The Innovation Chasm and the Big Six

Publish date:

I recently had a chance to sit down and
talk with a prominent Ivy League business
school professor. We talked a little about the
corporate inertia of large, comfortable organizations
and their failure to innovate.

He told me that one of the worst cases he ever
saw was that of AT&T in the early ’70s. AT&T
would send many of their executives to business
school for corporate development once they hit
senior vice president status. While most people
who arrived from mature corporations like IBM,
General Electric and Xerox showed up brighteyed
and eager to learn about case studies, innovation
and corporate agility, you could spot the guys from
AT&T a mile away. They all wore the same suits, had the
same demeanor and showed more interest in cost cutting
and cash flow than innovation and responding to the business
environment. Sound like anyone you know?

Th ough at the time AT&T was in essence a monopoly, the
“Big Six” cable operators now find themselves in the same
innovation doldrums as the old AT&T. The Big Six MSOs
are Comcast, Time Warner Cable, Cablevision Systems, Cox
Communications, Charter Communications and Bright
House Networks and account for the vast majority of cable
subscribers in the U.S.

While the recent efforts of TV Everywhere, adoption of
Enhanced Binary Interchange Format (EBIF) and Canoe
Ventures have paid service to the innovation mantra, I
still find myself asking, “Is there anyone at one of the large
MSOs that truly speaks the innovation language and tries
to engrain it in the DNA of their organization?”
More often than not, I can’t find a positive answer
to that question.

From video-on-demand to interactive
TV, there are many small, agile and innovative
companies out there with products that
would both increase MSO cash flow and increase
end user experience while lowering
the pricing burden. However, the MSO response
to these companies is usually “show it
to us when Comcast rolls it out” or “no thanks,
we are working on that ourselves among many
other initiatives.” No wonder there is little or no
VC investment to companies looking to innovate on the behalf
of the Big Six.

Innovation takes courage, and the history of cable is
filled with courageous moments, from Comcast’s Ralph
Roberts buying 1,200 subscribers in Tupelo, Miss., to Bob
Magness selling his cattle to fund TCI. Without the innovation
mindset and not looking beyond the core business,
I believe the big MSOs are just running out the clock, instead
of playing offense.

The Big Six need to foster an environment where the true
heroes of technology and commerce can stand up and take
some relatively safe chances. Until that happens don’t be surprised
if the next John Malone or Charles Dolan comes along
with the courage to risk it all, and potentially replace them.

Daniel Hassan is chairman and CEO of interactive-TV
firm BCM.