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splitting and lumping | The Discipline of Innovation

splitting and lumping

It’s hard for birders to see albatrosses. You have to a book a boat trip, they take all day (or longer!), and there are long periods of boredom punctuated by frenzied excitement when you run across birds – which you really hope you don’t miss seeing! And even if you’re not prone to seasickness, inevitably others on the boat are, so that part is unpleasant no matter what. The birds that you get see are spectacular though. So Nancy and I have ended up taking quite a few pelagic trips, and we’ve ended up seeing a lot of albatrosses.

Given the difficulties of pelagic birding, though, it was still pretty nice when the number of species of albatross that we had seen suddenly jumped by four without us even leaving land. How? Because dna test evidence was strong enough to convince ornithologists that the albatrosses that we always thought were subspecies were actually full, genetically distinct species. Since we had kept track of the subspecies that we had seen, our sightings of royal albatross suddenly retrospectively became sightings of northern royal albatross and southern royal albatross. This happened with three other species too, so that’s how our albatross list got longer without any extra effort. When it comes to species definitions, birders are almost always splitters. They prefer it when we focus on the differences between two things rather than the similarities. The opposite tendency, more often found in ornithologists than birders, is to be a lumper. Lumpers focus on the similarities over the differences.

So while I’ve consistently been a splitter as a birder, in business I’ve become much more of a lumper. In response to the post on Cory Doctorow’s book pricing experiment, I’ve been having some discussions with a friend of mine in the publishing business. In the course of that discussion I’ve mentioned examples from both music and book publishing. My friend is pretty well convinced that book publishing is completely different from music publishing. He’s a splitter on this matter. I think that is extremely dangerous, for a couple of reasons.

One is that people often split concepts to avoid change. If two examples don’t map onto each other in every particular detail, they reject the possibility of any comparison between the two things. This is fine I guess, as long as there is no imperative to change. John, Sam and I have seen this is our research – people from different sections of our research partner’s firm are convinced that they are completely different from other parts of the firm – consequently they don’t or can’t implement changes that the other parts have successfully developed. The problem with this is that if your industry is turbulent, this kind of thinking can prevent you from making changes that you must make in order to survive.

With books and music, I’m definitely a lumper. Publishing in both fields arose for essentially the same reason – musicians and authors want their work to spread to as wide an audience as possible, the the people that are potentially interested in their work are often geographically dispersed. Consequently, since it has always been pretty expensive to make, distribute and promote books and records, publishers with capital have had a very clear role to play as intermediaries. They take on the risk that a particular book/record won’t sell in exchange for a bunch of the profit if it does do well. The problem that both book publishers and record companies now face is that cheap and easy digital reproduction means that at least at a technological level, anyone can now reach nearly all of their potential audience. There are differences in the particulars of book and music publishing (musicians can make more money touring, book readers tend to be in a higher socioeconomic tier, and so on) – and if you focus on these, you can split the two industries. If you do this, then there is nothing for book publishers to learn from the 30 years of suicidal activities undertaken by the RIAA. There are no lessons for dealing with Amazon’s Kindle or the new Barnes and Noble Nook to be learned by looking at what has happened with the iPod/iTunes combination. In this case, splitting is dangerous, because you can’t learn from what has already happened in similar industries. “But my industry is different” is one of the most frightening phrases that I hear from people in business, and I hear it a lot.

That brings us to the second problem with splitting. Turbulent industries require innovation – particularly on the part of established players as they try to adapt to a rapidly changing environment. Innovation is the act of connecting two ideas that were previously independent. To do this, you need to be a lumper, not a splitter. If you’re trying to find new business models, finding an analogy with a similar (or even a vastly different) industry is often the crucial first step. Excessive splitting in business inhibits innovation. So even though there are significant differences between books and music, I still think that the generic problem is the same – publishers in both areas have to find business models that aren’t built on distribution any more. Cory Doctorow and Kristin Hersh have built unique business models based on building communities of fans/participants around their art. This is based on connecting – one of the three key drivers of economic value in digital economies. The other are aggregating (what Apple has done with iTunes and Amazon has done with all the ebooks available for the Kindle) and filtering (which has been the other historical service performed by book publishers and record labels).

Splitting can be useful in business. It can help you identify a customer segment that is currently under-serviced, or it can help you create five different versions of one product that people can access at different prices. But if you’re trying to make new connections, which is a critical part of innovating, you need to be a lumper. Find the similarities between your situations and others’ – and learn from those.

(the beautiful shot of a northern royal albatross is from flickr/pablo_caceres_c – creative commons licensed)

About Tim Kastelle

Student and teacher of innovation - University of Queensland Business School - links to academic papers, twitter, and so on can be found here.

Trackbacks/Pingbacks

  1. publishing business models « Business Models « Innovation Leadership Network - 31 October 2009

    [...] My friend in publishing asked me this question in the course of our discussion – “If I took [two novels] and put them on my Website and said,”Here, you can have these books for free, but if you want enhanced editions, pony up and I’ll sell you some beauties,” wouldn’t I be conveying the idea that the written works themselves have no inherent value?” If written works themselves have no inherent value, then I’d like to have back the $2500+ per year that I spend on books! The point here is not that written works have no inherent value – they very clearly due. The problem for publishers is that perfectly copy-able digital content has a market value that is pretty close to zero. And the problem is that it is impossible to prevent the existence of digital copies – you can’t have a business model that requires constant ligation to be successful. Consequently, given that reality, it is imperative to find a business model that successfully incorporates free content. [...]

  2. lumping helps learning by analogy « Connect « Innovation Leadership Network - 16 November 2009

    [...] by analogy Seth Godin’s post today demonstrates one of the key benefits of being a lumper instead of a splitter – you can learn by analogy. Sure, the industries change, the goods/service ratio changes, [...]

  3. news business model summary « Aggregate « Innovation Leadership Network - 30 November 2009

    [...] Splitting and Lumping: How trying to find the right analogy can help you build an effective business model when you’re surrounded by chaos. [...]

  4. Innovating When Your Organisation Isn’t Innovative « Innovation « Innovation Leadership Network - 19 December 2009

    [...] better, not come up with something new. This reinforces the point I’ve made before about the value of learning by analogy – you get better ideas by finding solutions to people that have solved problems similar to [...]

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