Whose side am I on? How behavioural economics is shaping the TV industry
September 18, 2013
It goes without saying that the TV sector isn’t short of big egos or over-confidence. But, on this occasion, I felt there was more subtlety, self-deprecation, humour and openness from participants about what they didn’t know. Perhaps it’s the impact of the crises that have hit some parts of the sector, or the tough economic outlook, that has caused executives think afresh about what makes them and their colleagues tick.
I came away with eight important points, many of which are rooted in behavioural economics:
- Most participants believed that platforms will be the most valuable part of the TV value chain – given they own the customer relationship, and the data that comes with it.
- Consider yourself an ‘outsider’ in the industry, thinking differently, and asking new questions - and make this your default position. Outsiders are often the ones that transform a business, and their industry as a result. This often requires considerable courage and resilience (recognised by Richard Desmond, Chairman of Northern and Shell, for one). Mike Darcey, CEO of News UK, gave a clear view of the future of business models in publishing saying, amongst other things, that the market will polarise between free and pay models, with the hybrid middle losing out. He has clearly taken insights from his previous role at Sky; and other speakers had used their experience elsewhere to great advantage (from advertising to TV, from TV to gaming).
- Get used to the ambiguity of dealing with companies who may be suppliers, competitors and partners in different contexts (raised by Adam Crozier, ITV CEO). Be careful in extrapolating one situation to another given these different roles.
- Spend time understanding the true motivations of people you work with – for example, broadcasters need to understand the underlying motivations of the producers they work with (and it’s often more than just money). How much does talent care about ratings? Or is it more important to be commissioned for another series? (Netflix thinks it’s the latter, and in any case, they don’t share ratings information with their talent.)
- Break down artificial distinctions, and biases – one speaker referred to leaders being split between commercial and creative types. I get the distinction but it underestimates the creativity of ‘commercial’ people.
- Give a little thanks to your team - it goes a long way in encouraging exceptional performance and loyalty. One speaker referred to Jeff Bezos of Amazon writing a personal letter to each of his top team (none of whom have left in the last ten years, apparently).
- Apply the notion of comparative advantage: let the people in the business do what they do best – the Netflix management team picks the right shows then lets the production companies get on with it.
- Build confidence to frame the right questions – led by the ‘next generation of leaders’ invited to the conference (and Mark Zuckerberg of Facebook in discussions according to Jim Citrin of Spencer Stuart).
So, whose side am I on? I believe that that these insights from behavioural economics can make a substantial contribution to the future of the TV industry. And they can probably make an impact in other industries and sectors as well.