Face it: Fake News is a Disruptive Innovation

Sam Mallikarjunan on 2016-11-16

A great deal of pontificating has been done recently on the depths and dangers of “fake news,” particularly in social media. However, if we look objectively at the fake news phenomenon, what we find is not a simple technological or journalistic failure, but instead a business model failure.

When people go from unemployed restaurant workers to making tens of thousands of dollars a month, out-competing century-old incumbents, we heave them onto our shoulders and laud them as heroes of innovation. We throw millions of dollars at them to help them do more of it. Yet when it’s done writing fake news, something is rotten in the state of journalism.

While we can agree on the negative impacts to society, can we honestly condemn these fake news entrepreneurs? Think: Have you always known that a little “harmless internet trolling” was so damaging to the world that you would have turned down more money than you’d ever dreamed of making?

Why do we think that journalism is immune to market forces — an immovable object against an unstoppable force? In any other industry, we’d call fake news what it is: a disruptive innovation.

source

Understanding Disruptive Innovation

The premise behind the disruptive innovation framework is brilliant in its simplicity and driven by basic human nature and the nature of the firm. Over time, successful firms are drawn upward in functionality and pricing toward more profitable market segments, which, in turn, leaves lower-end consumers over-served and over-priced.

Eventually, the sophistication and cost of solutions offered by incumbent firms creates a gap between their performance+costs and the needs+desires of an increasingly large segment of the market. This creates an opportunity for a disruptor to enter the low end of the market and capture significant market share.

from MIT Sloan

Left Behind: Disruptors Bring New Participants Into a Market

As the natural institutional inertia of a business drags them up the sustaining innovation trajectory, their pricing and functionality over-serves consumers at the low-end of the market. As they continue to follow that trajectory in pursuit of more profitable customers, little innovation is usually done addressing the needs of the over-served consumers — creating a gap in the market.

Let’s use everyone’s favorite darling of disruption, Uber, as an example. There has been some debate around if Uber is technically a disruptive innovation due specifically to this framework requirement. While it’s debatable if UberX has brought in over-served consumers who otherwise would not have taken a taxi, Uber’s genesis comes from leveraging underutilized resources in the traditional limousine and black car system to bring in lower-cost riders — such as myself. I had never used a black car service in my life, and likely would’ve gone many years without doing so, but Uber made it affordable and convenient and brought myself and other previously over-served consumers into the black car market.

How does this translate to the media? Historically, traditional journalism and news outlets have focused on readers and consumers of media who would pay for subscriptions or who had high intrinsic value to advertisers. Media outlets following the “sustaining innovations” trajectory upwards worked hard to improve their research and build rich interactive media experiences.

Fake news media outlets instead focus on readers to whom such robust media offerings have little value — they value the title.

What pundits and analysts have discarded as “low-information voters”, students of innovation can see as an over-served market segment.

Why Do We Buy It?

To better understand this, let’s return to Uber. Imagine if the driver simply had to pick a rider up and drop them off wherever the driver wanted, rather than the destination the rider had requested. The driver was still paid the full fare, and the rider still raved about the experience to their connections and friends.

In the Uber of this mythical fantasyland, the disruptive innovation provided by Uber over the incumbent car service firms would not be a lower-cost and more convenient transfer to a destination. In this case, the root cause of the car service’s disruption would be a fundamental misunderstanding of the job-to-be-done sought by the rider.

Consumers ask this question of businesses before they buy.

The jobs-to-be-done framework helps us understand the actual reason, or “job”, for which consumers are “hiring” a company. Henry Ford famously encapsulated this customer-centric obsession when he said “If I had asked my customers what they wanted, they would have said a faster horse.

Another illustration is the understanding that no one wants a quarter-inch drill bit; they want a quarter-inch hole.

You can actually take that job one level deeper, by understanding why the consumer wants a quarter-inch hole. Do they want to see through something? If so, there may be a better way to serve that job. Do they need the hole so that they can anchor something to the wall? If so, other products may serve that job more effectively, more efficiently, and in a less costly manner than a quarter-inch drill bit. The success in serving the customer’s job-to-be-done as specifically and effectively as possible is what separates enduring firms from firms that are eventually disrupted.

Modern software companies often attempt to define this with a “user story” to guide new feature development useful to users — “As an X I want to Y so that I can Z”. Alan Klement applies this same framework to understanding jobs-to-be-done:

source

Returning to our fantasyland, the incumbent car service firms would be in danger of disruption because they mistakenly assumed that their job was to quickly, safely, and cheaply take a rider from point A to point B. In our weird world, the job for which the rider is actually hiring the car service or Uber is to simply give them a ride somewhere — not necessarily to a specific destination, even if the rider had actually requested a specific destination. The fact that people use a feature does not necessarily mean that that feature best serves their jobs.

Although we may not like to admit it, the job-to-be-done for which much of the media and journalism firms are designed and optimized is not the job-to-be-done sought by a large segment of media consumers.

The job-to-be-done served by fake news is to reinforce existing beliefs and mitigate the immensely uncomfortable feelings caused by exposure to information that contradicts those beliefs. Fake news articles are to cognitive dissonance as decongestants are to a stuffy nose — they relieve the discomfort caused by cognitive capacity clogged with contradictory evidence.

Surviving Disruption by Better Serving the Job-to-be-Done

The traditional media executive may read this and despair — assuming that large segments of the consumer market are forever out of her reach.

However, once a consumer’s job-to-be-done is defined, the engines of innovation begin to crank. If we know that segments of market participants want reinforcement of their beliefs — but we care about injecting quality research and evidence-based fact checking into that experience — we can create a customized content experience that personalizes itself to a reader’s current political views.

Apparently I’ve “shown interest in Donald Trump”.

Many content recommendation engines, such as this screenshot from the Google Now app on my phone, already use this self-reinforcing method. As I read articles about a given topic, Google does its best to show me more on that topic. It doesn’t go as in-depth as understanding the slant or bias of the article — nor does it try to train me to value evidence in the article — but doing so would create a more cognitively comfortable content experience for me.

Surviving Disruption by Creating Change

Defining the job-to-be-done creates clarity also enables us to shift or create new jobs-to-be-done within that market segment.

If we’ve determined that reinforcing cognitive biases is what makes the disruptive entrants so successful, media outlets may want to direct the engines of innovation toward exploring demand for the inverse.

For example, an incumbent media company could allow users to subscribe to a newsletter where they take a political alignment quiz and then are sent the best-researched content that contradicts what they currently believe. Users may subscribe to this in order to avoid the uncomfortable self-awareness associated with acknowledging their own biases and echo chambers. Everyone wants to think they’re open-minded, even if they’re not. That is a job incumbent firms can serve while still fulfilling their core mission.

This is not to say that this is the only, best, or even a good potential response for traditional media outlets facing disruption. It is, however, a call to action for these important servants of the public good — and a way to learn the hard lessons of the corporate corpses that came before them.

Incumbent firms that deny disruption and instead insist that consumers conform to their vision of what people should want will become relics of the past. Firms that continually engage in deep customer-centric jobs-to-be-done analyses and orient their offerings around doing that job will own the future.

Fake news may be bad for the world, but once we understand it as a business model failure rather than just railing against its evils, we can begin to move forward.

p.s. if you think fake news is a problem that only “stupid people” have, check out this study from Stanford. You can also play with my far less scientific quiz using real stories from my Facebook feed.