CIO — Almost everybody has a theory about how to save the U.S. newspaper industry. The only consensus, it seems, is that it needs to change fundamentally or it could all but disappear. At The New York Times, tough times have elevated IT-enabled innovation to the top of the agenda.

A research and development group, created in 2006, operates as a shared service across nearly two dozen newspapers, a radio station and more than 50 websites. "Our role is to accelerate our entry onto new platforms by identifying opportunities, conceptualizing and prototyping ideas," explains Michael Zimbalist, the company's vice president of R&D.

Zimbalist's staff of 12 includes experts in rapid prototyping, specialists in areas like mobile or cloud computing and data miners who probe website data for insight into what visitors do. They work within a common framework based on idea generation, development and diffusion throughout the business. Recent projects included prototypes for new display ad concepts, as well as BlackBerry applications for Boston.com and the expert site About.com.

The team's work is intended to supplement and support innovation taking place within the business units. For example, the team is prototyping E-Ink, an emerging display technology that some business units can't spare the resources to investigate.

At NYTimes.com, CTO of Digital Operations Marc Frons's design and product development group worked with Zimbalist's team and Adobe developers on the Times Reader 2.0 application, the next generation, on-screen reading system it developed on the Adobe AIR platform. Frons further encourages forward thinking among his 120-person team with twice-annual innovation contests. Winners receive cash, recognition and the resources to turn their ideas into reality.

Typical projects are measured against criteria like revenue potential or journalistic value. R&D projects aren't. "Since we build software, there's no huge capital investment up front," Frons says, "which allows us to experiment. The emphasis is on rapid development."

Times Widgets, a widget-making platform, was a contest winner, as was the recently launched Times Wire, a near real-time customizable interface for online content. "We're trying to solve specific problems and think about where the business is going," Frons says. The company posted an operating loss of $74 million in the first quarter; Frons is focused on enhancing revenue, cutting costs and increasing efficiency through process improvements and automation.

Much of what has come down the innovation pike thus far at The New York Times can be classified as process or product innovation. Typically, a healthy and growing company should be content with focusing 90 to 95 percent of its innovation dollars on such core business innovation and 5 percent or 10 percent on new business models, says Mark Johnson, chairman of strategic innovation consultancy Innosight. However, he adds, "The newspaper industry is in so much trouble that business model innovation is more important than ever."

Now is a good—and bad—time for fostering such innovation. "You've got the leadership's attention you need," says Johnson. "But it's harder in the sense that there's an urgency to fix the financials, and being patient in the way you need to be for a new business model to unfold is a very difficult thing to do."

Stephanie Overby is a freelance writer based in Massachusetts.