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Harvard Business School Professor Anita Elberse
Creative talent and commerce have always been intertwined. Centuries ago, patrons supported artists’ work – and promoted it within their social circles. The television era birthed “stars” who enjoyed mass exposure. With the digital age, organizations can attract new audiences from an array of online channels. At the same time, talents have evolved into brands. In the process, they’ve gained greater control over decisions impacting their careers.
As a result, talents are shouldering more business burdens. And entertainment firms are navigating a more segmented and competitive marketplace. Amid the uncertainty, each is asking where they should allocate resources, distribute content, and build partnerships to produce the highest returns and the lowest risk.
To answer these questions, celebrities and entertainment executives alike are streaming into Harvard Business School each June. Since 2014, the school’s Executive Education arm has held a course called The Business of Entertainment, Media, and Sports. Taught principally by Anita Elberse, HBS’ Lincoln Filene Professor of Business Administration, the course relies on intensive case studies and lively class discussions to illustrate the decision-making variables and best strategies for making creative investments.
DIVERSE CLASS RANGES FROM MEDIA MOGULS TO FASHION MODELS
Twitter’s Luan Knaya
Indeed, the class draws an eclectic mix of students, says Luan Knaya, a 2015 attendee who manages sport partnerships for Twitter in Brazil. “It’s a diverse environment with each segment of society. [You’ll find] different cultures, ages, and [levels of] experience, but also different roles and jobs –presidents, vice presidents, directors, managers, and board members. They really mix it up in a very cool way so you see everything in a holistic perspective.”
And it’s not just different roles represented. The program takes great pains to admit executives from a wide range of industries, with Elberse clicking off sports, media, film and television, music, fashion and dance clubs among them. For examples, previous sessions have included the likes of Sean Saylor, VP and Creative Director at MTV International and Lisa Joseph Metelus, an executive at Creative Artists Agency. The course also attracts celebrities themselves, with recent alumni including three-time NBA champion Dwyane Wade, model Karlie Kloss, and Pro Bowl wide receiver Brandon Marshall.
“The target audience is mid- to senior level executives who work in the media or entertainment space – or hoping to make a transition into that space,” Elberse details. “Or, they could come from industries affiliated with or helping this industry – like advertising. It is also people that work directly with the talent and sometimes the talent themselves.”
CAREFULLY-CONSTRUCTED CLASS STEMS FROM SELECTIVE ADMISSIONS PROCESS
This year’s course is slated to run from June 1-4, costing $9,000 (which includes tuition, case materials, most meals, and the ever-popular dorm room).
The class is limited to 60-65 participants, with students receiving a non-credit certificate after they’ve completed it. While HBS doesn’t impose academic requirements on participants, they are required to be nominated and sponsored by their employer. Applications are then reviewed by HBS admissions.
“We want to keep it intimate,” Elberse explains, “but we want to have enough people to have meaningful discussions with and give everyone the chance to participate so they really have a voice.” While HBS doesn’t share its acceptance rate for this course, Elberse adds that they “say no quite a bit.” “We want to have the right mix of participants,” Elberse adds, “so we’re actually quite selective.”
STUDENTS DIGEST 3-4 CASES A DAY IN TEAM-DRIVEN ATMOSPHERE
And quite rigorous, too. Before starting the course, participants are sent the cases covered in the class in advance (along with accompanying data and materials). And Elberse encourages students to do the reading in advance. “Some only prepare for the first day or the first half, so they are doing lots and lots of reading during the program which often means late nights.”
To build cohesion, the class divides itself into teams, with five students usually comprising each group. Students are assigned 3-4 cases per day, with each case discussion lasting 90 minutes to two hours according to Knaya. However, the real work happens outside of class in groups.
“There is Individual preparation,” Elberse notes, “but there are also small discussion groups. They have time to sit down and discuss these cases before we have our class discussions. They have the opportunity to reflect on the learning after the class. It requires a significant commitment from the participants. Nothing is worse than sitting through a case discussion if you haven’t read through the case. A lot of things will just pass you by. So we make it very clear to participants that we expect them to do a lot of work.”
CASES RANGE FROM NETFLIX TO BEYONCE
However, the real magic comes with the case method, which Elberse says adds an extra layer of richness to the course. Instead of reading books on their own, students can interact with highly experienced peers who bring different backgrounds and perspectives to the table. “The experience of the case method and having to be on your toes for four days and being challenged to share your points of view and having the opportunity to listen to other points of view – that is one major element of why doing this might make a lot of sense,” Elberse stresses.
Just as important: These discussions happen in real time, with students able to tap classmates and faculty for further insight and clarification as learning is happening. In fact, Elberse divulges that many class discussions spill over to lunch and dinner due to students’ deeper sense of connection to the material. “It can be a surreal experience in those small discussion groups [to be] talking about what LeBron James should do in a case study in a group with (his former teammate) Dwyane Wade… There’s really no substitute for that.”
The cases themselves –ripped right out of the news – also keep students engaged. Forget well-worn cases like the 1982 Tylenol recall or Kodak overlooking the digital revolution. Elberse’s cases involve issues like Netflix’s move into original content and Beyoncé’s launch of her own distribution channel. According to Elberse, these cases are tied together by several key themes.
Harvard Business School – Ethan Baron photo
LOOKING FOR THE UNDERLYING REASONS WHY STRATEGIES WORK
For one, the cases examine how much investment should be made across product portfolios, with Elberse citing movie studios as an example. “A large movie studio might have a budget of a billion dollars: How do you divide that over different projects that you’re trying to launch in a given year?” The answer, of course, is “it depends.”
As part of the case discussions, students deconstruct the unique variables inherent to given situations. “We’re diving into what is now the most popular strategies in a variety of entertainment sectors,” Elberse specifies. “Not only are we looking at evidence to see why it works so well in certain settings but we’re also trying to get to the bottom on why that is the case – the underlying reasons for why these strategies work so well.”
CELEBRITY ENDORSEMENTS: PAY UP FRONT…OR FORK OVER EQUITY?
The cases also zero in on talent. As part of that, participants look at what the talent themselves want. “We talk a lot of about the talent lifecycles – and the incentives and motivations of talent – and how it changes over course of career from a business perspective,” Elberse shares.
Increasingly, stars understand that their name is their brand. As a result, they’re looking to monetize the value of this brand. LeBron James, a perennial NBA all star, is a case in point. In one case, class participants evaluate three endorsement options available to him. On the surface, each opportunity is a winner. However, as Elberse explains, each comes with a different compensation structure whose value is dependant on a star’s priorities.
From Left: Dwyane Wade, Anita Elberse and Brandon Marshall
“Would you want a structure where you get a big payment up front? Would you rather be participating in the upside where you have a share of the revenues? Or, [would you prefer] an equity stake in the company that you’re dealing with? So we talk about [these options] and why athletes in certain situations prefer [certain structures].” At the same time, as Knaya observes, some stars factor in considerations beyond money. “You must think about how to present a case, presentation, or project. [Some] want to make a difference. Others are looking for you to give them the best conditions to do what they do.”
The LeBron James case also looks at the perspective of the companies vying for James’ endorsement. “If you’re eliciting an endorser,” Elberse poses, “would that be a model that you would prefer to pay by as well? What advantage does it give you? Sometimes, it might be better to push for a more traditional payment model. You know exactly what it is that you’re paying.” And that’s a major consideration for companies weighing the risks of using celebrity endorsers. “I’ve done academic research in this space, Elberse points out. “In crunching the numbers, you see that the payoff of celebrity endorsers is quite significant. They do have a significant impact on sales and even stock prices. But obviously, we’ve also seen examples where companies make the wrong bet – and that endorser gets into trouble in some way or another and they have to deal with the fallout.”
THE BUSINESS OF BEING BEYONCÉ
In a similar vein, the course looks at the tension between developing new talent or paying established stars, using Spanish Soccer club Barcelona as a case. “There, do you actually focus on acquiring superstars – which is obviously very expensive but very often is a way to de-risk” Elberse explains. “So a movie studio, record label or soccer club making these big bets on big stars – yes, you’re spending a lot of money, but your chances for success are also increasing quite significantly…And then to what extent do you want to continue to invest in developing talent? The time you spend $30 million dollars to acquire a big star means you can’t spend $30 million dollars improving [talent] on your youth academy. So how do you think about that and what makes most sense?”
Another example is the course’s case study of Beyoncé, whose star power has enabled her to seize control of both the creative and business ends. In Beyoncé’s case, she formed Parkwood Entertainment to handle functions like building partnerships and distributing content that were traditionally managed by the record label. And her decision to build an infrastructure devoted to her ambitions opened new opportunities for artists – and created new competition for entrenched players.
“Now, you can reach out to Facebook and arrange the launch of an album through Facebook and with Apple directly, Elberse observes. “That goes way beyond thinking about Beyoncé’s brand and monetizing that brand and goes to the question of the future and how industries are going to be organizing themselves. We definitely go to that second level as well.”
THE REVOLUTION WILL BE DIGITIZED
Finally, many cases were interconnected in looking at the digital technologies and players that have hit the mainstream – and how they are changing business practices. In particular, these technologies enable organizations to fulfill two of the chief mandates from customers: Cheap goods and easy access.
“Because entertainment goods, in many ways, can be brought back to 0s and 1s – because they can be fully digitized – [it] is not like selling bicycles or titanium welding equipment,” Elberse explains. “You can bring this back to, ‘here’s the file and this is the entire entertainment product.’” As a result, goods are less costly to produce and distribute – and easier to consume in the process – a true virtuous circle.
And these changing dynamics have yielded a series of thought-provoking case studies for the course, Elberse adds. “We look at a case on Facebook, which allows us to talk about the impact that social media is having on the entertainment space and what the future of that might be. I have a case on House of Cards, which is really about Netflix and how it is changing practices in television. Traditionally, we teach a case on the Metropolitan Opera, which is not something you think about when you think about digital technology. However, their ‘Live in HD’ program, which broadcasts performances live in HD to movie theaters, allows us to study some of the most essential opportunities and challenges involved in going digital.”
So where did Elberse get the idea to each this course? For one, she is also the author of the acclaimed 2013 book Blockbusters: Hit-making, Risk-taking, and the Big Business of Entertainment, which dissects the attention-grabbing strategies used by stakeholders ranging from Apple to club DJs. In addition, she has she has already been teaching a similar course, Strategic Marketing in Creative Industries, as an elective for second year students at HBS with HBS professors Kristin Williams Mugford and Felix Oberholzer-Gee (who are also part of the summer teaching team). After receiving numerous requests from industry executives to sit in on the class, she developed an executive education program targeted to entertainment leaders and talents.
Sir Alex Ferguson with Anita Elberse
SUMMER SESSION COMES WITH GUEST CELEBRITY SPEAKER
And the course is anything but MBA Lite. In developing the course, Elberse condensed the 25-30 cases she covers for second years down to 12-14 cases – which she covers in just four days. “Basically, what I’ve done,” Elberse admits, “is that I’ve looked over the entire lineup and I pick what I think are the best ones, the ones that will get to all of the major core concepts that I would cover with my MBA students and would make for a compelling lineup.”
The executive students also enjoy a special treat. Each year, Elberse brings in an industry practitioner to speak to the class. In 2014, Sir Alex Ferguson, former manager of the Manchester United Soccer club came to Boston to participate in a case study that was done on him. In 2015, Brandon Marshall, a 2014 participant, returned to share how he applied what he learned (The 2016 guest speaker won’t be announced until the class starts).
“We always do one informal session with the creative talent,” Elberse explains, “so you can imagine the executives have a lot of questions for them. They are very interested in their perspective because usually they don’t have the opportunity – even those who work in the entertainment industry – to ask a Dwyane Wade what he really thinks about things. So we also make it possible through informal panel discussions to do that.”
SUMMER PARTICIPANTS LOOKING FOR RELEVANT TAKEAWAYS
Despite a more compressed schedule, Elberse teaches the course the same way with the summer executives as she does with her second year HBS students. “I don’t have a different plan with the executives. I don’t go in asking different questions. I go where the energy is and sometimes that might be a little different, but it also depends on when we’re teaching the case and maybe some recent developments that might be in the backs of their minds.”
That said, Elberse has noticed some distinct differences between her traditional students and the seasoned executives who populate the summer session. Naturally, the executives’ industry experience gives them a slight edge, Elberse concedes. “When you have executives in the room, they will have been exposed to more situations and have more work experience than [students] so there are certain things that you can cover a lot faster. So I think we make good use of that and some of the discussions are much more interesting because you have people who have actually lived it.”
That’s not a slap at her HBS students, who Elberse sees bringing flexibility and an eye for detail to the table. “They bring in certain things that traditional executives don’t, such as the ability to run numbers back and forth to see what happens when you do it in multiple ways. The executives do more of a back of the envelope translation.”
Their needs are also much different, Elberse adds. “When you’re doing a dozen or so cases, you’re asking at the end of every case: ‘What does this mean for my business when I get back on Monday morning?’ At the end of a discussion, I try to give them a handle on here are what you might think of as takeaways. Obviously, you’ll have your own takeaways, but [I’ll share] what I have found to be
insightful lessons on these cases. So I try to maybe package it a little more on the end to make sure we help our participants to make it relevant to their businesses immediately.”
THE NETWORK IS THE CLINCHER
Beyond the case lessons, executives take home another benefit from the course: A network. When Knaya arrived at Harvard last summer, he only knew a colleague from Twitter. A week later, he came away with a peer group that he could reach out to for advice – or to open doors when he was looking for business partners. In fact, Knaya shares that he keeps in touch with his classmates via social media, particularly the seven countrymen who were part of his class. “We exchange a lot of information,” he gushes.
And such intangibles are perhaps the biggest draw of this course. “Anyone can buy my book,” Elberse concludes, “but I think it really comes alive when you’re here.”
DON’T MISS: INSIDER HARVARD BUSINESS SCHOOL’S STARTUP MACHINE
The post Harvard’s Anita Elberse Teaches Entertainment Ropes To Execs (And Celebrities) appeared first on Poets and Quants.
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