In the era of “Citizen Kane” and “All the President’s Men,” media business models were so much more straightforward. You sold newspapers, and newspapers contained lots of advertisements, and if you succeeded on both dimensions, you had a solid business.
Not so in 2018, when print media readership is plummeting—along with cable television viewership. According to the research firm eMarketer, in 2017, more than 22 million adults in the US will have cancelled cable, satellite, or telco-provided TV service, a number that rose 33 percent from the year before. Replacing traditional “pay TV” are services like YouTube, Hulu, and Sony’s PlayStation Vue, television via videogame console.
That creates a tremendous imperative for cable stations like Atlanta-based Turner Classic Movies, part of Time Warner. TCM has always relied on fees from pay TV systems as its primary source of revenue—known as carriage fees — and has never interrupted its movies with commercials.
As part of our IL Live series of conference calls, we recently spoke with Shannon Clute, Director of Business Development and Strategy at TCM, about the channel’s “bottom-up” innovation strategy.
“Top-down support is crucial, but bottom-up development is the key to creating something that is reflective of your culture, and will result in widespread buy-in and active participation,” Clute says. “We decided to create a cross-functional, non-executive action planning team (all Senior Manager and below) to develop a ‘Culture of Innovation’ strategy, and got senior leadership’s approval on that plan.”
He described the initiative with IL members—including the dangers of scheduling too many meetings—and also shared two slides as part of the conversation.
My Role at TCM
I think that the easiest explanation of how I got involved in innovation is, it was simply part of my DNA. In just under a decade at TCM, I have worked in four different departments, and was always proposing new ways of doing business or new processes for improving communication or collaboration.
As the [cable television] industry shifted…the leadership here at TCM, and in particular our general manager, Jennifer Dorian, recognized that she wanted a unit within the network that focused more explicitly on identifying and developing new business ideas and opportunities.
There were two people who were tapped to create this department. I focus on more transformational opportunities, looking further afield, and then creating the touchpoints and the processes of development of an innovation culture within TCM.
Lydia Kim, who has a strong development background, focuses more on the portfolio strategy, the modeling and prototyping of individual businesses, especially those that are more adjacent. We are a good one-two punch.
Cable TV Dynamics
People are actually watching more television, it’s just that they’re doing it in more places, and traditional cable subscriptions are eroding both because of cord-cutting [giving up cable TV subscriptions], and because of what you’ve heard called “skinny bundles,” these smaller distribution packages that are popping up with PlayStation Vue, etc.
Retaining the same level of [distribution on various cable systems] is a challenge, and with that decline in subscribers comes the need to look for other business opportunities.
There is an innovation group that is quickly growing within the Time Warner corporate research function. [But] TCM is really unique, and it has been great for us from an innovation perspective, that we’re an unusual network.
First of all, we’re not ad-supported…By and large that’s a real advantage, but of course, as you’re facing industry headwinds and [a] decline in [cable] subscriptions it’s a particular challenge, because we don’t have some of the other revenue sources. We don’t have ad revenue. We don’t have our own intellectual property, as the other networks do that create their own programming.
It creates a really unique situation, where for the first two decades plus of our existence, we focused primarily on the brand and what it meant to consumers, and on this formula we had created around curation and context for the movies we presented, so that people could experience them in a more deep and meaningful way, and that meant hosted introductions. It meant themed programming. Nothing goes on TCM without a context…It made it a really unique environment, both from the business perspective and from the perspective of the consumer’s perception of the brand and what it represents.
I actually have to say that despite the challenges of not having our own intellectual property, it has in a strange way positioned us to be on the forefront of innovation thinking within [Time Warner], because we’ve always had to be about reaching the consumer where they are, and figuring out ways to extend the brand in a more meaningful way to the consumer and their lifestyle.
Many of the sorts of trends that brands are going through now as they try to transition from traditional business models to become, say, lifestyle brands or fandom brands, we’ve always had to think that way.
We don’t want to use the term “the little engine that could” because it makes us sound small, and we have a really outsized impact in some ways on broader innovation thinking within Turner.
Don’t Lead with Meetings
We started [our innovation initiative] in two directions. We started by shopping this to the leadership team, but also by beginning to schedule some innovation initiatives, some workshops for all staff, and we discovered that in retrospect, maybe it wasn’t the right approach…
The fact of it going on peoples’ calendars, whether it was the calendars of leadership, or the schedules of staff more broadly where we were scheduling these sorts of workshops or brainstorms or touchpoints, it [created] the optics of this being an additional layer to their day job.
If you lead with scheduling, I think that you put yourself in a corner where you’ve made innovation look like an additional responsibility or an additional duty. What we really wanted to create was a cultural change, where we said innovation was not an additional thing we need to do. Innovation is a way that we need to go about everything we do.
We need to be rethinking all of our day-to-day operations, whether they’re programming or packaging, marketing. All of these things need to drive additional value or have the potential to drive additional value, and ideally value that would exceed the linear network too as we extend into other businesses that are more direct-to-consumer.
We hit pause and brought in an outside partner to help facilitate discussions with the leadership team about…what it meant to create a culture of innovation, why it was important, to really clarify terms, clarify goals, create a shared vocabulary, and build consensus and buy-in.
[The outside partner was] a branch of the Center for Creative Leadership in Greensboro, which is probably best-known for its individual assessments and trainings. But they have an entire unit that focuses on executive organizational structure, organizational culture, and leadership culture.
Then once we decided that it was going to be a full-staff initiative, we — myself and Lydia Kim in business development — we sort of did an initial shortlist of staff that we thought would do a great job of thinking cross-functionally and in forward-thinking terms…
We then took that shortlist to the individual department heads and said, “Do you think this person would be a good fit, and could we make sure that there’s some time in their calendar for on-going ‘culture of innovation’ development work,” and got the buy-in then from those leaders, then sent out the invitations, initially to just one person from each team.
Every single one of them accepted and really dove into the work, which to my mind is indicative of this thirst for employees to really understand and embrace innovation. But a lot of times when it’s rolled out more as an exercise, they don’t know where to begin. We discovered that there was a lot of confusion about what we meant by innovation. Was it just ideation? Was it just business proposals?
We had the opportunity with this cross-functional non-executive staff—they were all senior managers and below—to work collaboratively to define those terms in ways that would be meaningful to all staff.
I thought these two illustrations (below) would be a good summary of what the process led to. Each of these is a one-sheet that was produced by the Culture of Innovation Action Planning team. The first, which is the more dense of the two, really represents the full ecosystem of touchpoints that we developed collaboratively to develop this broader culture.
These range from very informal and unstructured [things] that are really just meant to be thought-starters, to things that start to get people a little more structured development in innovation thinking.
[One example are] the inspiration grants, which are something we’re proud of…all the way through to this by-invitation meeting that we’re calling “The Breakthrough,” which is where we direct people who have an idea that we think has real revenue potential.
Then the Culture of Innovation team manages that meeting…They talk them through a formal idea résumé, and they coach them on where they think there’s room for more development, etc.
Once we’re comfortable with that pitch, it then goes on to the pipeline group that does the formal assessment of the portfolio mix in which new businesses are going to receive some seed funding for exploration, etc.
This next document was also created by the culture of innovation team. This was one of the key documents at the actual roll-out of the strategy to all staff, which we consider the official launch of this new culture of innovation strategy.
This was accompanied by a very cute video that the team produced. It’s cute, but I should also say it was really well-done because of course, we have some great producers in the house at TCM.
…From day one, it had this feeling of really being authentic to our culture.
Exploring New Business Opportunities
Traditionally, ideas [at TCM] would come from various groups. Those that got voiced through the individual department heads would make their way up, so there was still a process for innovation. The problem was, of course, as we became busier and we launched more businesses, it seemed likely that fewer of those ideas would get through the filter of layers within their individual departments.
What we needed to start was a cross-functional group that…could help to champion [new] ideas up through leadership.
There were already innovations going on and there were businesses being launched that really were aimed at extending our linear network into first, a lifestyle brand, and then really more direct-to-consumer product lines.
The lifestyle brand stuff, by and large, was an immediate hit with consumers because the connection was obvious. Things like the Turner Classic Film Festival in Hollywood that we do each year when we take over historic venues, show old movies, have incredible talent from those movies present, that was an easy fit.
But then, as we started to extend into, say, subscription-based businesses like the TCM Wine Club, it was tougher for us to understand how to position those businesses where what we were really saying is, “Look, we’re curators of the classics, and we know how to do this in other arenas.”
But, we weren’t doing enough to help the consumer understand that just dinner and a movie is a fun thing to do, and makes a lot of sense. Once we turned a corner in how we were positioning it, that [wine club] business started to succeed better.
Metrics of Success
Now that we have established a strategy, and we’ve defined all these touchpoints and processes, we’re excited to start really using this on a more regular basis to see what sorts of ideas come through it and what sorts of value they drive.
I think a big emphasis for us in 2018 is assessment of the actual revenue or monetary impact of these processes on our businesses, and also the kind of qualitative and cultural impact. Does it encourage more idea generation, get more people actively involved?
Testing some of the initial metrics of success that we’ve established to see, are we accomplishing what we meant to? Are we maybe accomplishing something else we didn’t expect to?
In terms of bigger investment for the company, needless to say, we are at a crossroads for reasons you’ve probably all read about in the press, which is that we’re waiting to find out what’s happening with the pending [merger between AT&T and Time Warner, Turner’s parent.]
That will certainly have a big role or a big impact on where we go in the future. That one I wouldn’t know how to speak to at the moment, because there are a lot of uncertainties.