Caveat – everything here (except the part about me) is low confidence – maybe 3/10. It’s based on some conversation and my voracious reading of lots of material around the cable, content and wireless industries. You should treat this more like an op-ed.

The media industry (from what I can gather) has traditionally innovated in the content space. But this traditional dimension of innovation is no longer sufficient to propel it profitably through the challenges it faces; a market which is delineated by more consumer power, changing customer behavior and transformative media technology and devices. To keep up and thrive, media companies need to keep pace and accelerate beyond the current technology, innovate with new business
models and find new revenue sources to diversify their reliance on traditional ad and cable revenues. The industry appears to be at an inflection point where a majority of the companies need to increase their investment in technology driven innovation, beyond what has traditionally been a normal level of investment. The simple reason is that technology is becoming a more significant gatekeeper to content than ever before and recent changes in the media and consumer landscape make it imperative to make sure innovation around that ‘gatekeeper’ is not only world class, but constantly at the cutting edge. In what follows I quickly summarize my own perception of the changing consumer landscape, key capability investments that are needed, and complimentary practical investments in terms of people and resources to realize those capabilities.

For the TL;DR crowd, here is a quick summary of the ideas in this scribble:

• You need to increase investment in infrastructure to a) increase the speed of bringing ideas to market, b) improve consumer data analytics to improve the quality of the ideas, c) new thinking about content distribution, partnerships and building media platforms.
• Above all you need new kinds of professionals to guide these transformations and drive change effectively within the existing organization.

The changing consumer landscape (D has been astounding)

Just 5+ years ago versus Now

5+ years ago the media industry was pretty sedate, even while the foundations for tremendous upheaval were quietly being built. Apple’s iTunes was wrecking the home that the music industry built and regional print had already been dying on the vine for decades due to the rise of the web. However for ‘heavy’ content (video mostly), the familiar structures of the cable monopolies (including satellite TV), theaters, DVD box sets and other accoutrements were still entrenched. People consumed most media in front of a TV, and mobile experiences were few and far between. Payment was pretty simple – through your cable provider, through ads or a combination of both.

But by 2007, a lot of what is causing seismic shifts were in place – a)the iPhone was launched, the App store would come pretty quickly soon after. At this point iTunes was already mature (lots of songs, very limited selection of video), b) Netflix launched its “Watch Instantly” video streaming product along with its existing recommendations engine c)Hulu was launched d) Bit torrent was emerging from niche status, nearing final version and being built into mainstream applications. This baseline of crucial new products quickly led to the Apple App Store and iPads. At the same time, major technology companies like Samsung, Google, Microsoft and Twitter, began to expand into content markets in significant ways; investing in protocols, technologies and devices that brought innovation and disruption into the marketplace that wasn’t previously there (sometime it wasn’t one product, it was a combination of them). The net effect of these new products has been to shift power more significantly towards the direction of the consumer.

Changing expectations of consumption

So today we have reshaped North American media consumers – who expect content to come to where they are, on every device they have (sometimes, synchronized between them) and expect pretty flexible prices and payment terms. The proliferation of media consumption on mobile devices alone has been astounding, centered around tablets. And it’s only set to grow. While the web is growing more leisurely, it is still hugely influential as a distribution point for customers. All this is very different from 5+ years ago and all indications are that this kind of innovation is set to increase.

In economic terms, this situation is creating winners and losers. And there is a clear trend: companies who have big expertise and R&D in technology are by and large on the winning side of things – whether it’s the technology companies (Microsoft, Google, Netflix, Twitter, Facebook) or media companies (Bloomberg, NYTimes) who have wisely invested in the capability to iterate quickly on media technologies and new business models.

World class capabilities needed

Assuming this basic premise is true, a baseline response from the media industry is increasing the investment in innovation along the technology dimension, likely beyond the current levels of investment. This means an investment in the right infrastructure and the right type of expertise (people). But what capabilities should be bought? What are the specifics of the areas of investment? It can be hard to say, but here are some guesses based on what I know so far and my own experiences:

Faster and smoother delivery

The infrastructure has to be there to more quickly and reliably translate ideas (hopefully, more good than bad) to the light of day, to be tested by the market. And then that feedback looped back to improve the product. The focus is on bringing more quality ideas to market faster as a matter of course, up to 2-5x what is traditionally possible. This means merging traditional application lifecycle management found in software technology companies with the more traditional content management driven workflows of media companies into a seamless whole. The point is that when you are effectively searching to refine your business model, speed itself is a strategic lever and short cycle times are incredibly critical.

Data-mining, Analytics and customer engagement

Sometimes the crucial clue is in the data. If you can find it. But a lot of media companies do not have sufficient capabilities to mine this data effectively. Up a level, there are no innovative way to engage customers and conduct experiments that yield information that can be ploughed back into business intelligence. As an example, Facebook runs hundreds of experiments before it launches a single global feature change. The ability to do this, generate the data, understand its significance, and respond to it; is a strategic advantage that media companies need to start emulating on some deeper level. Data mining additionally pays dividends when it helps content companies understand their customers in way that can be used to drive up the average cost of the ads served on the network through improved targeting.

Smarter distribution of content

Content distribution has to match the realities that the global customer is expecting. Media has to cover all significant outlets that customers are expecting and often anticipate, by skating to where the puck is going.

New & better partnerships

Key partnerships have a huge effect on the media business. For example, at the highest level, Apple iTunes and Newsstand redefined and are redefining the media business in incredible ways. Under these seismic shifts, media companies have to aggressively seek partnerships that complement their capabilities and enhance their brands in ways they cannot do alone.

Platform thinking

In software terms, a platform is something that encapsulates enough critical and low level functionality that it can be used by other people or businesses as their own engine of economic growth. Windows is a platform. Facebook is a platform. Twitter is a platform. CNBC is platform-ish. The point of a platform is network effects – if it works, a lot of players are invested in your success and you have multiple shots at the till of profit. There is enough in a few media properties to build a platform. Enough at least to give it a lot of thought and then actualize it if the value is there.

Practical investments to win the future

If these things are true (big IF at this point), what should a media company invest in? What should be in its shopping bag?

Here’s a partial list that will help bring what is needed to life:

The right leaders at the right level driving these transformational initiatives.

Anecdotally, the content side of the business still has the reins of power in old media companies. This does make some kind of sense and is a practical outcome of the evolution of the industry. However, now would be a time to consider bringing in new skills at the very top of the command chain. New leaders who understand how to meld the world of technology and media together and lead change in capabilities and culture needed to sustain the evolution of the industry. One pitfall I have observed is bringing in leaders at the wrong level and shackling them with old constraints that hamper their effectiveness. Technology is hard. Melding technology to media while evolving business models is even harder. The new leaders have to be empowered and also given some leeway in order to deliver. Or else failure will become a self-fulfilling prophesy.

Increase investment in high aptitude engineering talent. (Don’t worry about old media skills. Teach it instead).

You need new types of workers to carry the investment in technology. Problem solving engineers like those that new technology entrants (Google, Microsoft, etc.) have. People who think naturally about algorithms. People who love solving puzzles and hard technical challenges. People who are not afraid of mistakes and try to make the worst ones pretty quickly and improve on the state of the art. You obviously need to catch these people up on the ‘must knows’ in media, but consider teaching it to them instead so as not to suffocate the talent they bring to the table.

Automate and drive the delivery pipeline through great software integration platform – An Application lifecycle Management platform + digital Media Content System

In the same way that manufacturing firms have invested in automated technologies to streamline the pipeline of production, media companies must also invest in the ‘pipeline’ technologies to make their products faster and better. In software terms this is known as a collection of technologies called Application Lifecycle Management. Concepts like agile development, agile testing, continuous integration and continuous delivery, will have to become more normal in the media industry.   The additional wrinkle for media companies is the need to integrate these concepts from the software world into the pipeline of the media workflow. When successfully orchestrated, the organization should have the ability to execute on an idea an order of magnitude faster than previously capable.

Invest in user research capabilities and technologies

It’s imperative in a time of change to understand the core needs of your customers. Media companies need to increase their ability to engage, question and understand intent for their customers and any future set of customers they wish to serve. Investment in analytics, customer research, and ethnography need to be examined and increased where the capability is sparse.

Build data and business intelligence capabilities

It’s an entirely different muscle to analyze and understand the analytics data collected from millions of users and convert these into actionable business intelligence used to inform investment in new features, business models and investment. Data and analytics capabilities are hard to build, nevertheless to compete with the likes of Netflix and Amazon who hoover up amazing amounts of customer data and have technology platforms to pick out pins in the haystacks, one must compete in this new field. It’s the key to delivering more deeply on what your customers want and ensnaring new audiences.

Connect the last 2 in a smart analytics capability

User research and analytics has to close the loop to business decision makers in order to have an impact. Rolling up what is found to actionable tactics and strategy.

Addendum: a plug for me

There are many reasons I am one of the ‘new kind of professional’ and can help with leading some of this change in the media industry now that I live close to the media capital, New York City. If you’re a media industry exec, drop me a line.