Innovation is bound to increase the total volume of activity in the media and entertainment sector says Prof S Raghunath, Corporate Strategy and Policy, IIM Bangalore

How do you define innovation? What helps organisation achieve innovation?

Innovation as a concept applied to media and entertainment is all about the process of creating and delivering quantum improvement in customer value.

The general view is to create a separate organization for innovation.

But, in the media and entertainment industry such separation could prevent cross platform integration and conflict between the existing and innovation driven units of the organization. The ability to think innovatively should be a goal for every function in the organization.

More often than not there is a general inertia in recognizing and responding to changes in customer preferences once a company reaches a certain size or growth in hierarchy. For example general entertainment TV channels have audience members who are active participants who select programming to meet particular needs.

Should innovation start top down ideally? Is it a leadership issue? Do innovation turn a company’s performance?

Innovation requires top-down as well as bottom-up participation. The leadership at the top has to develop razor sharp focus on business model innovation. The challenge is to grow the pool of audience and, therefore the revenues; this in turn requires ability to create and capture value when technology, delivery and content are in a state of flux.

There are issues of when creative aspects should take precedence over business considerations and when business considerations must be given central importance in comparison to creative aspects. Both business and creative issues have to be explored and debated before making decisions. The success of media and entertainment offerings are a function of combining creative genius with business considerations.

The quality and calibre of those who make these combined decisions evolve.

There are decisions involved in looking at new ways to charge for the product or service, there is innovation involved in sponsorship as to who will pay for the product or service, there is innovation in considering new ways to expand a content or brand value to different consumer segments or different ways of offering the content to the consumer.

More specifically, leaders at the top have to reckon with audience fragmentation. They have to achieve a fit between the offerings of creative talent and changing consumer expectations relating to relevance, convenience and flexibility. They must examine how to segment customers so that the revenue model can fit to those segments who will perceive value from the offering and willing to pay for it.

The current trend of increasing communication, bandwidth, information and processing power has not just changed consumer behaviour and expectations but has also provided the media and entertainment industry increased ability to gather information about consumers. It is now possible to make better segmentation based on the analysis of the information and there could be innovations relating to new ways to charge for content.

Why are start-ups active and drive innovation than traditional companies? Do digital platforms offer more for innovation than traditional ones?

Start-ups are better of than traditional companies as they do not have to deal with the question of cannibalizing their current products and services. Traditional companies have existing partner relations and customer base and there is an apprehension that customers may not move beyond a certain level of willingness to pay.

Start-ups are better positioned to offer products and services considering the changing dynamics of what the consumers are preferring as content and mode of consumption based on their age, gender and views about society. While the traditional companies look at the consumers through the singular lens of what they are offering and what the current customer base is preferring to consume. There is little effort in segmenting consumers and markets.

Why do we see fewer innovation in Indian M&E companies than what it happens globally?

Changes in technology and utilization of the benefits from technology has enabled large western firms to increase the target consumers pool while the same has not been fully utilized so far by the Indian companies. The traditional consumer pool in our country consisted of passive consumers of media and entertainment who were hoping to be entertained in their living rooms. They have very strong preferences for program content. They are gradually accessing the internet. They are also beginning to question why they are paying for so many channels when they are watching only few. The set top box connections provide viewing information. Therefore the cable providers can make a selection for their consumers by identifying favourites for them and opt out of the rest. This kind of an arrangement can help content providing TV entertainment companies to maximize distribution of their niche channels. The managers of cable companies are resisting this mode of pricing. There is an opportunity in our country to shift to an arrangement that provides subscribers access to content through any device such as television, computers, pay-per-view via streaming.

The tendency towards bundling of the channels and offering a price makes the purchase less complicated or cheaper for the consumers, while a pick and choose model may fulfil a consumers desires of choice and flexibility. However, the cable operators prefer bundling option for pricing which then opens the door for new competition from streaming services available on the net and on demand content free startup like Box TV which download content from traditional TV, cable or internet.

Your thoughts on inculcating the culture of innovation in an organisation?

In the context of media and entertainment industry, leadership is all about creating and managing an environment for innovation. Respecting individuality and encouraging individual initiative is a hallmark of a leader in media and entertainment space. Leaders have to make final content calls. In business it is not just about coming up with ideas but also how much should be spent on it. This decision is based on how much revenue and margins can be expected. The most important contribution to creative success is getting people to come up with great ideas and having people support those great ideas and support those creative people, manage creativity with business foresight. This requires managing synergy across all company offerings. Everybody has to cooperate with everybody else and no competition must be encouraged between divisions. Many companies underperform due to tensions and weak relations at the top level. If innovation is to be successful over the long term, it is imperative that all divisions of a company remain true to its espoused values of delivering “entertainment”.

Are companies bound to vanish — if innovation is not put into practice — there is a lot of disruption happening across sectors?

Any media and entertainment product or service that is not an imitation may be treated as innovation. Innovation is about those creative efforts that are accepted by the market as unusually different, satisfying or productive. Innovation is bound to increase the total volume of activity in the media and entertainment sector. The potential market for media and entertainment products and services has grown in India not just because the population and national income have grown but also the literacy rate has gone up and people have begun to spend on media and entertainment. Secondly more intermediaries are available to introduce artists to the market and more artists struggle for creative success. An enlarged M&E market attracts more would be innovators. Successful innovations are highly diverse and they illustrate important links between the responsiveness of tastes and the organization of creative activities.

It is not unusual to expect successful innovating firms to flourish and failed non innovating firms to fade away.

Companies with well established distribution system can preserve their position if they open their facilities to innovation. On the other hand with no control over distribution of content and no capacity to bear large losses innovation can cause enormous turnover among companies. The turnover process is more natural and continuous when firms are small and without sunk or committed resources.