It’s one thing to look at the entertainment business from an executive’s point of view. It’s quite another to see it through the eyes of a professional basketball player, supermodel, or actress.
That mix of perspectives is exactly what has folks in the media and entertainment industries flocking to Harvard Business School’s Executive Education program: the Business of Entertainment, Media, and Sports.
“The creative talent brings a unique perspective … they have insights that no one else has”
Big-name celebrities, including Miami Heat player Dwyane Wade, New York Jets wide receiver Brandon Marshall, fashion model Karlie Kloss, and “Magic Mike” star Cody Horn, have attended the program, sharing business challenges and contract strategies in the same room with mid- and senior-level executives who work for studios, networks, music companies, and sports leagues.
“The creative talent brings a unique perspective,” says Anita Elberse, the Lincoln Filene Professor of Business Administration at HBS, who is faculty co-chair of the Executive Education program. “Their viewpoint often sheds light on why we see certain tensions in the media space and why executives face certain management challenges. They have insights that no one else has. They also bring a certain energy to the room—everyone is more on their toes.”
The executive education program has been offered twice—once each spring starting in 2014—and the next session will be held June 1-4 on the HBS campus near Boston. Elberse is remaining mum on celebrities planning to attend the next session in order to protect their privacy.
Participants sign up to learn strategies for launching creative products, managing talent, coping with advances in digital technology, and maximizing chances that an entertainment product will be successful.
Attendees study a variety of real-world case studies, including peeks into the business dealings of basketball star LeBron James, rapper Jay Z, and a look at the drama series House of Cards to get a feel for why some creative businesses thrive while others fail to get off the ground.
Beyoncé’s bold experiment
They also discuss a curious case study, one Elberse wrote about singer-songwriter Beyoncé, who wrote and produced her long-awaited fifth album in secret until the album’s surprise release in December 2013. The album went platinum, and Elberse explored how the artist managed to pull off such a huge success without any of the typical pre-release marketing hype.
“You could make a strong argument that an unknown artist could not get away with this. You need to be at a level of Beyoncé to pull this off,” Elberse says. “Most people will not be Beyoncés in their lifetime or be able to manage a Beyoncé. But you can learn a lot about how things work in general when you look at exceptions—when you study these really unusual cases. Here, participants walk away with a deeper understanding of why products are released the way they are in the entertainment industry, and why this launch worked despite violating the rules.”
But for every smash hit like Beyoncé’s, the entertainment industry sure sees its fair share of flops.
“A lot of products these companies introduce fail,” Elberse says. “If you think about a publisher, movie studio, or TV network, they introduce many more products than the average business, and face the challenge of having to manage a large, constantly changing product portfolio.”
One solution to that challenge, Elberse says, is for executives to consider a “blockbuster strategy,” making large bets on big-bang projects, rather than spreading resources too thin on a variety of lower-rent risks.
“Media companies often try to play it safe. ‘Let’s make five $40 million movies instead of one big $200 million movie.’ They figure it’s hard to predict which one will work, so they’ll see which one sticks,” she says. “In reality, that’s difficult to pull off. You’re better off investing in that one $200 million movie. It seems risky to put all your eggs in one basket, but it can be the best way to go.”
The value of superstars
In Elberse’s book Blockbusters, she notes that starting in 1999, then Warner Bros. President Alan Horn greenlighted four or five big “event films”—those believed to have wide appeal—among the studio’s annual list of about 20 movies and backed those picks with an exceptionally large share of the company’s production and marketing budget. Meanwhile, then NBC Television Group President Jeff Zucker took the opposite approach, spearheading efforts to cut the rising costs of programming at the network by directing staff members to choose less expensive content and rely less on pricey A-list actors.
Horn’s strategy paid off: By 2011, under his leadership, Warner Bros. had the distinction of becoming the only studio in history to break the $1 billion mark at the domestic box office for 11 years in a row. Zucker’s strategy, on the other hand, failed miserably. His network ended up in a sorry state as ratings took a huge dive and Zucker was ultimately asked to leave.
The HBS program also explores how executives should invest in talent. In allocating resources, should they focus on building talent or acquiring superstar talent? Elberse says strong evidence suggests that it is hard to find long-term success without having a strategy that revolves around superstars.
“We try to make participants more aware of the challenges they would be encountering,” Elberse says. “People facing these portfolio decisions do what feels right to them. But when you analyze their strategies, you often see mistakes. We’re trying to prevent participants from making the mistakes that so many media executives have made in the past.”
Part of understanding how to succeed in the industry today means getting a firm grasp on the impact of digital technology, so the program devotes a full day to the subject.
“Media executives need to know about the rise of digital channels and the growing importance of social media,” Elberse says. “Digital technology has the potential to completely disrupt the kinds of channels they’re used to. Take the music industry: new technologies allow someone like Beyoncé to have a direct route to the consumer, which has all kinds of implications for established players in the industry.”
Real world demand
The executive education program was Elberse’s idea.
Elberse, who is chair of the MBA program’s Required Curriculum, has been teaching a highly sought-after MBA course called Strategic Marketing in Creative Industries about the business of entertainment, media, and sports. Word evidently got around in the business world.
“I got requests from people in the industry who asked, ‘Can I sit in? I would love to see your class,’” she says.
So Elberse pulled out key concepts and pertinent case studies from the 28 sessions she taught MBAs and crafted this four-day program for executives and those aspiring to work in the business.
Elberse teaches a good chunk of it along with her co-chair for the program, Kristin Williams Mugford, the Melvin Tukman Senior Lecturer of Business Administration in the Finance Unit at HBS. Felix Oberholzer-Gee, the Andreas Andresen Professor of Business Administration and Senior Associate Dean and Chair of the MBA Program, also teaches a portion.
“I’m blessed with a great team,” Elberse says.
Applications are due at least four weeks before the June 1 program start date, and because acceptance occurs on a rolling basis, quite a few of the seats for the June session have already been filled. The acceptance process is a selective one.
“We say ‘no’ quite a bit,” Elberse says. “We want to have a mix of different industries with a certain level of experience. The idea is to create the best possible experience for our participants.”