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Risk and reward: Joi Ito on what news orgs could learn from tech companies about innovation

The director of the MIT Media Lab compares the worlds of media and tech, and says “When you’re sinking, you have two ways to go: You can bet the house on something, go all in, or you can try to become smaller and smaller until you disappear.”

What’s one of the most important things that drives innovation? Risk, according to Joi Ito, head of MIT’s Media Lab. The willingness to take risks and accept what comes with them is what can lead to the creation of new tools, technologies, or systems that can change society.

And therein lies the problem — or at least one of the problems — when it comes to innovating in the world of journalism, Ito says. While journalists are known to take risk in their jobs, it’s done in the course of reporting a story. But the risk involved in starting or operating a business — or in making radical changes to how an existing business is run — is something else entirely. Two professions often exposed to risk, journalists and lawyers, can also be the most averse to it, Ito says.

“The problem with journalists, I find, and lawyers, is they understand risk very well. But they’ve never taken it,” Ito said at a recent event at the Media Lab, sponsored by the Boston chapter of Hacks/Hackers.

That’s specifically true, Ito said, when it comes to fundamental financial risk. “Lawyers and journalists are so protected from personal risks that they make the worst kind of risk takers,” he said.

What Ito was talking about more broadly is how journalists can manage innovation and change within their own companies at a time when innovation seems to be popping up anywhere other than newsrooms. Ito and Ethan Zuckerman, director of the Center for Civic Media at MIT spoke at the gathering about the challenges journalist face in trying to create new products and transform the business models surrounding them.

Ito’s background blends the worlds of tech, civic activism, and media. He’s been an early investor in companies like Twitter and Kickstarter, and he sits on the board of The New York Times Co., Creative Commons, and Knight Foundation, among others. It’s with that experience that Ito contrasts the experiences of trying to develop new products and ideas as an entrepreneur versus a large media company.

Everything in media, as well as how people react to it, is changing, Ito said. Consumption habits are transforming, our devices are changing each year, and media coverage is shifting as well. These things together are at the heart of people’s connection to — and participation in — their community, Ito said. That’s why it’s so important journalism finds a way to transform, he said.

Risk is one part of the equation when it comes to innovating, Ito says. One reason journalists have difficulty with experimentation, at least within their job, is that it could mean losing everything. Because of the nature of the industry, journalists have become “people who have been trained to be so good at what they do that the cost of not doing it is very high,” Ito said. That, in turn, brings up another problem: the skills. Journalists, while skilled and trained in writing and editing, may be less prepared to build a new product or devise a new business model as a designer or developer, Ito said.

As anyone watching media companies today knows, there are problems on the institutional level that can limit the impact of individual reporters, editors, or developers. Media companies are facing a fundamental decision that will shape their future, Ito said. “When you’re sinking, you have two ways to go: You can bet the house on something, go all in, or you can try to become smaller and smaller until you disappear,” he said. 

Some of the bets we see now are things like paywalls, or investing money in intensely local markets to try to build up community coverage and re-establish a connection with readers, Zuckerman said. That’s what we see with investors like Warren Buffett buying up small and midsized papers, or Aaron Kushner’s reinvention-in-progress of the Orange County Register. But that still leaves a lot of journalists trying to find ways to transform their paper from within, without the benefit of a cash-rich new owner, Zuckerman said.

Ito said one solution is people with ideas working in small teams, and on some occasions skirting the official channels until an idea, app, or other product is more fully formed. Innovation doesn’t always need to come from the edges, but it often grows well there. “I do think that — and this is generally true about innovating in large organizations — it’s a small number of people who understand enough about what needs to be done and go off and just do it,” Ito said.

Zuckerman wondered if acquisitions, a method favored in the tech world, is the answer for media companies. Companies like Twitter, Facebook, and Google regularly buy or raid smaller companies with the talent or technology they need. But by and large, that doesn’t happen in media, in part becuase media companies lack the cash or high-flying stock values needed. Media companies could also be hard pressed to integrate managers from an outside company fully into a newspaper’s leadership team. In the world of tech companies, those outsiders can rise to the top of their new firm — but in a newspaper? “You don’t get to be the editor-in-chief of The Boston Globe by starting Homicide Watch,” Zuckerman said.

While there is plenty the world of media could learn from Silicon Valley and other parts of the tech world, Ito said a purely financial orientation should not be one of them. Tech companies can be relentless in their pursuit of profits, but newspapers and other media organizations, have a mission beyond money, he said. The concept of a double bottom line — meeting the civic needs of readers as well as the fiscal ones of investors — needs to remain important to media companies, even in times of shallow growth and slim profits, Ito said.

                                   
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  • Dave Ball

    Wow, where to begin?

    It is nice to say that newspapers have “a double bottom line”, but unless the editor is also the owner, that’s pretty naive. Unlike in tech, where investors may put money in a portfolio of startups hoping that one in ten (or twenty or one hundred) makes it, you’ll find that the investors in media properties tend to make one big bet, and they only see one bottom line. Public companies are also challenged to hit hit their revenue and profit numbers each quarter. That may be good … it may be bad … but that’s the way it is. That’s the environment that management is working in.

    As far as product development goes, perhaps the editors are not the people who should be the innovators, exactly because of the skill set. In other industries, CPG for instance, there is a rigorous methodology for product development. Is there a market? How big is the market? Who are the competitors? Can we make money (yes, that is a consideration)?

    Seems like the folks at Blackberry (and Motorola?) had the same constraints as people in media. Maybe it’s just easier to innovate when you are not the industry under attack.