MOI - Kanopy Digital report

1

Olivia Humphrey - Kanopy Streaming

2013

Digital ReportManagement of Innovation 301

Tiara Muliany – 15359108/ 7E1A8259

Total file word count 3955

Less direct quotes 790

Less tables of content 66

Less reference lists 425

Total net word count 2674

Table of Contents

1.0 Executive Summary.............................................................................................................3

2.0 Company Profile & Background...............................................................................................4

3.0 Establishing an Environment for Innovation.......................................................................6

3.1 IP Strategies......................................................................................................................... 6

3.2 Managing organizational knowledge and innovation strategies..........................................7

3.3 Collaboration strategies.......................................................................................................8

4.0 Implementing Innovation.......................................................................................................10

4.1 Managing Innovation and Operations Management.........................................................10

4.2 New Product Development................................................................................................11

5.0 Questions from CEO...............................................................................................................14

6.0 Conclusion and Recommendation.........................................................................................15

7.0 Reference List........................................................................................................................ 16

8.0 Appendix................................................................................................................................19

1.0 Executive Summary

Olivia Humphrey founded Kanopy in 2007. Kanopy is a Netflix in the education sector. The

business is operating by licensing the videos to the universities via Kanopy’s streaming platform,

and they will get unlimited access to the video. Kanopy is using the IP code to protect the

business’ innovativeness. In term of managing organizational knowledge, Kanopy does have a

knowledge base which is Olivia’s own past experiences before she founded Kanopy. Kanopy is

also having collaborative strategies with the Media Education Foundation to gain the US

market. In term of managing innovation and operation management, Kanopy is currently

certain about their goal and how to achieve it. Kanopy is also running on the new product

development process to expand their business. But there are some challenges Kanopy will face

in scaling up globally. A reserve innovation is one of the ways to continue to innovate.

2.0 Company Profile & Background

“Kanopy was founded in 2007 by Olivia Humphrey, and now has become the leading supplier of

DVD and online video to Australian universities” (Kostoka 2013). Olivia Humphrey has recently

been awarded the winner of the 2012 West Australia Commonwealth Bank Business Owner

Award for the Telstra Business Women’s Award, and also the 2012 WA Innovator of the Year

Award, Mitsubishi Growth Category for Kanopy. As the managing director of Kanopy streaming

sources, Olivia Humphrey (2013) described Kanopy as “the Netflix of the education sector,

being an aggregator of content between filmmakers and university libraries.” Its fully

customized business form has transformed the method tertiary libraries and filmmakers run.

Kanopy’s vision is to open up education video through “Innovation; forging new educational

applicants to increase student/academic engagement and interactivity,” and through

“Collaboration; partnering with filmmakers to promote and support a vibrant, active, and

sustainable screen community” (Kanopy 2013).

The background of Olivia Humphrey is with the media rights management at BBC in the UK and

also the Roadshow Entertainment. She was always interested at the amazing video content

available there, but she was also always wondering why the students were not making use of it

to the fullest. And to deal with this, Olivia Humphrey has launched the Kanopy DVD distribution

five years ago which is 2008 and the Kanopy Streaming two years ago which is 2011.

So the business is operating by licensing the contents to the universities via Kanopy’s streaming

platform. The universities which purchase the licenses will get unlimited access to a video,

wherever they are, and on any device that they are using. They can even put the videos

together into their lectures. The first three universities which adopted the Kanopy’s program

are Curtin University, Edith Cowan University (ECU) and University of NSW. In the Edith Cowan

University (ECU), the Kanopy Streaming service provides “video access and delivery to

Australian Tertiary Education Institutions, the licensed video content can be accessed via the

ECU Library catalogue and is streamed directly to any computer, iPad or other media device

using their ECU login, and Kanopy also manages all aspects of the streaming process, including

rights management, acquisition, licensing, hosting, delivery and development” (Edith Cowan

University 2013).

“The main problems we solve are around accessibility and copyright management” (Humphrey

2013, quoted in Kostoka 2013). Kanopy can also just set in their videos into already existing

university management system such as Blackboard, so it will be flexible for the students to

watch the videos wherever they are, using any device that they prefer. “Kanopy takes care of

copyright too, making sure all the relevant copyright is cleared for use in an academic context.

This is a job that was done by librarians up until now so both filmmakers and librarians are

happy to outsource this function to Kanopy.” (Kostoka 2013)

The timeline of Olivia’s path to commercialisation of her innovation is available here.

3.0 Establishing an Environment for Innovation

3.1 IP Strategies

For some certain reasons such as the growing reputation of knowledge management in the

industry area, companies which are running with any innovation they had done, it is better and

is very important for them to have an Intellectual Property (IP) Protection which can protect

their innovativeness. Candelin et al. (n.d.) have found that,”the developments of innovation are

strongly established on the information and profiting from understanding is an important

aspect of innovation management, in a high-tech company in particular.” For Kanopy especially,

it would be very important for them to have the right methods of the IP Protection.

According to Olivia, most of Kanopy’s innovation when it comes to the business model and the

business platform itself is the ‘code’. The code is actually really relevant to Kanopy, so they are

producing an application which is quite sensational and is becoming their competitive

advantage. This is because they have the choice to pay for that and no any other competitors

can actually use the code. Kanopy can also actually patent their product but the problem is, by

patenting it, the other competitors may get access to their code. “A patent provides the owner

with special privileges to hold, shift and authorize the production and sale of the

product“(Frederick and Kuratko 2010). “Patent also provides the owner with the duration of

the patent only 20 years from the date of the form filling” (Reitzig 2007) and “the authorization

of the patent is considered as a return for the time and effort spent on creating the innovation”

(Freibrun n.d.). That’s why it is safer for Kanopy to use the code. Even though anyone could

actually create the same code, but if the code is not the exact one, then it is not considered as a

breach, as they couldn’t access through Kanopy. And even to do a copyright the code, it would

be very hard, time consuming and very expensive to be done.

Olivia Humphrey can be considered to be on the right track with her IP strategies. This is due to

the competitive advantages which Kanopy owns, innovating and developing, and to be one step

ahead from the competition in the market as all they’ve done is always exciting and surprising

for their customers. According to Olivia, Kanopy could do it well by collaborating with some

filmmakers where they are having their transparent model, keep giving new ideas and even

keep engaging the filmmakers into the Kanopy’s platform fulfilling their needs and wants, as

well as keeping them to feel glad and joyful. What Kanopy does have actually in order to

protect their innovation are its interesting content and a sustainable return for the filmmakers

to keeping them in licensing their product to Kanopy, keeping the platform as the most

competitive platform for the highest demographic customers of the online streamed video

which is the students, and also the universities library who keep supporting them.

3.2 Managing organizational knowledge and innovation strategies

Core competencies are defined as “the knowledge, abilities, management processes and usual

practices attained over time which are very hard to be copied” (Trott 2012). According to

Armstrong in 1999, competencies are the factors which are contributing to high levels of the

performance of an individual, and as a result, organizational effectiveness (Armstrong 1999,

quoted in Chan 2006, 145). In the practical terms also, core competencies can be defined as

“the characteristics which make an individual more effective than the other person who is

having the same work/situation” (Tyler 2003), but here in Kanopy case is in term of the

organization, not the person. So according to Hamel and Prahalad, “a firm’s ability to generate

profits from its technology assets depends on the level of protection it has over these assets

and the extent to which firms are able to imitate these competencies” (Hamel and Prahalad,

quoted in Trott 2012). As Kanopy is an organization which is having core competence and low

imitability, it can be placed in the uppermost right-hand quadrant of the matrix in Figure 4.

Kanopy is able to produce long-term profits based on its core competence and only a few of

competitors are able to copy their activities.

According to what Olivia has said in her presentation, she has built the knowledge base of her

company through her experiences such as the experiences in the media rights management,

customer service and CRM, mass market channel which is one of her big strength and also the

general knowledge about marketing as her background is about marketing. Then the

knowledge resources that she has developed are the cloud based operational systems, where

everything is in the clouds so anyone anywhere can see anything anytime; the intense training

which is done so that every staff member is familiar with every characteristic of the business as

that’s how they can add value to the business as a whole; the routine meetings which are

compulsory for all the members are also held where they can share among the members during

the information session.

It might be very hard to obtain knowledge if a company doesn’t have a knowledge base from

the very start. “A company’s previous knowledge allows it to obtain and make use of the new

knowledge. This concept relates to term absorptive capacity” (Trott 2012). Absorptive capacity

is a capability regarded as an important aspect in expanding a company’s knowledge base.

“High absorptive capacity not only enables an individual, group or organisation to exploit new

external information, but also to predict more accurately the nature of future technological

advances,” (Cohen & Levinthal 1990). Based on what has been discussed earlier about Kanopy’s

knowledge base, it is shown that Olivia does have an absorptive capacity, which is her own past

experience.

3.3 Collaboration strategies

According to O’Donnell (2012), “strategic collaboration is where the companies enter into

arrangements with each other for mutual benefits. It is also an umbrella term for how the

companies can work together in some different forms such as partnerships, alliances, business

clusters, etc.” The purpose of collaboration strategies is to have a cost savings, deduction in the

services duplication, enhance skills development, and access innovation.

Strategic collaboration also offers the companies of how to achieve their goals and

objectives in cost effective and innovative ways. Olivia has said that she was very interested in

collaborating with a lot of international media companies, and therefore she needs to get more

than 400,000 customers in the major global market which is the US market where there are

about 4,500 universities, but without an intermediary financing. Luckily, there is a supplier from

outside of Boston, Media Education Foundation, which is a large company in Australia and is

famous in the US market. Media Education Foundation has an extraordinary collection of

critical analysis of the media and that’s why Olivia had requested to Media Education

Foundation to collaborate in the US market. At first, Media Education Foundation was a bit

doubted why they have to collaborate with Kanopy since they have been in the market and got

their own customers, so there is no benefit as Kanopy is still in Australia. But then Kanopy had

an idea, Media Education Foundation needs to spend more than 100,000 dollars in order to

have a digital platform, and as Kanopy is having the digital training platform, they could

exchange the digital streaming platform with the customers of Media Education Foundation.

In a report of Ernst & Young (2013), it is mentioned that Olivia Humphrey has successfully

“opened a new office in Boston in 2012 and will develop her business to Asia, Latin-America and

also Europe in 2014.” Olivia has also mentioned that the innovation and the collaboration have

supported the business model of Kanopy, where currently, Kanopy is holding about 80 per cent

of the global academic marketplace with the strong collaboration with the producers and the

filmmakers. But there are some dangers of collaboration, Alvarez and Barney (2011) have

mentioned that “the business companies are generally at a risk of being escorted by the large

collaboration business partners when a new technology is becoming their only resource to be

brought into the companies.” Therefore the companies need to put up their economic value in

order to avoid the risk and the danger.

4.0 Implementing Innovation

4.1 Managing Innovation and Operations Management

Pearson's uncertainty map (Pearson 1991, quoted in Trott 2012) “provides a framework for

analyzing and understanding uncertainty and the innovation process.”

Pearson's framework separates the uncertainty into two different elements:

Uncertainty about ends – what is the final goal of the activity or the project

Uncertainty about means – how to accomplish this goal

The Pearson’s uncertainty map, shown in Figure 5, concentrate on the character of the

uncertainty and the way it alters eventually. The two elements mentioned above, used in

designing the framework, with the uncertainty about means on the horizontal axis and the

uncertainty about ends on the other vertical axis. These two axes are again to be divided, which

gives four quadrants, exploratory research, development engineering, combining market

opportunities with technical capabilities, and the applications engineering.

Exploratory research involves “a high degree of uncertainty about ends and means, and the

final goal and how to achieve the goal is not clearly defined”. The activities also often involve

working with the technology which is not being completely understood and even where the

possible marketplaces or products have also not been recognized. In development engineering,

“the goal or the end is clearly identified, but there is still a significant uncertainty about how the

goal is going to be achieved exactly.” The activity is usually an on-going activity where a

company is constantly observing their production processes, searching for more efficiencies and

also ways to reduce their production costs. In the third quadrant, combining market

opportunities with technical capabilities, “there is uncertainty about the ends or the goals.” But

usually it is related with trying to find out how the technology can be used in the most effective

way. In the fourth quadrant, applications engineering, “there is most certainty regarding the

ends and the means as it covers the innovative activities.” And in this situation, the activities

may be taken over by improving the existing products or creating the new products through the

combination of technical capability and market opportunity. Kanopy is more likely to be in the

fourth quadrant as they knew that the US market is also covering the innovative activities and

they will have more certainty in expanding their business. They also have created new services

through the combination of the technical capabilities and the market opportunity in the US

market. (Trott 2012)

After going through the organizational characteristics that facilitate innovation, there are 2

characteristics that suit Kanopy best. The first characteristic is ‘growth orientation’, where “the

innovative company’s objective is to grow the business.” As Kanopy is one of the innovative

companies, their objective is to expand the business and actively plan for the long term, like

what Olivia has mentioned in her presentation, Kanopy wants their video to be an integral part

of the tertiary curriculum, to be recognized as adding a real level of depth to learning and to

have a generation of a Kanopy ‘community’. The second characteristic is ‘vigilance and external

links’, which is “the ability of the organization to be aware of its threats and opportunities”

(Trott 2012), which is why Kanopy has already had some new ideas such as, networking with

industry, brainstorming meetings and talking to their customers such as the librarians,

academics and the student circles to know what they want Kanopy to provide.

4.2 New Product Development

In many companies, new product development is the most important factor driving the

companies’ success or failure. The importance on new products has encouraged the

researchers to study about the new product development process. Most of them concluded

that “in order to be successful at new product development, a firm must simultaneously meet

two critical objectives: maximizing the fit with customer needs, and minimizing time to market”

(Schilling and Hill 1998). Most of the companies are of having an intention on growth of their

business, and one of the ways is identified in the Ansoff’s (1965, 1968) directional policy matrix.

Within the matrix, the new product development is included in the four options. The growth

can be achieved through the internal development and external acquisition. So what Kanopy

did is, empowering the student to define needs in order to be able to preview the requests and

the Patron Driven Demand. “Expanding into new markets, achieving financial goals, increasing

sales, capturing market share, becoming proactive towards competition, finding areas of

application for new technologies, increasing product or service longevity, and strategizing

internationally to attain a global presence are all reasons forcing companies to focus on

innovation.” (Scarcia et al. 1998)

Saren’s (1948) classification, where he classified the new product development models in to

eight distinct categories, is a useful starting point to examine the multifactor illustration of the

new product development process; departmental-stage models, activity-stage models and

concurrent engineering, cross-functional models, decision-stage models, conversion-process

models, response models, network models, and outsourced. (Hart and Baker 1994)

Here, only the network model is being focused, as it is the final category of the models to

represent the latest thinking on the subject. The network models highlight the external linkages

paired with the internal activities to contribute to a successful product development. “The

models also imply that new product development should be viewed as a knowledge-

accumulation process that needs inputs from a lot of kind of sources.” (Trott 2012)

The generation of business opportunities, which is referred as opportunity identification, is the

next step in the process of new product development. “It is the process of collecting possible

business opportunities that could realistically be developed by the business into successful

products” (Trott 2012). New product ideas can come from some different sources, for example

in Kanopy, the existing products, new products, technology which is the apps, customers which

are the markets, and even the content itself.

Lastly is the screening of business opportunities which is the evaluation process of the new

product development. And to help with this process, “the companies often turn to product

lead-users and product experts,” (Ozer 2009, quoted in Trott 2012). The purpose of the

screening process is to select the ones which are going to be successful, and eliminate the ones

which are not going to be successful, which is a very difficult process. Some screening strategies

to determine the best way to expand the business are; distinguishing between dreams and

reality; initial screen, entry screen or preliminary screen; customer screen, concept testing;

technical screen, technical testing; final screen; and last is business analysis.

5.0 Questions from CEO

There are some ways that Kanopy can continue to innovate to preserve the trajectory of being

true game-changers. One of the ways is by doing a reverse innovation, which happens when

“products or services developed in an emerging market flow uphill to developed markets”

(Gobble 2012). Reserve innovation has also been understood to represent a benefit for

organizations native to emerging markets, but Govindarajan and Trimble (2012, quoted in

Goblble 2012) “aim to show how developing-world companies can harness the innovative

energy of these markets for their own innovation efforts.” There are some recommendations

which are organized by three levels; strategic, organizational, and project, which include: “seek

every opportunity to offer those innovations in other countries, keep emerging-market giants

on their radar screen as potential competitive threats, and move the people and resources to

where the growth is.”

When Kanopy is scaling up globally, they must determine “the ownership strategy and the

management strategy that will best maintain the organization’s competitive advantage” (Dev,

Brown and Zheng 2007). As they need to open offices internationally, of course a very well

management must be maintained. Some other challenges that Kanopy might face in scalling up

globally are, the host-country restrictions and regulations, the market related problems, coping

with cultural differences problems, staffing and personnel problems, lack of information and

knowledge, and also miscellaneous problems such as currency fluctuations, pirating and

competition). (Reardon and Dsouza 1996)

6.0 Conclusion and Recommendation

As Kanopy is an innovative company, it is important for Kanopy to have an IP Protectio. One of

the ways they use is the code, as it will be hard to access the exact code. In term of managing

organizational knowledge, it might be hard to obtain and make use of new knowledge if a

company doesn’t have a knowledge base. That’s why Olivia was using her past experiences in

order to exploit new external information and predict accurately of the future technological

advance. Kanopy which has successfully collaborated with Media Education Foundation has

gained more customers especially in the US market. But as there are some risks in collaborating

with large companies, Kanopy need to examine the companies carefully. In term of managing

innovation and operation management, Kanopy should maintain their current position where

they are certain about their goals and means. Kanopy is also running on the new product

development process to expand their business. Even though they might face some challenges in

scaling up globally, they can do a reserve innovation to continue their business’ innovativeness.

7.0 Reference List

Alvarez, Sharon A. and Jay B. Barney. 2001. "How Entrepreneurial Firms can Benefit from

Alliances with Large Partners." The Academy of Management Executive

15 (1): 139-148. http://search.proquest.com/docview/210522005?

accountid=10382.

Candelin-Palmqvist, Hanni, Birgitta Sandberg, and Ulla-Maija Mylly. "Intellectual Property

R(Gloet and Terziovski, 2004)ights in Innovation Management Research:

A Review." Technovation 32, no. 9–10 (9// 2012): 502-12.

Chan, Donna C. 2006. "Core Competencies and Performance Management in Canadian Public

Libraries." Library Management 27 (3): 144-153.

http://search.proquest.com/docview/198802925?accountid=10382.

Cohen, W.M. & Levinthal, D.A. 1990, ‘Absorptive capacity: a new perspective on learning and

innovation’, Administrative Science Quarterly, Vol. 35(1), pp. 128-152.

Dev, Chekitan S., James R. Brown, and Zheng Zhou Kevin. 2007. "Global Brand Expansion: How

to Select a Market Entry Strategy." Cornell Hotel and Restaurant

Administration Quarterly 48 (1): 13-27,8.


Edith Cowan University Australia. 2013. ECU: Library Services Centre.

http://ecu.au.libguides.com/content.php?pid=179311&sid=1508682.

Ernst & Young .2013. Ernst & young: Entrepreneur of the year. http://eoy.ey.com.au/olivia-

humphrey-kanopy/w1/i1646407/.

Frederick, Howard H., and Donald F. Kuratko. 2010. Entrepreneurship: Theory, Process, Practice.

Melbourne: Cengage Learning.

Freibrun, Eric S. “Intellectual Property Rights in Software: What They Are and How the Law

Protects Them”. The law offices of Eric S. Freibrun, ltd. computer and

information Technology law.

http://www.freibrun.com/articles/articl2.htm.

Gobble, MaryAnne M. 2012. "Innovation and Strategy." Research Technology Management 55

(3): 63-67. http://search.proquest.com/docview/1017895949?

accountid=10382.

Hart, Susan J. and Michael J. Baker. 1994. "The Multiple Convergent Processing Model of New

Product Development."International Marketing Review 11 (1): 77-77.


Hogan, Matthew. 2012. “Julie Shuttleworth takes WA’s top honours.” Smarter: Business Ideas.

http://smarter.telstrabusiness.com/julie-shuttleworth-takes-was-top-

honours-telstra-business-womens-awards-2012.htm?index=2.

Kanopy Streaming. 2013. Kanopy: Expanding Educational Horizons.

http://www.kanopystreaming.com/about-us.

Kostoka, Ana. 2013. “A Teaching Revolution: Kanopy's Olivia Humphrey.” Women in Focus, May

18. https://www.womeninfocus.com.au/docs/DOC-2172.

O’Donnell, Orla. 2012. “Strategic collaboration in local government: A review of international

examples of strategic collaboration in local government.” Local

Government Research Series Report No.2.

http://ipa.ie/pdf/StrategicCollaboration.pdf.

Reardon, James R., M. K. Erramilli, and Derrick Dsouza. 1996. "International Expansion of

Service Firms: Problems and Strategies." Journal of Professional Services

Marketing 15 (1): 31-46.


Reitzig, Markus. 2007. "How Executives can Enhance IP Strategy and Performance." MIT Sloan

Management Review 49 (1): 37-43.


Scarcia, Frank, Gregory Herrera, Robert Sparadoski, Andrew Lichnowski, and Jane Ehrgott. 1998.

"Hybrid New Product Development Strategies." Engineering

Management Journal 10 (3): 41-49.


Schilling, Melissa A. and Charles W. L. Hill. 1998. "Managing the New Product Development

Process: Strategic Imperatives."The Academy of Management

Executive 12 (3): 67-81.


Trott, Paul. 2012, Innovation management and new product development, 5th edn., Pearson

Education Limited, Essex, England.

Tyler, J. L. 2003. "Core Competencies: A Simplified Look at a Complicated Issue." Healthcare

Financial Management 57 (5): 90-2, 94.


8.0 Appendix

Figure 1 - Julie Shuttleworth takes WA’s top honours (Hogan 2012)

Figure 2 - Innovator of the year 2012 (Kanopy 2013)

Figure 3 - Timeline of Olivia's path to commercialisation of her innovation

Figure 4 – Core Competencies, Imitability and Profits

Low

High

Non-core Core

Imitability

Extent of coreness

Figure 5 – Pearson’s Uncertainty Map (Trott 2012)

Figure 6 - Organisational characteristics that facilitate the innovation process

Figure 7 - Ansoff’s directional policy matrix (Trott 2012)

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