How Amplify Broke All the Rules for Innovators

column | Entrepreneurship

How Amplify Broke All the Rules for Innovators

By Michael B. Horn (Columnist)     Nov 11, 2015

How Amplify Broke All the Rules for Innovators

Not dead but greatly diminished, Amplify was sold in September by News Corp. to its management team “supported by a group of private investors.” The news came just days after the announcement that Amplify would layoff 500 employees and a little over a month after News Corp. had announced that it had written off a whopping $371 million in losses from Amplify over the past year.

Why did the News Corp. incarnation of Amplify—the product of an acquisition of Wireless Generation by News Corp. in 2010 for $360 million—fail?

Although some of Amplify’s stumbles and meltdowns have been well documented, tried and tested theories of innovation also have a lot to say on the topic. If management had used them, they could have also foreseen some of the struggles before they occurred. Here, then, are the rules of innovation that Amplify ignored to its detriment.

When Good Money Turns Bad

When corporations seek growth before profits at the outset of new ventures, good money turns bad, observed Clayton Christensen and Michael Raynor in Chapter 9 of The Innovator’s Solution. Pushing for growth--either market or customer growth--often “forces many potentially disruptive ideas to get shaped instead as sustaining innovations that target large and obvious markets,” note Christensen and Raynor.

“The only way that a venture can instantly become big is for existing users of a high-volume product to be enticed to switch en masse to the new enterprise's product,” they write. “This is the province of sustaining innovation, and start-ups rarely can win a sustaining-innovation battle. Money should be impatient for growth in later-stage, deliberate-strategy circumstances, after a winning strategy for the new business has emerged.”

Amplify ignored this advice. News Corp. invested a massive amount of money—$1 billion over roughly five years—in Amplify to build what its management team considered gold-standard products complete with a rich multimedia, gamified curriculum that won plaudits from experts all over. This investment was breathtakingly complex and created an expensive cost structure—witness the total of 1,200 employees at Amplify at its peak—that Amplify needed revenue to sustain.

But there was a big problem: Schools weren’t buying en masse what Amplify was selling. A winning strategy had not emerged. For the most part, Amplify was playing a sustaining innovation game—not a disruptive one—against well-established content providers.

Amplify had a similar experience in certain respects to inBloom, the ill-fated Gates and Carnegie Foundation-funded data warehouse solution that created what it imagined to be the “one beautiful and universal solution” only to find that those in the grassroots felt differently. Interestingly, Amplify had helped inBloom build its solution.

Amplify had a choice. It could have been patient for growth but impatient for profits and followed an “emergent” strategy. This approach, as Christensen and Raynor wrote, aims to “test as quickly as possible the assumption that customers will be happy to pay a profitable price for the product—that is, to see whether real products create enough real value for which customers will pay real money.” Creating a disruptive, emergent strategy—as opposed to a sustaining, deliberate one—funded by dollars that were patient for growth but impatient for profit would have been a better path ahead.

It’s Not About The Tech

In Chapter 3 of Disrupting Class we wrote about how the key to success of a new product or service is rarely the technology itself, but the model in which it is deployed. Cramming a potentially disruptive technology into an existing model rarely results in success. Said differently, the learning model matters.

Amplify wound up trying to cram products that enable robust, personalized learning for each student into the existing classroom model that is built for mass, standardized instruction. (This non-starter has a long history--think new wine into old skins.) Amplify never seemed to understand fully or prioritize the importance of innovating around the learning model, even though it offered some services in this direction.

Until the learning model itself was redesigned, no amount of professional development would make the products take off. But here’s the rub: Redesigning learning models for blended learning is not a quick process. It takes time. And time was one thing Amplify didn’t have once it had evolved its top-heavy cost structure.

It Is About The Teachers’ Load

As we wrote in Chapter 7 of Disrupting Class, “many companies have offered products or services that they could see would improve student learning— if only teachers would just use them correctly! Many an education technology company has struggled with this—and few have lived to tell about the struggles.”

Wireless Generation’s first product was just such a technology solution that promised to improve student learning—but it was a success. The company built a device that helped teachers do more easily something that they were already doing. In this way, it improved and simplified their lives rather than further complicating them. It was a brilliant insight.

All too many education technology companies, however, are not offering products that help teachers do their work more efficiently or prioritize their work. Instead, these products feel like they are “just one more thing” on top of a teacher’s already busy work day. In the parlance of our theory, they don’t understand teachers’ “Jobs to be Done.”

Fast forward to Amplify: No one suggested that its products simplified a teacher’s job. The beautiful products too frequently felt like they might make it harder (or neutral at best) to teach students. Maybe Amplify simply didn’t focus on the learning model redesign. No matter the root cause, too many educators deemed Amplify’s products simply not a good “fit” for today’s classrooms and districts.

Amplify’s Future

Going forward, the spinout of Amplify and associated layoffs leave the company in an interesting position. It retains an exciting product with a smart management team. Many on that team helped grow Wireless Generation’s considerable success.

By restructuring its costs, the reborn Amplify might have a structure that could let it address the market with a fresh approach and truly make a real improvement in the lives of students everywhere.

This time, however, Amplify’s leaders should heed the theories on innovation that exist alongside its extensive knowledge of the challenges of operating in the U.S. public education market.

Michael is the co-founder of and a distinguished fellow at the Clayton Christensen Institute for Disruptive Innovation and a principal consultant for Entangled Solutions.

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