].”
VdR: “We have to invest in our IT and we have to develop our IT systems which we are doing at the moment [with a new online system to help our customers with their bills.]
ED: “What sort of problems have you had with your IT?”
VdR: “The problem is to control the costs. That is the permanent challenge for me, to be sure that we are spending the right amount of money on the IT systems.”
LJ: “All my experience of IT systems is they are always overdue and over budget, and I think it’s a built-in part of the IT industry that they deliberately under-quote and then they may get up on the extras.”
Now there are many problems board leaders could have with IT: We aren’t getting the best out of our technology investments. Our technology portfolio isn’t broad enough to help us in a constantly-shifting market. We don’t have the people who really understand how to manage and change our technology infrastructure.
These are all problems that require board-level investment and oversight. And they are also all questions that, if you substitute “financial” for “technology” all boards do deal with. But sadly it’s okay to ignore those matters if they’re technological, and so the top-of-mind IT issues for our token CEO and chairman are (1) cost control, and (2) IT people are sharks.
Indeed, Luke Johnson seems to have something of a chip on his shoulder about technologists. Jacqueline de Rojas goes on to explain a bit about the difficulty of turning “woolly and aspirational” IT demands into concrete deliverables, but that doesn’t stop him:
LJ: “I think the IT experts blind clients with science, and I think very often they themselves overestimate the benefits, and overcharge for what they do. And the fact is there isn’t another industry, except perhaps pharmaceuticals, that makes the returns on capital and margins that software does. Huge margins.”
JdR: “The level of investment we have to make to stay ahead technologically is also huge. So where do you think that money goes? It goes right back into making sure we stay one step ahead of — in our case — the hackers and cyberterrorists and the competition”
ED: “Let me challenge you, Luke. Is there something different about IT from other areas of company purchasing? Is IT unique in being difficult and awkward for a company?”
LJ: “No, I don’t think it’s unique, but I think it is mission critical, and unquestionably we are all more dependent on IT than ever. I accept all that, and it can deliver huge values, and the very nature of it is it’s constantly evolving. But the truth of the matter is, what other sort of project or product, rather, do you buy that requires these perpetual upgrades and offers such super returns? I was involved with a retailer once, Whittard of Chelsea. We spent, many years ago, the best part of half a year’s profits on building a fully-integrated website. This was in the early days of the web. Within two years we had to throw it away. Because it just didn’t work. We used the wrong suppliers and we made a lot of mistakes.”
To him IT is a homogenous blob, and he transfers his anxieties freely between commodity software sales (“returns on capital and margins… perpetual upgrades”) and individual business change projects (“a fully-integrated website”). Maybe he’s just exploiting the opportunity to have a go directly at a software vendor, because when Jacqueline de Rojas highlights how technology change really does improve our lives he’s having none of it:
LJ: “What are the cost of goods in software? What are the cost of goods? How much does each new program cost Microsoft? Zero.”
Which is silly, because he knows perfectly well that software (like pharmaceuticals) costs a lot of money to create, and Jacqueline de Rojas has already explained the cycle of investment, return, and re-investment that her market demands.
Where the problems lie
I’m not for a second denying that Luke Johnson’s frustration is unfounded. It’s clearly borne from many hard experiences: this is a man who’s job is to cast his net widely across many, many companies, to look into them seriously, and having done this he finds that “every business [he’s] ever come across has always been having problems with [its IT]” and he’s witnessed one of his companies building one costly system only to have to replace it unexpectedly early.
But from where I sit a lot of his problems are of his own making. If you treat IT primarily as a cost then the best you’ll achieve with it is cost control, whereas the best you should get out of it is business transformation. If you think IT contractors under-quote on the basics and expect to make up for it on the extras, then you probably want to structure the next deal differently and be prepared to make it more of a partnership — if you can be confident of being able to act as a partner. If you think IT experts blind you with science then you’re talking to the wrong people — and if you don’t know who the right people are then you need to start filling that gap in your personal network. If you think IT experts overcharge then you’ve created a relationship with conflict at its core and the best you’ll get out of them is the minimum they’re contractually obliged to deliver, whereas you should be getting them to apply their creativity and rigour to help propel your business forward.
The thing that’s really shocking to me is that there are many company leaders like this, who are unashamed of their blunt handling of technology — which is undeniably mission critical — and yet the same people wouldn’t stay a week in their jobs if they demonstrated the same disregard for, say, legal matters or finance.
Which is rather ironic, because earlier in the programme it was Luke Johnson who was called on to be the resident expert on organic growth versus acquisitions, and one insight he provided was this:
LJ: “Many studies suggest that even perhaps a majority of all acquisitions fail to deliver shareholder value. So it’s important to put it into perspective and say if we can achieve returns through organic growth, but perhaps a little more slowly, then maybe that is the more sensible way to proceed.”
Let’s take a second to understand what we’ve just heard: possibly more than half of acquisitions fail to deliver value to the owners of the business — which sounds very similar to his problems with IT. And acquisitions are a significant part of his company’s business — mission critical, even. Just like IT. But in that conversation he wasn’t remotely upset or bitter about this, he just treated it as something to deal with. He could do that because he was comfortable with working in that sphere and, I suspect, because while he might have had his share of acquisition failures they will have been outweighed by his successes.
It seems to me that if board leaders were obliged to grasp technology to the same degree as they are obliged to deal with financial or legal matters then their companies — and their companies’ technology — would be in a much better place.
Two final things
A couple of parting thoughts.
First, some not-at-all-serious observations about Risk Capital Partners. While confirming that indeed they don’t invest in any IT or software companies, I found they do have an interest in InterQuest, “a fast growing IT recruitment business”. So if Luke Johnson is concerned about the high cost of IT professionals then he might want to have a word with them. Also, I couldn’t help but think if software really is the fantastic high-margin business he thinks it is then RCP really should start making some investments there. I don’t know if they really will make a lot of money, but I do know they’ll learn a huge amount.
Second, a much more serious note. Earlier I said that if these sorts of leaders had IT problems then some of the causes were close to home. But it’s also true that some of the causes lie with us technology professionals. If technology really is seen above all else as a cost to be controlled, and if we are finding ourselves in unbalanced, conflict-driven relationships, then we really do need to do a much, much better job at explaining what we do. And then we have to carry that through into our actions. Technology in business is about making the business more effective and people’s working lives better. We ought to be able to find routes to even the most sceptical business leaders to explain that, and get a positive reception.
My public service for today is that of matchmaker, and specifically finding a match for the many online commentators who have a start-up-shaped solution for newspapers’ current crisis of faith and future.
Over on Mashable, Vadim Lavrusik has a useful round-up of “12 things newspapers should do to survive”. It’s good to see a lot of thinking brought together, and nice that the Guardian’s last Hack Day was noted with approval. But if there’s one thing that rankles me it’s the seemingly glib assertion that newspaper companies should emulate Internet start-ups, and which features at number six on Vadim’s list. He says that “creating a startup-like environment that encourages innovation in the newsroom” is one way forward, and cites three sources.
First, start-up veteran Scott Porad on the problem:
Over an 8 year period, my last startup grew from a startup into a corporate environment with several hundred employees and layers of management. For the last 5 or 6 years of that I felt like we spent 80% of our time planning and only 20% of our time doing stuff. […] On the other hand, my current startup is the opposite — we probably spend 5% of our time planning and 95% doing.
Then Mike Briggs on how a newsroom can generate some start-up-like energy. And finally Ryan Sholin of Publish2, who thinks that you should “Make your newspaper function like a start-up.”
Somehow start-ups seem to be the panacea: not only do they make good stories, but it’s so easy to spot the successful ones: for instance Google started in a garage, and Microsoft was started by just a couple of people. And let’s not forget the many, many start-ups from more recent times. You probably remember Kevin Rose’s Pownce.com, which was successfully bought by Six Apart, which loved it to death; or tr.im, which was so successful at making URLs short, they’ve practically made them vanish. And let’s not forget the current media darling, Twitter, which is generating so much profit they’ve run out of positive numbers to express it and have had to start using negative ones. Meg Pickard has a more complete and up-to-date history for those of us with selective memory.
But that’s not to say there’s nothing there; a typical start-up has the kind of drive and energy in its half dozen employees that any corporate CEO would love to have reproduced across their 1,000-plus workforce. I’ve written before on about injecting start-up goodness into the newsroom, so you can go there for that. Mark Briggs does acknowledge all that is easier said than done.
Instead of me explaining why, let me introduce the start-up standard-bearers to the new blog from Simon Waldman. This extract from his first entry is worth quoting at length. Although his examples are older, rather than new, internet companies the principle is the same, being about “the general ways of the online world”:
It has always struck me that there has been a huge amount written about Google, Amazon, Wikipedia and eBay and the general ways of the online world. Some of this is brilliant, and genuinely insightful, some of it is frothy digital euphoria.
There has also been plenty written about what is wrong with newspapers, broadcasters, Britannica, record labels etc, and what they should or could have done; but there have been very few books that I’ve come across that take a systematic look at the what has happened to these businesses – and what they have done that has actually worked, often in the most trying of circumstances.
The point is – businesses that have to deal with the internet are fundamentally different to those that are the products of it. It is great to look at Google; great to admire Amazon, and Wikipedia is as fascinating a social and creative phenomena as you fan find. But if you are running a business that is profoundly structurally challenged, you share very little of their corporate DNA.
Yes, everyone needs to know about their world, but thinking you can just graft on the bits you like from them in a hope that you will ‘get digital’ is no more likely to succeed than putting on a flashing bow tie and hoping everyone thinks you have a sense of humour.
Simon is writing a book for the rest of us, who need to listen to those with ideas about how to save our challenged industry, and who also have the responsibility, along with our colleagues, to actually do the saving. The blog is the online counterpart to that book, which will be called Creative Disruption. As you can see from the extract above, it’s less “What would Google do?” and more “Never mind Google, this is for you.”
In ten or twenty years we’ll be able to look back and see which ideas from who were the wisest. For now I’m going to be a paying a lot of attention to anyone who recognises the fundamental DNA difference that Simon describes, and who deals with it.
These are some thoughts on how news organisations (and specifically those which have a background as newspaper companies) might create new opportunities for themselves. In particular I want to focus on why and how those opportunities might come from outside the organisations themselves.
The thinking behind this piece has sprung from two articles: the first is by David Carr, in the New York Times, in which he seeks an iTunes-like saviour for the news industry, and the second is Jemima Kiss’s thought-provoking response on guardian.co.uk.
What I’m going to present isn’t new, by the way — it’s about being open and encouraging innovation. But what I do hope to add to conversation is the idea that we don’t have to have all the answers ourselves, and that we can — and should — encourage others to work with us. I’m also adding some practical actions to take.
Here’s the structure of what follows:
- Background reading. A summary of the articles by David and Jemima.
- A brief look at the music and news industries. Some similarities and differences between the two industries.
- Why not look internally? Why seeking a solution from within a company or industry, without also looking outside, isn’t sufficient.
- An example of an internally-generated idea. A brief look at AllThingsD.com, which Jemima references with regard to innovation.
- An example of an externally-generated idea. A brief look at the iTunes Store, which David references with regard to innovation.
- How to harness startup-power. In three steps…
- 1. Create opportunities.
- 2. Talk to the innovators.
- 3. Exploit the innovation.
- Wrapping up. Some final thoughts.
David Carr’s article in the New York Times is headlined “Let’s invent an iTunes for news” but that’s rather misleading. He’s actually calling for a way to charge for news content, pointing out that Apple has done this very effectively through the iTunes Store (although he never uses that phrase — he conflates iTunes, the desktop software launched in 2001, with the iTunes Store, the online shop launched two years later and accessed via that iTunes software). He does refer to one or two gadgets which could be an iPod for news (“Now all we need is a business model”), but the underlying point of the article is that content needs to be charged for one way or another.
Jemima Kiss picks up on the gadgets theme and dispenses with it quite quickly — “I think newspapers are wrong to put too much effort into pursuing degradable devices with a very limited potential audience.” Instead she says news organisations can find salvation within, and urges them to “start thinking like startups”.
Both David and Jemima refer to the “newspaper” industry, which is understandable but puts us in a limiting mindset. The companies they are referring to have gone to great lengths to diversify themselves into other media (most notably various digital media) with some genuine successes and we should embrace that. I’m going to refer to it as the news industry, although that’s arguably too broad. We’re all referring to the same thing: the-industry-which-used-to-be-the-newspaper-industry-but-now-reaches-across-many-media-including-paper industry.
The music and news industries do have similarities, which is why David has compared them, Jemima has followed, and others have done so, too. Both are facing declining sales, and many people in each industry hold the rise of the internet as partly or wholly to blame. In both cases their core product is content, and they are both facing the atomisation of this product — from albums to tracks, and from newspapers to articles — as the internet becomes more ubiquitous.
But they differ in the way they have faced the growth of digital media.
Figures from the RIAA show the US music industry in near-consistent decline since 1999, after years of near-consistent growth before. This 1999 point is more-or-less when digital music took off and sharing became easier on the web. The music industry tried to lock down its customers’ new-found freedoms, but unsuccessfully. Only when the iTunes Store arrived did some kind of calm prevail.
In the news industry DMGT’s annual report of 2007 shows a steady decline in UK circulation since 1994/5. From the US the Pew Research Center shows a steady decline in total sales of daily newspapers going back to 1990. In both cases the charts don’t go back further. But unlike the music industry we cannot blame this on the rise of the internet. These downturns started before what-was-then-newspaper content was widely available digitally.
So the music industry might point to the internet as the source of its troubles, but for the news industry the internet was just something that was going on at the same time. Furthermore each industry has met the challenge of the internet differently: the music industry has tried hard to prevent copying of its content, while the news industry has made some efforts in that direction, but has largely let its content go in the hope of rewards elsewhere.
As a consequence the music industry has an uneasy relationship with the internet, and still finds it difficult to get on there. By contrast, in the internet the news industry has another means to market, one in which it hasn’t made enemies. The internet could be the source of the innovation and upturn that it needs.
So if this innovation is to be found, where might the news industry look?
Why can’t news organisations look internally to find a revitalisation for their business models? Well, of course they can, and should, and do. Looking internally and externally for new opportunities are not mutually exclusive, and to not look internally would be a dereliction of duty. That’s why most commercial companies have a a special team dedicated to this — Business Development — aside from the responsibility of each of its employees every day to push the organisation forward.
But seeking solutions internally won’t maximise its dose of innovation. That’s because people inside organistions are most likely to see opportunities through the prism of their work in the organisation: we people who work in large organisations spend 8, 10, 12 hours of every day in these places, and the problems we’re driven to solve are generally those that relate to our daily work, and the particular people and processes we encounter there. Even the Business Development team is tasked with creating innovative opportunities that fit in with the company’s known strengths and current structure, and what it can practically achieve today — radical ideas beyond this are going to be difficult to handle. In general a company will value people who make the company better; it will not be very interested in people who have a great idea that does not easily fit with what it does.
Additionally, I think the rallying cry of “think like a startup” — as positive as it is — is particularly difficult to act on in a large organisation. That’s primarily because large organisations attract people who want to work in large organisations. They are subeditors who thrive on subediting and don’t want to have to produce business models; they are A&R people who love nurturing new bands and don’t want to sell sponsorship deals; they are marketing people who love planning marketing campaigns and don’t want to negotiate office leasing. They are not generally people who thrive on doing it all themselves, which is the driving force of a startup founder. They are people who thrive on achieving wonderful things by being a specialised part of a much greater whole.
Finally, business success stories are themselves unusual, so casting a net into the internal talent pool of one particular company is unnecessarily limiting. By all means we should look to home to find a success story, but we shouldn’t only do that.
To repeat, none of this is to say that innovation cannot be found internally, but we shouldn’t seek it there exclusively.
Let’s briefly compare internal and external success stories…
Jemima uses the example of the technology blog AllThingsD.com as an internally-generated idea, so let’s look at that in more detail.
The site describes itself as “the online extension of the prestigious D: All Things Digital conference” which started in 2003. Its “creators and executive producers” Walt Mossberg and Kara Swisher drove that for four years before launching the blog in April 2007 — or rather, before being able to launch the blog in April 2007, because the site is under the umbrella of the Wall Street Journal.
In ordinary circumstances such move would have been detrimental to WSJ since AllThingsD.com seems to be taking support and infrastructure from the bigger organisation whenever it wants, and yet retaining independence (on stories, production processes and technologies) when the ways of WSJ don’t suit it. WSJ would only have allowed this if there was some clear upside for itself, and of course it’s the conference, which we can readily expect to be a real moneyspinner. Walt and Kara spent four years proving they had a viable revenue stream before they got the support to expand into their own independent blog.
The conference-extended-into-a-website is an internally-generated line of business from WSJ and its parent, Dow Jones, and conference organisation is very much part of their daily business. Dow Jones organises quite a lot of conferences throughout any one year — on finance, economics, and environmental issues among others — and therefore will have a dedicated team of conference organisers to bring each one together. Guardian News & Media has a similar line of business.
None of this is to talk down the conference or the website, which are beacons in the tech industry. But it is an attempt to show their lineage as an outcome of Dow Jones’ daily operational machinery, and the key revenue-generating part of that machinery (conference organisation) is a well-established part of the company. The conference and website will be highly valued by Dow Jones and WSJ, and the kind of business unit that any company would be grateful for. But I suspect that if this kind of business unit was going to be the key innovation that reversed the news industry’s fortunes then we would have discovered that by now.
Now let’s take a look at…
David looks to the iTunes Store as an example of an industry saviour, so let’s consider that.
The iTunes Store revolutionised and arguably saved — or at least slowed the death of — the music industry, yet it was an innovation that came from Steve Jobs, a man outside the industry. It came at a time when music sales were first declining and it’s not as if the industry didn’t have its own ideas to deal with the rise of digital music — but those internally-generated ideas turned out to be quite misjudged.
The iTunes Store gave consumers more freedom over their ownship and use of music. It was never likely to come from inside the industry because, as David pointedly says, “Mr. Jobs saw music as […] an ancillary software business to generate sales of the iPods and iPhones. That’s not a perspective that flattered people in the music business”. We can readily imagine what reaction might have been received by a hapless music company executive if they’d have originally suggested the idea to their boss.
It took an outsider to devise the most workable innovation.
Individual news organisations will continue to discover and exploit profitable seams from within their own structures. But they also need to be able to identify and exploit innovation from outside.
(By the way, I’ve called external innovation “startup-power” in the title here and above mostly in an attempt to be eye-catching. However it does largely capture the idea, and it does chime usefully with Jemima’s call to arms, so it’s not entirely superficial.)
For a long time the music industry tried to fight consumers’ desire to have more freedom with their digital music, and it did this by trying to create new business models entirely on its own terms. It only started successfully getting to grips with digital music when an outsider entered the game, and that outsider is taking a pretty healthy cut of the revenue. The music industry might have been able to dictate better terms if it had more to bring to the table earlier.
The news industry needs to put itself in a better position than the music industry did. I’d say there are three steps which will enable this to happen.
- Create opportunities for external innovators;
- Recognise and make contact with those innovators when they come along;
- Be in a position to best exploit the innovations.
Those are pretty obvious, but they still need careful consideration, because there’s still room to handle them poorly. Let’s take a look…
Creating opportunities for innovators means presenting what you do in multiple ways of accessibility. For news organisations the obvious example is RSS, which in some sense is less consumer-friendly than nicely designed web pages, but makes the raw material (articles) more accessible, and hence provides more opportunities to anyone else building their digital venture.
But large news organisations tend to provide only summaries in RSS, which parallels music companies’ early paranoia of digital music piracy and prevents external innovation. This puts the content out there, but only a bit — the news organisation is still holding it tight to its chest, still not trusting anyone external, and not giving anyone else the chance to innovate.
Finally, let’s not think that content is the only thing news organisations do. They also provide advertising services (so there’s scope to open that, too) and much else besides. Perhaps everything an organisation does has scope for opening itself up to innovation if just enough imagination is applied.
Recognising and making contact with the innovators is a fairly obvious next step, but it’s rather different in the online world from the offline world. Experimentation is easier with digital assets than with physical ones: it can happen anywhere in the world, and due to the way digital media can be copied and distributed it can happen largely without the originator knowing.
Allowing the use of one’s assets or services without the knowledge of the originating organisation might seem daunting, and akin to giving away the assets or services. An obvious action would be to allow registration ahead of use, which means a channel of dialogue is opened immediately. The Times has used this approach with its APIs. But that option has its drawbacks, mainly that it creates a barrier to entry. Given that a small proportion of experiments will lead to something useful there’s a strong argument to remove that barrier, however small it may be, so as to maximise successes.
The alternative to enforcing dialogue is to make it so enticing that innovators will want to enter into it voluntarily. This means creating a forum or other environment that is sufficiently useful for innovators to make the active choice to speak to you. And it also means making yourself available in other ways — at other people’s conferences, seminars, and so on.
The dialogue of course has another direct benefit, which is that you get to understand how people really are innovating with what you offer. It provides you with an opportunity to change and improve what you offer so as to generate more opportunities for more innovators.
In theory the third step is trivial — after creating the opportunities and speaking to the people who are using them it should be easy for both parties to get to a win-win on making something of lasting value.
However, when it comes to a large news organisation interacting with a very small organisation, such as a startup, the large organisation can easily act far too slowly. It will have committees and contracts and steering groups to go through. But startups worry about cashflow and have sufficiently few staff to be able to deploy them quickly if other opportunities present themselves in the interim. If the large news organisation cannot become fleet of foot then it stands to miss those opportunties as the innovators lose patience and pursue other interests.
This can be a difficult culture change for large organisations. Unfortunately it’s rarely possible to know just how valuable a lost opportunity might otherwise have been. But if a large company were to consistently fail to exploit external innovation then it might be a death by a thousand cuts.
News organisations already have internal mechanisms to create and exploit ideas so I’ve spent some time trying to set out why internal innovation shouldn’t be considered to the exclusion of external innovation, and outlined a little of how external innovation might be developed.
I think this idea of developing external innovation might be particular to the digital times we live in, and not just because many might think we’re running out of our own ideas. Instead I think it’s a consequence our newly-networked world, where so much data and services are readily available globally, and so many ideas can be tried and discarded in such a short space of time. Previously the limitations of geography and physical objects meant businesses had to focus almost entirely on exploiting known opportunities for themselves. But in a digital world it’s easier than ever to create opportunities for others, and the rewards of creating those opportunties for external innovators is more immediate.
That historical economic perspective, however, is something that others would be better placed to evaluate. For now, those of us in news organisations probably need to focus on the more immediate concern of making innovation happen. Looking externally for ideas is not about waiting for someone to come by on a white horse and presenting a road to a happy ending; it’s not about hoping we get lucky. It’s up to us — we make our own luck.
This is a word that doesn’t tend to get used much among software development teams, and when it does it tends to carry the claustrophobic feel of heavy bureaucracy: ITIL, ISO, and lots and lots of very dull paperwork. But while it might not be thrill-a-minute stuff it’s something that the software team on the ground does need to be aware of: not just what it is, but how it works in your organisation.
Governance is about providing the link between what people do in the software team and what people in senior management need and expect. Without that link there would be no mutual trust. That trust is important to the tech teams because, to be frank, none of us would be here without senior managers’ say-so. They provide the time and resources for us to do our jobs — not just the physical working environment and pay-cheques, but a meaningful and stable programme of work.
Here are a couple of examples.
Example 1: Life with poor governance
The importance of governance came home to me a few years ago when I worked on a project which involved a group of management execs somewhat separate from the development team. As with many such projects there were all sorts of unexpected problems, but we on the development team had the great benefit of working closely with the end users who who provided regular guidance and advice. As a result we developed something which more or less made those end users very happy — they didn’t get everything they wanted but they were happy that they got a good system within the bounds of budget and time.
The management execs, meanwhile, met regularly to track our budget, which was used responsibly and didn’t provide too many alerts.
Unfortunately when the final product was delivered the executive group was distinctly unhappy. It turns out they had expected one or two key features which the end users had decided they could cut among some of the compromises they had to make. When the development team and end users were proud of their finished work the executive group were disappointed.
The result was that future work with this group was incredibly difficult, because trust had been lost — they authorised future work only after a great deal of pain, and we generally had a work an awful lot harder to get anything done.
As result of poor governance the people on the ground had a much harder time in their day-to-day lives.
It’s clear to me that no one person or group was at fault here, but as a development team we could have done better. We should have flagged up not just budget changes but also changes in the evolving feature set.
Example 2: Governance on the guardian.co.uk
Good governance isn’t about reporting absolutely everything upwards, because you want your executive group to focus on the relevant issues.
On the recently completed guardian.co.uk rebuild project we were careful about what did and did not go to the board. For example, while the development team estimated and costed work in “ideal days” or “story points” we were careful to translate these into pounds sterling for the board. Ideal days is a useful abstraction for development estimation, but a pointless additional layer for a board.
In terms of the evolving feature set, change was tracked carefully within the development team and percolated upwards. But again, the information wasn’t conveyed verbatim, because development teams worked on lower-level tasks than were meaningful to users. So all lower-level task changes were translated into higher-level feature changes when presented to the board.
The result of this good governance was that when the the project ended both the board and the development team were united in recognising a job well done. We have further plans now, and although we’ll still have to justify each of them we are at least starting from a position of trust.
By the way, all this governance this did involve paperwork — in the form of writing board reports. But that’s only because paper is often a good vehicle for communication, and communication is central to building trust. We shouldn’t dismiss governance simply because it involves careful communication.
Governance in review
Good governance is therefore all about trust through communication; for software teams it means they get the trust and support of those senior people who shape their working environment and daily lives. Without good governance that trust won’t be forthcoming. Understanding how it works in your organisation means you have a route to ensuring you have senior management support when you need it.
This is the second in a short series of articles intended to restore the reputation of certain words — words that have been abused by managers and therefore have likely become meaningless to people who have to listen to them. Today: “leadership”.
“Leadership” is surely a word that needs saving from the management jargon-fest. It does mean something real and important, but I think it’s too easy to switch off when you hear it. It’s so loaded with portent that it’s easy to mistake the speaker as deluded or (at best) mistaken — after all, how many Winston Churchills, Nelson Mandelas or Martin Luther Kings can you expect to find in your organisation? Also, unless you recognise a revolution in progress, it’s hard to spot leadership at work.
Yet leadership is important and possible in even the smallest groups or organisations. As with the discussion of “strategic”, earlier, this article is part apology, part explanation.
There is much that’s been written about leadership, but it tends to be for ambitious management-types [1, 2, 3], and therefore ignorable by the people who probably feel they’re doing the real work. Yet it’s important for everyone.
For me, leadership is about encouraging groups of people to being doing things they wouldn’t do if left to their own devices. These might be people inside or outside your team.
So if your team is stuck in a rut, then someone needs to exercise some leadership to help you out of it. Or perhaps there’s a dysfunctional relationship between your department and the rest of your company; again, it requires someone with some leadership to change the way people work together.
These situations are not just about implementing changes, they’re about changing the otherwise-routine behaviours of groups of people. And leadership doesn’t need to come only from those with the keys to the executive washroom. Here are some examples..
Example: Increasing the value of our product
This story comes from one of my former companies, and is about someone I’ll call “Mike”, because that was his name.
Our company produced shrink-wrapped software for search engine marketing, and its most common function was to produce search-engine-friendly content for sites which didn’t already have it. (An aside here: that kind of thing isn’t too respectable today, so let me assure you of three things: (1) this was a very long time ago, when the rules we know today weren’t written, (2) we always made sure our clients used the software for respectable purposes, and (3) the company today is quite a different beast and enjoys strong partnership relations with all the major search engines.) Mike was one of the technical consultants for the sales staff: he’d go along with them to sales meetings, answer technical questions, feed back ideas to the developers, configure installations, and so on.
The core module of the software was given manually-entered information about your company (company name, key product names, common related terms) and generated the content. This was a nice, simple sales proposition and was relatively easy to sell: we put you on search engines — simple, eh? However, we always felt it was undervalued, because it took a lot of time and effort to demonstrate and explain, and it was incredibly difficult to justify anything more than quite a low price on something as vague as “visibility”.
There was another module, too, which mined your company’s product database and drew out terms from that so you didn’t have to key them in yourself. If you’ve got 5,000 products and you were actually going to key them all in, that’s a real time-saver. But database connectivity was quite a new and and cumbersome thing (I told you this was a long time ago), difficult for the sales people to understand, and difficult to convince clients that they should spend time doing this when the only real value was to save you some typing which you probably weren’t going to do anyway. In the end our software was a technically advanced product of lowish-value and with a fancy database add-on.
But one day Mike started seeing things differently. He realised that by mining a product database the system was raising the profile of every single product that your company offered. Each of those products was a direct revenue stream for the company, and by raising the visibility of those products the system was going to put those products in front of more people, leading to a proportional rise is sales. Suddenly you could put numbers into a spreadsheet, and even a very conservative rise in sales would mean our system could be incredibly valuable to companies. We could comfortably value our software much more highly — as a proportion of your company’s annual turnover.
Mike went to our CEO with his new perspective, and our CEO was enthusiastic. He created a PowerPoint presentation, and took it round the sales people and his fellow technical consultants. It was clear to us that we had seriously misunderstood our own work. We had a new sense of excitement — we were sitting on something really valuable and hadn’t realised it. Nothing physical had changed, but we had a new outlook. We could explain what we did in a new and much more compelling way. We started using the phrase “return on investment” with conviction, and it actually meant something to our clients.
It wasn’t instantaneous, of course. Mike went out to trial our new outlook and our new presentations in front of clients. Lessons were learnt — the good and the bad — and were fed back to the team. Occasionally there was a confusion or misunderstanding, or subtle presentational tweaks needed to be made so as to make our message clear. Mike would ensure we kept learning the lessons from each other, and that our understanding was common and thorough.
I think the first actual sale of our software with this new perspective was ten times the previous average, and four or five times higher than anything we had sold before. And everyone was a winner: our clients had a tool to increase their revenue, and we were making more from our product.
Mike might have been one of the many people in the team, but he showed leadership. He changed the outlook and the behaviour of a large group of people. Nothing changed physically: we didn’t change our software, we didn’t change our staff. But we changed our attitude, we changed the way we talked about ourselves and our product, and we changed the benefits we offered our clients.
Oh yes, and we changed our revenue. That went up.
More leadership examples
There are numerous other examples of leadership that I’ve witnessed, but I fear writing about the protagonists as if they were saints, and I don’t want to embarrass them. So instead I’ll list a few examples only briefly…
- The developer who lead the replacement of our proprietary application server, bringing in an open source (and much more managable) alternative. While everyone agreed it was important to do, he designed the architecture, sketched out the plan, and guided the other developers through the implementation. We still had a project manager and many others involved, and I can still say it was a team effort, but that developer saw it through from beginning to end and was a pivotal authority throughout.
- The sales manager who led his disparate transatlantic sales people to be much more accountable and transparent about their prospective clients. He created a system of gates, in which the sales people needed to categorise their prospects, and ensured each member of the team shared their progress in a weekly conference call. With increased accountability, the sales team became much more trusted and respected throughout the organisation.
- The business development manager who translated Agile planning techniques into his own (non-technical) department. He used these to regularly organise and prioritise a demand pipeline that was not only impossibly large, but was so diverse the various demands weren’t easily comparable. He ensured the various stakeholders discussed their needs together and came to a common agreement, allowing the department to regularly present a clear, consistent message to the rest of the business.
I can be quite certain that when these people did these things they didn’t for one second think they were demonstrating leadership. The sales manager will have thought he was just implementing good practice; the app-server developer will have thought he was just sorting out a long-standing problem. And in all cases they’d be right. But they demonstrated leadership, too.
Leadership in review
I’ve deliberately picked out people who were in the middle — not the top — of their respective organisations. The individual things they did towards each achievement ran over a sustained period, and were interspersed throughout their day-to-day jobs. But at the end of this they had changed the way their colleagues worked, and they were all undoubtedly better teams as a result.
So although leadership might sound overly-grand when referenced by management-types, it really can come from anywhere. I hope these examples show that leadership is a real and important quality, needed at all levels and in every organisation.
This is the first in a haphazard series which takes various management phrases and tries to ground them in reality. First, though, a bit about why I’m writing this.
A poor choice of words can be damaging. There are numerous times I’ve received an e-mail introduction from a company, and after a couple of paragraphs of impressive-sounding buzzwordology I’ve thought to myself “Yes, but what do you actually do?” Sometimes, though, some of those words actually translate into a tangible reality, and mean something for the lives of real people — even those who don’t spend their days thumping boardroom tables.
Sometimes, also, I find myself using management jargon in front of management-types, and then repeating it in front of non-management-types, which is probably not very helpful to the dialogue. But while these words may sound empty or obtuse, they do relate to things that impact on real people’s lives, and that’s why I use them.
So if I, or someone else, has used such jargon in front of you then please don’t shut down immediately. The consequences of these words affect our working day.
Today’s word is… strategic.
I think the word strategic is more useful than the word strategy, because something can be strategic without you actually having a strategy. If a strategy is the route you want to go down, then strategic refers to the general direction you want to go in. You can know which direction you want to go in without knowing the specific route. More powerfully, you can know that something is the wrong direction to go in (not strategic) even if you don’t know the specifics of the route you should take (the strategy).
Here are two example of how strategic and non-strategic things affect our daily lives.
Example 1: Non-strategic work leads to expense and pain
This is an example where doing something that is not strategic would have meant making our business more expensive and difficult to run.
In June 2008 we launched a new-look Comment is free (Cif) on our Java platform with Pluck powering the community features. Previously is was running on Movable Type. Now let’s work backwards a bit… the site was launched in June 2008, so anyone can guess that work might have begun in, say, January. We’ll have needed to sort out some legal paperwork with Pluck, which you can imagine might have taken three months to negotiate, and before that a market survey and possible prototyping to assess the alternatives to Movable Type (let’s say two months’ work).
So in August 2007 we would have been at point where there was general acceptance that Movable Type was not the future platform for Cif, even though we didn’t have any certainty about its specific replacement. Movable Type was not strategic, even though we didn’t have a specific strategy, or at least not a very detailed one.
And at this point any significant feature development on our (now non-strategic) Movable Type would have had three kinds of cost implications:
- Its lifetime value would have been limited;
- It would have created more work for the people migrating to the new platform, because they would have had to migrate more features;
- It would have added more support costs to the Movable Type platform and hence the company.
This last one is probably most relevant to technical people, journalists and the production staff who work on Cif. Because “support costs” means not just “money” but “time and pain”. With the focus moving on to the next platform there will have been less and less expertise available to work on the limited-lifespan technology: there will have been fewer people available, and knowledge would be less fresh. Any technical work would be more time-consuming to put in place. It would also be less reliable because reliable work (rather than quick hacks) generally takes more time and more expertise; and yet this is a platform with less expertise and a known limited lifespan, so greater reliability is especially difficult.
Example 2: Strategic work gives you stuff for free
Meanwhile, what of all that so-called strategic work on the new platform? Why was that “strategic work” and not just “work”?
Because so much investment (translation: time and effort) had gone and would continue to go into the new platform there are suddenly lots of mutual benefits. Cif got lots of things for free, because they had been developed before for previous launches on the same platform. Some of the front-end features I can spot which came free include:
- The “all” page, which shows everything published today (or indeed on any particular date);
- The ability to create subsections freely, such as those for the US, religion, and things that have appeared in the papers;
- Keywording and keyword navigation;
- Contributor pages, such as those for Susan Tomes or Mark Lawson;
- Alphabetical index pages; and
- RSS feeds all over the place.
Similarly other sections have gained from Cif’s launch. When we later launched the Life & Style section I was particularly pleased to see the editor had written her introductory article on the new platform and opened up comments underneath it. Commenting was previously available only on our Movable Type blogs, but by building Cif on our strategic platform the Life & Style editor got more features than she might otherwise have had.
Sometimes management jargon really is jargon. But sometimes it translates into a tangible reality. Strategic things are about creating a better working life for us in the future, whether “better” means less costly, less frustrating, quicker, or more flexible. That should make it meaningful for all of us.