How Pixar Fosters Creativity (and Competitive Advantage)

Pixar is a success story 20 years in the making, and the envy (and antithesis) of its Hollywood competitors: a creative powerhouse with unparalleled consistency in both quality and box office.  From Wall-E and Ratatouille to Finding Nemo and Toy Story, it’s tough to define the company by anything other than unconventional genius.

In the September 2008 issue of the Harvard Business Review, Ed Catmull (Pixar’s Co-Founder and President) offers an insightful look into the true source of Pixar’s success: a collective culture driven by creativity, obsessed with quality, and with an appetite for risk.

Other studios may have caught up with Pixar’s aesthetic, but replicating a culture — arguably Pixar’s greatest renewable competitive advantage — is an arduous challenge… well beyond the powers of Hollywood magic.

Here’s a few excerpts from Catmull’s wordy and worthwhile case study:

Creative Isn’t a Department:

Our philosophy is: You get great creative people, you bet big on them, you give them enormous leeway and support, and you provide them with an environment in which they can get honest feedback from everyone.  […] Of great importance—and something that sets us apart from other studios—is the way people at all levels support one another. Everyone is fully invested in helping everyone else turn out the best work.

On Continual Improvement:

Systematically fighting complacency and uncovering problems when your company is successful have got to be two of the toughest management challenges there are.

Demand Quality, Never Settle:

Toy Story 2 also taught us another important lesson: There has to be one quality bar for every film we produce. […] By rejecting mediocrity at great pain and personal sacrifice, we made a loud statement as a community that it was unacceptable to produce some good films and some mediocre films.

You can enjoy the Full Article at Harvard Business Review.  [via The Disney Blog]

The Hollywood/Valley “Community” Divide

More debate on the difference between Hollywood and Silicon Valley in this rant by Kieth Boesky, who articulates the critical difference in each’s perspective of “community”:

Hollywood views engagement as watching a video and community as the people who watch the show coming out at the other end of a pipe, or group of pipes – one to many.  They only hear from them when a small percentage decides to write letters, or start an on-line petition.

The Valley views engagement as interaction with the audience via web based tools and forums and community as a network built by its members – many to many community members not only see the content, but interact with it, share it with a friend, impact it and through a social network, build a distribution channel around the content. Their interaction establishes the distribution channel, or “value.”

Boesky further notes that Hollywood is errantly insisting upon “viewing the online world through the lens of traditional media” and becoming fixed on porting linear concepts to smaller screens, without recognizing and addressing the unique opportunities of web/mobile as a medium for storytelling.

You can read the whole piece here: Why Hollywood Agents Just Don’t Get It

Netflix + XBOX Live = Social Entertainment

After much speculation, Microsoft and Netflix used the podium at this year’s E3 Media & Business Summit to unveil an exclusive partnership that will bring Netflix’s catalog (currently including more than 10,000 movies and TV episodes) to XBOX Live members later this fall.

“[It’s] perfect combination, the leading online movie rental service and the leading games and entertainment system joining forces to create an all-in-one entertainment experience with content for everyone.”
— Reed Hastings, chairman and CEO of Netflix.

Most interesting, however, is that the service aims to make entertainment social again by integrating with Microsoft’s other announcement: a new, avatar-based dashboard called Live party, which Engadget reports will allow up to 8 friends to simultaneously watch the same film.  That alone may be worth the price of admission (which I already pay separately, anyway), but I’m most intrigued by where this will lead the experience and consumption of entertainment.

In a world where audiences can instantly satisfy the demand created by recommendations (both social and algorithmic) and marketing, the game will change considerably.  It will surely become more personal, more granular, more cost-effective, and more challenging.

Product Placement: This Post Brought to by…

Look out, Jack!  The FCC has set its sights on the next goldmine of needless government regulation: product placement.  MediaPost reports that the agency “has begun a formal inquiry into altering its regulations governing product placement [and] is seeking comment on whether greater disclosure of so-called ‘embedded advertising’ is needed.”  One proposal would force networks to run on-screen notices lasting up to four seconds.

This is the sort of slippery slope regulation that warms the heart of a government bureacrat, especially FCC Commissioner Jonathan Adelstein who believes that viewers have a legal right to know every product within the frame:

“Reality TV should mean informing viewers about who is secretly pitching to them in the TV shows they are watching.  The true reality is that news and entertainment alike are practically being turned into undisclosed commercials. Many current practices fly in the face of viewers’ legal right to know who is pitching to them.”

Be careful what you wish for.  Companies of all sizes have taken to product placement as a subtle way to push their wares into the mainstream — and most of this activity is directed not by Fortune 500 ad agencies, but by savvy productions looking to stretch their budgets as far as possible.  Such regulation will only increase the barrier to entry for anyone but the multinationals it is attempting to curb and, far worse, transform entertainment into a tag sale not unlike Fight Club’s vision of consumerism run amok, in which case the audience will suffer the most.  Call me old-fashioned, but I prefer to enjoy a scene without having every prop brought to my attention (whether it was paid/bartered for or not).

Sure, you say, the FCC wants to ensure that you know American Idol contestants don’t really drive around in a Ford singing covers of a forgotten artist looking for a reunion tour and drinking Coca-Cola all day.  Perhaps they are just doing their patriotic duty to protect us from our desire to enjoy the suspension of disbelief that makes entertainment so engrossing.

Lehman Knocks the Movie Business

Lehman Brothers cut its ratings on a number of top entertainment companies yesterday, also lowering its industry rating to “negative”, citing concerns over the economics of media within the ongoing fragmentation of audiences and distribution.

“To be clear, our fear is that the damage that digital distribution inflicted on the music industry will replicate itself in the movie industry, and our fears are too great to justify keeping neutral or positive ratings on the creators and distributors of movie and TV content,” analyst Anthony DiClemente wrote in a research note.

“In reality, while there are many obvious differences between music/audio and movie/video media forms, the core properties of video distribution and consumption are not different enough from music content to continue to justify why movie/TV content will be spared fragmentation.”

The crux of Lehman’s analysis lies in forecasting that the decline of DVD revenues (Netflix CEO Reed Hastings has previously speculated the format could peak as early as 2013) will outpace the growth of new models.  Read another way, more focu$ is being given to sustain the life of the familiar than in accelerating the growth of new alternatives.

Translation: the industry must innovate with real conviction, and endeavor to catalyze change rather than react to it with the unwilling trepidation that so quickly brought the music business to its knees.  Hollywood does NOT have to cede its future to disruptive technology… rather, it should build itself upon it, become better and more relevant because of it, and lean into the wave rather than bracing for impact.

Lehman’s assumption that movies will follow the erosion of the music industry because they have similar “properties of distribution and consumption” also assumes that Hollywood has learned nothing from recent history. Let’s hope prove they’re wrong.