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Inadvertent Innovation

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Joseph J. Esposito is president of Processed Media, an independent management consultancy providing strategic advice, operating analysis, and interim management in the area of digital media to publishing and software companies in the for-profit and not-for-profit sectors. He writes extensively on digital media and has been awarded research grants from the Hewlett, MacArthur, and Mellon Foundations.

Innovation-DefinitionWhen I was invited recently to moderate a panel on innovation at a publishers’ trade conference, my thoughts immediately turned to Clayton Christensen and his much-cited book, The Innovator’s Dilemma. Christensen has achieved heroic status in some quarters, especially among people in the tech sector, who are keen to come up with the disruptive innovations that Christensen writes about. Indeed, for a period of time it seemed that you could not come across the word innovation anywhere without disruptive preceding it.

It’s easy to see why the tech guys like disruptive technology so much, as they have the lessons of successful disruptions all around them: CraigsList (farewell to newspapers), Amazon (good-bye, bookstores), Twitter (so long, CNN news flashes), and so on. Of course, publishers and the communities they serve may have a different idea about innovation, since the disruptive kind is generally pointed directly at them.

The challenge then is how to be innovative without being disruptively so.

If established publishers are going to learn from Christensen, they are more likely to reach for a later book, Seeing What’s Next, which Christensen wrote with Erik Roth and Scott Anthony. It offers a taxonomy of the different kinds of innovations and responses to them, which includes making an innovation work for an established business.

Some innovations, in other words, are sustaining innovations, not disruptive innovations. And in some instances a truly disruptive innovation gets co-opted by established organizations (that’s the value of seeing what’s next). Consider mobile phones, which apparently aimed at the heart of the old landline phone companies—except that the landline companies took over the wireless firms. We have met the enemy—and we bought them.

As much as I have benefited from Christensen’s various analyses, I continue to be nagged by the feeling that innovation does not have the star power that many claim. The innovator is thought to be a genius, a visionary, but often innovation is a byproduct of something else.

Byproduct Bonanzas

Of course, I am not denying that some people do have incredible foresight and are able to build new services well before others even imagine what they might be.

Many innovations in publishing, on the other hand, began with baby steps that only later were revealed to be the strides of a giant. When Paul Ginsparg, the high-energy physicist, wrote the first lines of code for arXiv, the open access repository for scientific papers, he was solving the tactical problem of getting access to material in his field more quickly than he could by waiting for publishers to release their materials or by waiting for colleagues at other institutions to mail articles to him. From that code to the Public Library of Science—and the entire open access movement. I can think of no more influential action in this arena, and its enormous impact was not designed.

Other small changes in policy and activity also yield enormous changes in larger ecosystems, and those changes are sometimes unwelcome. Consider the switch in the music business from analog LPs to digital CDs. When compact discs were introduced, the promise was that they would significantly reduce costs and enable a better toolset for audio production. Be careful what you wish for. That toolset was eventually to include Napster, which was made possible in part because the digital files on a CD could be ripped and uploaded over the Internet.

It’s fun to think of how some tactical innovations later went on to lead to big things. Harry Hoffman was heading the Ingram Book Company many years ago when he got behind the idea of putting all the titles in Ingram’s inventory onto microfiche. The aggregation of metadata into an ordering system created huge efficiencies for Ingram and the booksellers it served. But no one thought that such aggregation could be turned to face consumers until Jeff Bezos came along.

Scholarly book publishers, to cite another example of the impact of Amazon, initially saw Amazon as just another bookstore for their print books, but over time they realized that Amazon was opening up new markets internationally, since a scholar in Brazil or Thailand could order English-language monographs over the Web.

This in turn led them to demand world rights for titles, a contract provision increasingly useful now that more of the books sold are offered digitally and can be “shipped” around the world at no cost. So from microfiche at Ingram to a wholesale revamping of intellectual property practices: who would have thunk it?

I first began to think of the role of inadvertence many years ago when I was working at Simon & Schuster. Among my responsibilities was the management of a venerable tax guide, J.K. Lasser’s Your Income Tax. The book had first appeared in the 1930s and had become a perennial bestseller, with net sales around 700,000 every year. The editors of the book liked to include copies of the IRS tax forms, but those forms were rarely ready when the book shipped, so each copy included a coupon for readers who wanted the tax forms mailed to them.

Over the years the number of people who requested these forms grew to several hundred thousand a year. For quite a while, no one perceived those recipients of tax forms as heralding a highly significant business diversification. But mailings for the forms gave rise to a marketing database, and after some years Sam Meyerson, a longtime S&S employee, got the idea (“A brainstorm! I had a brainstorm,” he later told me) of selling the actual book through the mail. This was a huge success.

Years later, thanks presumably to another brainstorm, S&S began to sell updates on tax court rulings in the form of a newsletter. These updates got the attention of professional accountants, who were offered—and bought—a special edition of the tax guide, gussied up with citations to court cases, along with the newsletter.

The J.K. Lasser Tax Guide went from being an inexpensive paperback consumer publication to being a highly profitable professional information service. It was a journey of a thousand miles, and it began with a single small step that stemmed from happenstance.

The What-Else-Is-This-Good-For Approach

It would be very easy to dismiss this line of reasoning by pointing out, correctly, that accidents happen all the time, people get lucky, all technology builds on other technology, and if you extended this argument to its logical outcome, every biologist would have to cite Adam and Eve when writing about genetics.

Yes, serendipity is part of the fabric of our lives, but the challenge for people who study and wish to enhance innovation is how to manage it. It’s one thing to say that people get lucky, another thing entirely to determine why it is that some people are luckier than others. When it comes to innovation, luck has its own internal physics.

As organizations build a product or service, they really create two things: both a solution to a tactical problem (a way to reduce costs, for example), and tools and infrastructure to support that solution. Sometimes those tools and other infrastructure can later be deployed in new ways.

When publishers first put journals into electronic form, I doubt anyone foresaw that this would lead to the development of large aggregations, consortia purchasing, and remote access, all of which served to make academic libraries more valuable to their communities. Nor did anyone anticipate that digital delivery would lead to the capture of user activity, which now can be analyzed for patterns and used to make decisions on editorial policy and library collections.

The future of a number of assets now in existence may not closely resemble the reasons they were created in the first place.

When I began to study patron-driven library acquisitions a couple of years ago, I was intrigued by all the data libraries had collected on circulation records. It was immediately apparent to me that this data, once it was fully anonymized, could be repackaged and sold to publishers who would like very much to know how their books circulate in libraries, a matter about which currently they have barely a clue.

In the journals publishing world, more and more publishers are beginning to develop a database of a kind they never had before, a record of authors and their works and all the online activity that takes place when an author submits an article to a journal. It may be time to bring in database marketing experts to assess how that data is being stored, what other fields of information it would be useful to collect, and what new products and services could be derived from that database.

Looking Behind the Labels

There is a moral to this story: Don’t just invest in your core business; invest in capabilities. Over time it may become more apparent what other uses these capabilities can be put to.

And the moral has a corollary: Review the common practice of outsourcing. It may push away capabilities that will come to surprise us all in the years ahead. Now that we are seeing more and more publishers sending their production work to companies in India, I wonder how many executives in these companies recall that the first steps toward digital publishing strategies were taken by the very production departments that have now been outsourced.

Should IT work be handled in-house, or by vendors? That is a question whose answer varies day to day. But when you outsource your software platform today, you may be failing to invest in a capability you will need tomorrow.

There are no easy answers to how to spur innovation in an organization, but it clearly makes sense to look for opportunities in unlikely places labeled as something else. Innovations are not always the work of the smartest people in the room; they are not always prophetic in nature or grand in scope. Sometimes they are simply as clever as using a PDF to drive print-on-demand or as capturing user names. They spring from all corners of an organization and are no respecters of job title or rank.

An innovative organization is simply one that makes things and then reflects on them. Rock stars need not apply.

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