Tag: innovation

NBA’s broadcast innovation dilemma

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Disruption theory (2:00 minute YouTube HBR explainer) describes how leading companies serve their customers through product improvements rather than invention.

Keurig’s innovation was capsule coffee and sustains their company with ideas like Brew ID which “recommends recipes with easy step-by-step instructions.”

It’s an innovation dilemma because sustaining innovations makes the money printers go brrr, like at ESPN.

These sustaining innovations fail when the customer Jobs-to-be-done changes.

“We started doing it for free,” Nate Duncan said on Wharton Moneyball in December 2022 about his NBA Strategy Stream show, “with the idea of eventually doing something like this back in the 2016/2017 season. We did it pretty much unpaid – our Patreon subscribers would throw us a few bucks but they weren’t obligated to – and we just built up a lot of reps doing it in the bad old days.”

Think about that. Duncan and his partner Danny Leroux worked “pretty much unpaid” to broadcast NBA games.

But they found an audience. They found an adapting JTBD.

Disruption theory also describes how leading companies can create both sustaining and disruptive innovations. One aspect is a separate P/L. But that takes financial, temporal, and status capital. Within any organization, what executive is going to suggest an unprofitable bet to create something people might want? No way.

But that’s disruption theory.

Should you build *magic*?

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When talking about Jobs To Be Done, Bob Moesta notes that there are two ways to innovate. Supply-side innovation is internally driven. Organizations know their capabilities, limitations, and business model and build from that position. This type of innovation is more efficient, has limited scope (and costs!), and uses the language of the organization.

Alternatively, demand-side innovation is externally driven. Jobs theory is demand side as is the Mom Test and IDEO’s invention through iteration. This type of innovation includes prototypes and feedback, lots of questions, and uses the language of the customers and consumers. 

“Any sufficiently advanced technology,” Arthur C. Clarke wrote in 1962, “is indistinguishable from magic”. 

That quote highlights this aspect. Technology users want it to feel like magic. Builders use advanced technologies.

Face ID is magic. 

“What Apple did with Face ID was take a really hard computer science problem, and using a lot of complicated technology, create something with a simple name. I intuitively know what Face ID is just from the name. It’s also intuitive to use. I looked at it and was in. There’s an opportunity to do something like that (for crypto). Multiparty computation is not the right marketing term for what the average person might use.”

Brian Armstrong to Ben Horowitz. 

Uber is magic. 

“At first glance Uber might just look like a simple app—after all, the premise was always to hit a button and get a ride. But underneath its deceptively basic user interface was a complex, global operation required to sustain the business. The app sat on a vast worldwide network of smaller networks, each one representing cities and countries. Each of these networks had to be started, scaled, and defended against competitors, at all hours of the day.”

Andrew Chen, The Cold Start Problem.

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The wrong lesson here is to think customers want magic. It’s situational! Shopping and buying are different. 

There is no best way to innovate, only trade offs. But Clarke gives us a nice framing for technology.

ESPN’s innovation dilemma

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One pant leg on is a local maximum. One problem is solved but the larger set is not.

Clayton Christensen’s series on disruption and innovation is about local maximums.

Money machine go brrr is a strong incentive to keep printing. Maximizing a profitable business makes sense, which is the dilemma! Organizations find themselves looking good in one pant leg.

The solution to local maximums is exploration. But this is costly – money, status (uh oh), time, reputation. Plus the stakeholder’s opinions.

The solution, Clayton Christensen writes, is separation. Different groups with different strategies, finances, and when possible physical locations.

Solutions via exploration are important because customer and consumer preferences – their JTBD – change.

“We are all under the Disney umbrella,” Brian Burke said, “ESPN.com is a huge enterprise with an army of people and is a revenue generator in so many ways. It’s difficult to change course. FiveThirtyEight is agile, nimble, and experimental so (publishing there) was a great opportunity”.

ESPN.com go brrr.

Which is the dilemma, and Disney/ESPN uses FiveThirtyEight as the exploration solution. Who knows if Burke’s writing approach is better, but the publishing strategy is a solution to the innovator’s dilemma.

“The next ESPN.com” will be different. Whatever is next will have a different business model than the current Great Firms (Christensen’s subtitle). Whatever is next will have a different maximum. It will be a short vertical video or the degradation of the sport monoculture or something we can’t predict today.

Or even an analytic forward analysis from Brian Burke.