Product innovation is a beast and tough to manage, especially in large organisations. To get it right, media companies need to understand and even embrace its underlying complexity.
In a live Webinar on Wednesday, INMA members learned about DPA’s approach to innovation management from Klaus-Peter Frahm, head of innovation management at DPA and co-creator of the The Product Field Reference Guide.
Frahm shared how to not only innovate but also manage the concept and its execution within a news media organisation to help INMA members understand the difference between design thinking and product thinking. He also explained how DPA has shifted toward innovation.
Deutsche Presse-Agentur (DPA) is somewhat of the German equivalent of the Associated Press in the United States. Consisting of around 1,100 people across 20 subsidiaries, it’s a complex organisation in an industry that is under pressure. DPA requires a systematic and disciplined approach to innovation.
Why innovation management
Frahm listed seven reasons innovation management is important:
- If you don’t have innovation management, you don’t have a balanced portfolio of short-, mid-, and long-term investments.
- Without such a plan, you don’t have an overview of all innovation-related activities across the enterprise.
- Innovation management allows a shared understanding of the areas to focus on as an enterprise as the whole organisation.
- (And most important.) Innovation management provides a systematic fitness check of ideas and initiatives.
- Innovation management creates shared knowledge of tested models and tools. “You have to have some sort of people to take care of that, that can be used as trainers or consultants.
- A lack of innovation management creates no, or a limited, shared strategic direction.
- Such a gap means no visibility or an appreciation of the innovation activities that are going on.
Based on these problems, DPA created seven building blocks of Innovation Management, which address these areas:
- Innovation Horizons: the three horizons of growth.
- Innovation Places: where things actually take place.
- Innovation Areas: where people should go to ask the questions.
- Innovation Fitness: check if what you are thinking of doing fits within your context.
- Innovation Methods: a directory of methods we know are working.
- Innovation Alignment: the strategic alignment.
- Innovation Communications: built-in means of communication.
This is the relation of time (which you can’t do anything about) with growth (which you do have control over). The first horizon is your core business and its product life cycles.
“What you’re going to do is to try to innovate iteratively to try to get this core business going for a longer time, to prolong the product life cycles. Building your features or even taking features away to make the product better,” Frahm said.
Sooner or later, however, every product is going to outlive its usefulness, which is where horizon two comes in. “You have to make sure that you have something that you can build on, which is new products for existing client base or existing products for new market segments.”
The third horizon is about creating opportunities for future products, business models, and markets. “This is a lot about research,” Frahm said. “It’s not about design thinking and understanding real problems; it’s really about understanding how the world works and how technology works and how that can be relevant for your business in the future. But as these things go on very fast, you have to do it now, and you have to address all three horizons at the same time.”
“In our case, all our business units are in charge of their own product innovation,” Frahm explained. They are addressing horizons one and two. At the same time, they are also building new B2B marketplaces being developed in a special unit called Developer Campus.
“To address horizon three, we have a newslab, with some really brilliant guys who are thinking about AI stuff and data analytics and things like that.”
DPA has also co-founded the next media accelerator to support industry innovation in Germany, he said: “This is very interesting for us because on the one hand we are supporting the whole industry, but also we are very invested in it. It makes it very easy to customers to dip into our platform.”
Frahm’s examples of key focus areas for DPA include AI and data analytics to enable innovation in B2B marketplaces, media intelligence, performing content, and new storytelling.
“These are just our areas. Every company has their own.”
DPA’s product innovation initiatives require fitness checks to make sure they:
- Fit overall business strategy.
- Fit resources and capabilities.
- Fit users’ needs.
- Fits the target market.
“It’s a little bit like if you want to go climb Mount Everest, you don’t just go there and walk until you die,” Frahm said. You would prepare yourself, train, buy the right equipment, etc., very carefully long before the actual expedition.
“In many companies, however, most kinds of innovations happen without any kind of fitness checks asking, ‘Are we really fit to conquer Mount Everest here?’”
DBA applies a model to do its fitness checks, which works a little bit like Canvas. It addresses all the areas that are affected for the things they are planning to do.
“This is very simple,” Frahm said. “Design thinking is something we do very deliberately to understand problems and find solutions. But we do user interviews and user research. At least we’ve started to do that. You really have to talk to the people who use the products to validate not only the solutions, but also the problems.”
Other methods employed by DPA include the product field for fitness checks and innovation management to facilitate innovation on all levels and organisational change. “This is very important because when we improve innovation management, there will be some sort of change to organisational management. There has to be or you won’t be able to move your organisation forward.”
“We’ve created a strategy we’ve called the Connect Strategy, that’s basically three levels that we’ve established to create alignment throughout product innovation in the whole group: design, services, and protocol,” Frahm said.
Design sits at the core, and everyone in the organisation who creates a new product can use that design kit. Every service that is valuable to any kind of product is done once, and can be used by any product innovation project. Protocol allows content elements to move from one application to another. For example, a Twitter link used in a Medium post would be automatically converted in Medium.
This Connect Strategy takes place in DBA’s Developer Campus, which builds culture, competence, and communications between all the applications.
As part of innovation communications, DBA established both an internal and external innovation blog. “Also, we connect our product managers, like doing training workshops on methods and strategic issues,” Frahm said. “To minimise misunderstandings, we use the Product Field terminology as the basic terms that we use when we talk to each other. So we instantly know what we mean when we talk about drivers or motivation; we just know, because work with the same model.”
Frahm likens this to the terminology that pilots use to talk to each other and the control tower because they cannot afford to misunderstand each other.
“The core idea of product thinking is to put the product in the very centre of all our thinking and actions. This might sound a little counter-intuitive to a lot of innovators, who have heard to put the customer in the middle and use that as a focus point.”
Frahm, however, thinks that this is not working.
“It’s not just about the user value, it’s not just about the market opportunities, or your great business ideas, or the resources you have. It’s all of those context elements together that decide the fate of your product innovation. And that is the core of product thinking. Don’t focus only on the customer, don’t focus only on your great idea or resources or the market — focus on all of them at the same time.”
“To really get this going, you need a method, and that is the product field,” Frahm explained. At the top of this method are the goals and motivations of the organisation. At the bottom are production and distribution. In the middle and between these two things are problems, solutions, and alternatives.
“It’s very important to differentiate between your users and customers,” Frahm said. “It’s not the user in most of the cases that makes the buying decision.”
You also have to know what kind of enabling assets you have and production capabilities. “This is something we really follow here at DPA, to get the complexity of innovation handleable.”
Everything on the left half of their product field is everything about the inside of their organisation (drivers, enablers, production), and everything on the right half of the product field is about the outside of the organisation (users, customers, problems, distribution). The product sits right in the middle.
“You have to create business value for the outside and for the inside,” Frahm said. “Only if you take care of that are you on a success path in terms of product innovation.”