It’s a classic variation of the “innovator’s dilemma“. Large, legacy publishers recognize that their business models are changing dramatically, yet they can’t afford to shift resources into developing the risky new technologies that may–or may not–rescue their companies.
To address this dilemma, publishers have started experimenting with a new solution: innovation labs. In the past few years, legacy publishers from the New York Times Company to Condé Nast have launched small departments dedicated to exploring potential company-wide innovations. Each lab differs in terms of structure and focus, but all strive to function more like start-ups. The hope is that these departments can be less risky, but much more agile, innovators within the larger organization.
Over the next few weeks, I’ll be exploring the emergence of these departments at several publishing companies. A profile of the Dow Jones R&D department will kick off the series.
The Dow Jones R&D department
Prior to becoming chief executive of Dow Jones (the News Corp subsidiary that publishes the Wall Street Journal, Marketwatch and Dow Jones newswires) in early 2012, Lex Fenwick had spent the past several years as the head of Bloomberg Ventures, the company’s business development arm. At Dow Jones, Fenwick took some of these business development lessons and launched a new R&D department that reports directly to him.
Led by Jack Levy, the 7-person team is purposely independent and is tasked with creating innovative solutions to company-wide challenges. “We can look at a problem with complete objectivity and with an eye toward finding the best solution for the company, not for the publication or manager or another group,” Levy said. Their independence also means they’re not beholden to entrenched technologies, but can instead experiment with new software or programs. For anyone stuck using an email system or project management software merely because that’s what your company has always used, this freedom is particularly appealing.
And when it comes to solving these large, company-wide challenges, Levy emphasized that a new technology may be a solution, but it’s not always the default solution. “We pinpoint problems that cut across teams and products and find effective solutions that use the best technology that we can find to solve the problem–whether or not that technology is very cutting-edge or not depends on the situation.”
The team has been in existence for under a year, but it’s already developed a few products that are soon to launch. One is a “digital vault” designed to protect sensitive user-owned content and provide Dow Jones customers with a channel for sharing and discussing the content with one another. The vault will initially focus on the exchange of sensitive information between lawyers, accountants and tax advisers, among others.
Another soon-to-debut product is built to encourage conversation between Wall Street Journal readers. This technology, which Levy describes as a hybrid between email and chatting, is meant to take engagement a step further than just commenting on a Journal article. “We have over 2 million people paying for the Journal. And these are highly educated, influential professionals who have a lot in common with one another,” Levy explained. “Right now, we engage our readers, but we don’t necessarily encourage them to engage with one another in a long-lasting way that will build relationships and enable collaboration.”
The products coming out of the R&D department are ultimately developed to prepare Dow Jones for an all-digital world, a key tenant of this innovation lab’s philosophy. “It’s my expectation that in a number of years, 100 percent of [Dow Jones] revenue will come from digital. People aren’t going to want to hold a newspaper,” Levy said. “For as long as people want to hold a newspaper, we’ll give it to them, but sooner or later that will change. And by then, we’ll have a digital business model in place.”
Photo of Dow Jones’ New York office courtesy of Dow Jones