Movie business the prototype of new economy
Last week, I laid out my best guess about America's future economic structure: That it would start to look more and more like Hollywood and the film industry and less like what we've all thought of as the traditional American economic system.
We're leaving the idea of big-company jobs with a weekly paycheck behind as the core building block of our way of life. We're headed toward a reality that is more project-, network- and track-record driven. Just like Hollywood.
The movie business has transformed from an everyone's-an-employee-at-our-vertically-integrated-studio structure 50 years ago into a dazzlingly capable web of very small, very focused, and very creative companies and individuals today. Those focused companies and those talented individuals then come together under the umbrella of the movie project to make their magic happen.
That's a radically different organizational idea — each project a separate company. In the economic structure we've all grown used to, companies have products. But in Hollywood, the product has a company! For a short time, that is. Once the project's done and the movie's had its run, the company goes into suspended animation and the workers disappear into the ether, only to re-form in a different configuration for their next project.
Wave of future: small
Think it sounds unappealing? Maybe. But it's a thriving system — one of the few American industries where we are unquestionably the dominant global player without a single real challenger on the horizon.
That big, vertically integrated studio system ultimately disintegrated because it was too expensive and unwieldy for a business as dynamic and uncertain as the movie industry. There was no way a studio could reliably predict what would sell next, so a huge, high fixed-cost structure was out of whack with the business reality.
In the non-Hollywood world, the flood of information from the Internet and related technologies has changed how we do business forever. The idea of corporate and job stability is desirable but less and less attainable. The fact that it takes surprisingly little financial capital today to start Web-enabled businesses means that incumbents are at a disadvantage and new entrants can be surprising giant-killers. Old-line companies can't maintain a massive cost structure while being taken out at the ankles by leaner, meaner Web competitors — as Best Buy and other retailers have recently discovered.
So it's likely that we're all facing a world with more individual economic agents and fewer employees. More small, very-focused companies and fewer big vertically integrated ones. Intense specialization and role playing in the workforce rather than jacks-of-all-trades. Risk shifted from employers to individuals — but rewards shifted in that direction too.
How do we prepare ourselves to prosper in a future economy that looks like that? Here's a few suggestions:
• What have you done for me lately? Just like in Hollywood, your value is increasingly determined by your track record, your performance, and your ability to deliver in your latest project. The Web brings information, and information brings transparency. You can't hide a lack of talent or performance.
• Network, network, network. Your friends and colleagues are the best source of your next gig and the gig after that. Be the person everyone loves working with, and stay networked to stay busy.
• Don't hide your light under a bushel basket. You're going to have to learn to market what you know and can do. Only Julia Roberts, Brad Pitt and a few others get agents; everyone else has to promote and sell themselves.
• All significant returns flow to creativity. You can know a lot of stuff, but the Internet is always going to know more. Technicians don't make the big dollars in Hollywood; the creative talent does. Creativity might be the single most-important skill set in the Economic Revolution.
• Master technology and keep your skills current. They don't use hand-cranked cameras anymore, so wearing your technological illiteracy as a badge won't get you dinner. The steeper the innovation curve gets, the more critical it is that you're on the front edge of it.
• Focus, focus, focus. It's a search-driven world. If I want a red-headed actor who sings opera, I can find the world's best one via the Web. Figure out what you want to be known for and keep sharpening your point so people can find you. Be the answer to someone's search query.
• Live frugally. Hollywood's workforce doesn't have the luxury of living paycheck-to-paycheck. Unpredictable cash flows, even when the cash flows are large, require planning and frugality. Living below your means becomes a valuable skill set in the Hollywood — and our future — economy.
No one said going Hollywood would be easy.
Dave Maney, an entrepreneur and former journalist, runs Economaney.com. Reach him at davemaney@ economaney.com
Economic Revolution Dave Maney