Innovating before the music stops?
An iconic entertainment brand recently faced a conundrum: what to do when your revenue model suddenly stops working?
That was the question posed this spring at one of our Innovation Roundtables. The company’s head of innovation described a business model falling apart literally overnight — from cushy revenues and fat margins, to a gasping need for breakthrough innovation.
Here’s what happened. The nature of content licensing in the entertainment industry is changing, at warp speed. For years and years, the brand made its money on predictable pass-through revenue from syndication networks and TV affiliates. They focused exclusively on creating and curating great content that third party distribution companies would pay for. Which was highly profitable, and extremely stable — until suddenly it wasn’t.
The bulk of their operation — anchored by a fiercely loyal internal work culture — was built around the work of production experts and content/media junkies. They had no real marketing & sales division. They had no innovation program whatsoever. None of that had ever been necessary.
So what kind of shock treatment works best in a situation where the company has to start innovating, from a standing start, literally overnight? And furthermore, when it’s happening at a company with a very strong, entrenched work culture?
It’s a fascinating case study. We debated these questions at length during the roundtable, and I couldn’t stop thinking about it over the next few days.
Three thoughts stand out:
• Forget about mobilizing the troops. If your business model is drying up, the current organization won’t be able to help. Don’t waste time changing old habits — focus on building the right new capabilities.
• Aim for strategic speed. Obviously speed matters here — the ship is sinking around you. But, as first responders and other crisis professionals will attest, the worst thing you can do is panic. Be thoughtful, deliberate, and THEN give it everything you’ve got.
• Light is right. In this type of situation, systematic industry changes are usually at work in the background. The first wave crashing ashore is rarely the last. Don’t build a complicated new offering when a lightweight one is enough to get started and test the (churning) waters for fit.
What do you think? Have you been through this type of scenario? Any other thoughts/tips to share?
We’d love to hear your take — either in the comments below or at one of our upcoming Innovation Roundtable events!