Executive Summary
A great innovative artifact could be created when various aspects, such as Innovativeness, simplicity, affordability, reliability, and usability, are perfectly tailored to the artifact. YouTube, as the core of this report, indeed benefits from all these aspects. Even since its advent, YouTube has gained much popularity and recognition all over the globe in such a way that currently everybody at least has visited this website one time or has seen one video through this platform. As far as the media is concerned, this online streaming website has disrupted the traditional way of broadcasting television programs. In the literature, an innovation that is able to accordingly disrupt the current market, and incumbents is called disruptive innovation (Christensen, 1995). Based on this theory, in this report, it is justified that YouTube’s success is mostly due to its unique virtues. Then, different types of adopters of the selected innovation based on the diffusion of innovation theory are explained and provided. It is also proved that all types of adopters with different levels of adoption are willingly using YouTube nowadays in light of its beneficial advantages and social values. Next, the evaluation process of the innovation based on Ex-ante and Post-ante phases by which Youtube is considered to be in its first starting point to be evaluated before its final implementation is explained. Following the evaluation process, the best management strategies when the selected innovation is set to be launched by a hypothetical start-up are proposed.Finally, some measures for evaluating Business Analytics when considering the design and management of the innovation to be more successful than before are suggested. It is then followed by a conclusion and two appendixes including an infographic of YouTube and its components in addition to some relevant tables and illustrations.
Unbeatable Innovation
Behind the success of every innovation, there ought to be some secrets of how it has been achieved and what the reasons are. For this report, a successful innovation by which not only the media but also giant television channels should be concern about is selected. This innovation started its journey in February 2005 when three former PayPal employees decided to create their sharing video website in that there was no perfect instance at the time according to Bellis (2019, para.5). The website was named YouTube on which everybody simply could share and watch videos online. At its outset, due to simplicity and free to use accompanied by the rapid development of mobile phones with decent cameras and growth in the Internet speed, YouTube was quickly becoming popular in the US according to USAToday (2006, para 2). Surprisingly, In the course of just one year, YouTube was acquired by Google for $1.65 billion in 2006 according to Monica (2006, para.1). It led to the growing expansion of YouTube’s influence, recognition, and popularity. This trend continues to grow, and currently, YouTube has become one of the most impactful and well-known online media the world over as said by Diu (2015, para.2). This influence can be simply proven by visiting the most viewed video in history on YouTube, reached around 6.5 billion visits the same number as the population of the world (2017). It is the current massive influence and prevalence that YouTube claims that “over 2 billion active users visit this website each month and every day people watch over a billion hours of videos and generate billions of views” (2019). In just Australia for instance, as reported by PwC, YouTube has had so far around 13.5 million users including people with different age groups (2019, p.4). To justify this tremendous achievement and light the path through success for other innovators, it is intended to break down YouTube into several business perspectives.
Proof of Disruption
Since YouTube is a streaming and ICT-enabled medium, television channels companies are at the forefront of facing it. Although they began dominating the entertainment industry and the media two decades ago before the advent of YouTube, they have still had their inherent limitations. Firstly, their programs can be only broadcasted through cable or wireless infrastructure. Secondly, to be a TV representative or an entertainer as well as publishing your video content, enthusiasts need to cope with many barriers to be finally allowed to be in a TV program or publish their videos. This traditional way to air programs and attract enthusiasts had never been disrupted since when YouTube was established as mentioned by Fortune (2013, para.2). YouTube, however, as a social media, not only empowers its users to simply create their channels to share their videos to be a self-made entertainer or journalist but also as a digital platform directly interconnects both video creators and their audiences. Further, everybody can watch various categorized videos through YouTube online with no cost by using all types of electronic devices such as cell phones. There has been no such paradigm that can compete with all these strengths. Further, according to Google’s report by Neil-Hart, due to these benefits, there has been a fundamental shift from watching programs by TV to watching videos online through YouTube (2016). All these strengths thus have led to the end of the TV channels’ dominance (2016).
To pinpoint the reason behind YouTube’s success and the cause for concern over this success by the media, YouTube should be considered from the perspective of disruptive innovation theory. This theory was suggested by Christensen (1995) and since then the theory has had much influence in the business world as stated by King (2015, p.1). According to Christensen, it is defined as “innovations developed without an attempt to make better results to their customers in existing markets, but rather, by introducing products that are not as good as current products but simpler, more convenient, and less expensive to disrupt and redefine the trajectory of improvement [1], as shown in Fig. 1,(2003, p.33). This trend can appeal more to new or less-demanding customers (2019, p.1,2). Thus, once a disruptive product gains a foothold in its new or low-end markets, the improvement cycle begins (2003, p.34)”. In other words, disruptive innovations do not disturb the mainstream market, but instead, they attract more customers out of a market to bring into the new one in that the customers consider the new product to be more convenient to employ (2003, p.45.46). Given this explanation, because YouTube was based upon the low-end streaming market by providing all necessary factors of the theory, such as simplicity, convenience, reliability, free to use and access, all at once in its online platform, Thus, YouTube is quite eligible to be regarded as a disruptive innovation (Turner, 2012).
[1] A line that shows how products improve over time.
Exploration of Adoption of Innovation
After clarifying the disruptive innovation theory, the way in which the adoption of YouTube has diffused amongst individuals should be examined. To do so, the Diffusion of Innovation as a mature theory for the adoption of innovations is opted for. This theory was developed by Everett Rogers in 1962 (2003). In his theory, he first introduces and explains five essential characteristics of innovations, namely: Relative Advantage, Compatibility, Complexity, Trialability, and Observability (2003, p.232) by which an adopter’s decision to adopt or refuse an innovation could be affected. Next, as shown in Fig. 2, he classifies adopters of innovation according to the S-shaped degree to which they tend to adopt an innovation called “innovativeness”. These Adopter Categories are as follows: Innovators, Early Adopters, Early Majority, Late Majority, and Laggards (2003, pp.282,283). From the business and marketing perspective, these factors could be critical when innovations are about to be launched and promoted to a target population according to LaMorte (2019, para, 2).
Given the rapid prevalent of this platform, in YouTube’s case, Innovators are those groups who are either business owners or avidly eager to use new technologies. By looking at other disruptive innovations such as Khan Academy - an academy to provide free world-class education based on high-quality videos (2019) - and Ted Talk - a non-profit organization for spreading ideas (2019), clearly these innovators have based their ways of disrupting educational context upon YouTube’s platform. Further, nowadays some companies have started teaching freelancers how to establish their businesses by simply creating their own videos on their own channels to make money from YouTube. Interestingly, this trend reminds us of the saying “if I have seen further than others, it is by standing on the shoulders of giants” by Issac Newton. Early Adopters for YouTube are those willingly using its videos for educational purposes and those forced to learn a subject with the help of videos on YouTube. The highest portion of YouTube’s users, however, consists of the Early Majority and Late Majority. The former group generally is not willing to adopt new technologies and innovations before seeing the evidence and making sure that the innovation in reality works or has benefits to their lives. Likewise, the latter group is even more skeptical of using new innovations in a way that they tend to wait for the early majority to use innovations. The second deterrent to adopting innovations for both groups is that whether or not an innovation jeopardizes their privacy or security. For YouTube, these groups could be the majority of the general public with different age groups. The last group of adopters is the Laggards whose tendency to use innovation is the lowest among others. They do not adopt new ideas unless they are forced to use or see people benefit from them. Thus, those who do not connect to the Net or have no knowledge to do so are the user's YouTube can consider being Laggards. Following this classification, in order to determine the rate of YouTube’s adoption by its adopters, each classified group should be examined based on Roger’s 5 factors and characteristics of innovations (Table.2).
1) Innovators: Relative advantage: When an ambitious website like YouTube is born this group is in the first line. For them, the merits are the unique opportunity to be easily seen, and plenty of simple and free features. Compatibility: When providing a free platform without a need to install any applications on a computer to watch videos, everything seems compatible with the first group’s needs to adopt this platform. Complexity: For those who are experts, technology geeks and business owners, the level of the complexity could not stop them from adopting new technologies.
2) Early Adopters: Relative advantage: For this group, accessibility via the Net, and free to use are the most advantageous factors they take into consideration when adopting this platform for the first time. Compatibility: Provisioning informative and relevant videos shown on any device help this group attain what they need since this group of adopters mostly seek knowledge and skills. Complexity: In order to learn, simplicity could be a matter of importance when using YouTube by this knowledge-seeker group.
3) Early Majority: Relative Advantage: Benefiting from reliable privacy and security for this group is the most fundamental aspect of using YouTube. Compatibility: Nothing would be better for this group, except accessibility with ease so that YouTube can be run on every electronic device. Since YouTube has provided a simple but thorough platform to share videos, this group can also simply adopt this innovation. Complexity: As simplicity is a requirement for YouTube to attract more people who are not experts at IT, complexity could be a deal-breaker for the majority.
4) Late Majority: Relative advantage: Late Majority even goes further. They consider their privacy to be the most important part of their lives. Having established strong privacy policies by YouTube, they have also started adopting this streaming platform. Compatibility: Like the Early Majority, nothing would be better for this group, except accessibility with ease besides security. Since YouTube has provided a simple and secure platform to use, even this group can simply enjoy its benefits. Complexity: for the Late Majority, who are doubtful of trying innovations, at least providing a simple platform to adopt, is a game-changer.
5) Laggards: Relative advantage: There is no benefit to be regarded, as members of this group rarely connect to the Internet. It happens unless this group is compelled to use videos on YouTube. Compatibility: The only question this group would ask before using YouTube is that whether or not it can solve their issues. If the answer to this question is yes, hence the compatibility could be achieved. Complexity: For those who are conservative about new technologies, complexity just reduces the probability of adoption. Thanks to YouTube's simplicity, compatibility, free to access, and reliability, and as its sheer popularity indicates, it is becoming increasingly widespread and everybody with various levels of adoption joins its society. Thus, it could be proven that Youtube has reached its plateau of adoption by all types of adopters.
Evaluation of the Design
For the benefit of new innovations and technologies, in this part, YouTube is examined from the design process perspective based on Design Science Research (DSR). One of the crucial aspects of DSR is thorough evaluation since any artifact should be purposeful and serve its purposes (Hevner, 2004, P.85). As illustrated in Fig. 3 (Knut Samset. 2015), by carefully evaluating an artifact before (Ex Ante) and after (Ex Post) the design and implementation phase, pre-defined aspects of the artifact could be examined (Venable, 2012). These aspects that should be evaluated are utility, rigor (Functionality and efficacy) (Hevner, 2004, p.85), effectiveness, efficiency, and ethics of an artifact. As a result, based on these factors, the evaluation process provides us sufficient evidence that whether or not a product can properly work in accordance with its purposes (Venable, 2012, P.2). An evaluation framework in DSR consists of two axes: i) X-axis demonstrating types of evaluation, naturalistic and artificial, and ii) Y-axis specifying the time of evaluation process, Ex Ante and Ex Post (Pries-Heje, 2008, P.5).
To facilitate the design of the evaluation of an artifact, John Venable et al. proposed a detailed four-step method. These are as follows: 1) analyzing the context of evaluation 2) matching the needed contextual factors to the provided criteria in the DSR Evaluation Strategy Selection Framework, as shown in Fig. 4, 3) selecting an appropriate evaluation method based on the Evaluation Method Selection Framework, as illustrated in Fig. 5, 4) Design the detailed evaluation process (2012, pp. 11,12).
Prior to starting the evaluation based on the aforementioned method, first, it is needed to specify some basic facts regarding the selected product or the subject of evaluation (Evaluand) which is a website. To do the first step, we identify the characteristics of this artifact and the goals of the evaluation. As this evaluand by nature is a user-based platform, YouTube would be considered not to be purely technical but socio-technical. Further, due to its nature, some aspects of evaluation, such as utility, effectiveness, efficacy, reliability, simplicity, ethicality, and efficiency should be examined. However, given that the technical team has enough resources such as time and money to dedicate to the evaluation, efficiency could be taken out from the evaluation. For the evaluation, since YouTube is a content-based website, the only constraint is the lack of an adequate amount of content or videos to extract the best result during the evaluation process.
Having matched the contextual factors of the selected artifact, it is decided to choose naturalistic evaluation from the X-axis and both Ex Ante and Ex Post from the Y-axis on the basis of the DSR Evaluation Strategy Selection Framework as illustrated in Fig. 4. It can be justified that because the artifact is supposed to benefit from real stakeholders and is socio-technical, we need to evaluate this in a real environment with empirical evidence. Other key reasons are having enough amount of resources for the evaluation and the artifact per se has a low risk of safety for the participants. To opt for which evaluation method could be best suitable and feasible for the evaluation, the choice is based upon the DSR Evaluation Method Framework as shown in Fig. 5. For this reason, as shown in Table .1, action research and focus group are the selected methods in relation to Ex Ante and participant observation and survey as regards Ex Post.
On one side of table 1, the first Ex-ante evaluation of the selected DSR framework is to conduct action research before the implementation of the artifact. This method of research is an interactive research process with the active participation of both researchers and participants through defining an inquiry first and gradually moving forward to a conclusion at the end of the process (Reason, 2001). Since the nature of the artifact is an interactive user-based platform, action research could be the best method for the Ex-Ante phase of the evaluation. The focus group is the second method by which we are able to evaluate the product before the final design and implementation. By analyzing a certain and special group of participants with similar predefined characteristics, such as age and habit, this approach helps identify which group could be more eager to use the product. (Krueger, 2000, p.2).
On the other side, however, the selected first Post-Ante evaluation is a participant observation by which qualitative research and data collection are undertaken. This approach simply assists us to develop the evaluation through directly participating and observing a group of individuals with similar features concerning the evaluand (Kawulich, 2005, p.2). The survey, however, as the last method for the Ex-post evaluation, is a quantitative method. This can be at our service of doing the evaluation in a way that the result of the survey describes the very responses of the users in the future. The survey method could be carried out by providing questionnaires and interviews among users.
Entrepreneurship vs innovation
It is so far discussed the disruptive innovation’s achievement after its success, yet what YouTube’s start-up would be like if we consider it to be in its first place? With respect to innovation along with entrepreneurship, in retrospect, YouTube could have been managed in various ways. For the purpose of the evaluation of this startup, it is considered that the team initially was under resource constraints such as budget, content, and human resources. Further, as innovation and entrepreneurship can perfectly complement each other to make an organization successful and sustainable (Zhao, 2005, pp.1,2), it should be evaluated by considering different entrepreneurial and innovative strategies of the management of start-ups.
By lack of a sufficient amount of money at first, the team should pursue the cloud-based solution for the establishment of the whole platform. Using cloud-based services helps the team launch and host their website as quickly and inexpensively as possible without spending much time in and money on preparing their own expensive servers. Further, in order to keep the human resources of the start-up as few as possible to save the initial budget as well as making the website efficiently enable to cope with the increasing number of potential users in the future, the platform should be designed in a self-service and automated way (Cardoso, 2012, p.8). For example, by developing an automated and intelligent filtering system, this platform can autonomously prevent users from sharing inappropriate videos and comments on videos.
Since the features and fuctions of the commercial platform of YouTube should benefit from usability, simplicity, reliability, and uniqueness, the team cannot use free open-source and online services to set up the platform and utilize their users as their co-developers to develop the platform. The best approach, however, is to iteratively develop the whole project. In this respect, the perpetual beta approach by which products and technologies are incrementally developed instead of waiting for them to be wholly completed could the best choice. This approach, as stated by Salvatico (2015, para.1), also paves the way for developing products in an open environment based on the idea of “release early, release often and listen to your customers” from Raymond (2001, pp. 28,29). For the start-up, it effectively results in saving the limited budget and keeping the human resource as few as possible, as they can encourage users to create video content as their co-creators and release the essential features in different phases.
Business Analytics vs Innovation
In the final part of the evaluation, the selected innovation “YouTube” is assessed from the angle of Business Analytics (BA) by which innovation could be positively influenced. It happens when an organization’s absorptive capacity is enabled by effective information use and BA (Duan, 2017, pp. 29,30). Business Analytics, generally, is defined as the effective employment of data, quantitative analysis, and information to contribute to the decision-making process and effective course of action (Davenport, 2007, p.20). Regarding its classification, it is generally categorized according to various situations and needs into descriptive, predictive, and prescriptive analytics (Robinson, 2010). Based on the nature of BA, it can assist us with problem-solving analysis and strategies, data interpretation and extraction, predictive (Ex-ante) and descriptive (Ex-post) analysis of the evaluation phases. These are viewed as BA objectives according to Warne (2017, para.3). By considering these objectives, the first question that should be asked is whether the innovation management and design of YouTube can benefit from Business Analytics, and which method of BA could be more beneficial? To answer these questions, first, the innovation and then management design by discussing different criteria for BA will be analyzed.
In terms of design, the first criterion for BA is the determination of users’ interests based upon the question as to what type of features, services, and advertisem*nts should be provided to attract more users and keep them longer? This criterion also could be addressed by adopting descriptive analytics with the help of Key Performance Indicators (KPI) such as customer metrics according to Jackson (2019, para. 5,6,7). It can be achieved by specifying primary and new features in order to design the platform in perfect accordance with users’ interests and demands. The second criterion is user acquisition and retention by which a question as to what the start-up should do to raise the level of its users’ satisfaction can be addressed. This descriptive and prescriptive criterion also is based upon the problem solving and analysis nature of BA. It gives the start-up an opportunity to carefully assess the users’ needs based on current social trends, their culture, and language, etc. to maximize their long-time satisfaction.
With respect to innovation management, three measures will be assessed. The first and foremost measure is efficient Customer Relationship Management (CRM) based on Ex-post evaluation and descriptive analytics. To make this measure benefit the management of the innovation, some Key Performance Indicators such as Customer Lifetime Value (CLV), Customer Satisfaction, and Net Promoter Score (NPS) should be analyzed. This measure thus is capable of generating detailed insights from data such that effective CRM can be established. The second measure is the analysis of return on investment (ROI) on which the question regarding what is the long-term and short-term ROI of the start-up is based. This measure can be accomplished by using business intelligence on the basis of descriptive analytics to generate information about past and current trends. Therefore, the gross and net profit, cost, and revenue can be determined through using this measure based on Business Analytics. The last measure is to specify and clarify future features for the platform based on Ex-ante or predictive analysis. It can be attained by means of prediction of current and potential users’ demands in line with new technologies and social trends along with social media analysis. Not only does it help the team whether or not users’ needs are thoroughly met, but also it equips the management team with effective decision-making ability for the future.
Conclusion
Our selected innovation, YouTube, was evaluated from the theory of disruptive innovation and the diffusion of innovation to the idea of how Business Analytics can benefit innovations. As noted by Christensen, it is true that innovations should not be always new and expensive products or better ideas for the current market. Instead, innovations could be at the beginning simpler, cheaper, and more convenient to adopt, to be regarded as disruptive (2003, pp.33,34). With this, based on YouTube’s great attainment, it is indeed a disruptive innovation, since it has benefited from the simplicity, reliability, ease of use, and free to access since its birth now.It is not only explained that Youtube owns its adopters influenced by different characteristics of innovation with different tendencies to adopt, but also proven that Youtube has achieved its maturity and recognition throughout all types of adopters of innovation according to the diffusion of innovation theory (Rogers, 2003, pp.282,283). YouTube is then considered to be nothing but an idea to envisage how to effectively develop and design it in the first place based on Ex-ante and Ex-post evaluation stages. Additionally, after assuming that the innovation is about to be released into the market, by considering resource constraints, it is then discussed the best management strategies for the start-up. Finally, the degree to which Business Analytics is capable of benefiting the design and management of YouTube is analyzed. In the end, it should be also noted that YouTube, a giant media in website’s clothing, has been playing a key role in people’s lives for a while, thereby analyzing it from the social perspective of those directly and indirectly affected could be worthy of attention.
Infographic
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