Tag Archive: competition

Advice to Board Members From Batman’s Producer: Look East

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Michael Uslan has been many things: a lawyer, a professor, an executive producer, and—most recently—a global media mogul; but he identifies most closely with the moniker that became the title of his 2011 memoir: The Boy Who Loved Batman. During an interview at the 2015 NACD Global Board Leaders’ Summit, Uslan reflected on his experience in media—ranging from Hollywood as a case study on how to think about competition to the danger of losing sight of the story to the rise of China as an indispensable partner in long-term strategic growth. In the process, he shared valuable insights that apply across industries.

Michael Uslan at Global Board Leaders' Summit

A self-described “comic-book geek” even before he could read, by the time Uslan graduated from high school, he had amassed a collection of more than 30,000 issues. “They were stacked floor to ceiling in our garage,” he recalls. “My dad never could get a car in there.” While Uslan would read almost any superhero rag within reach, he developed an early and enduring love for the caped crusader. That love drove him, at age 28, to buy the rights to the Batman franchise. He was able to purchase them for a song, even as the president of DC Comics tried to talk Uslan out of the deal, telling him that Batman was “as dead as a dodo.” Uslan was undeterred. He believed in the potential of showing a darker, more human side of Batman, to say nothing of the revenue the franchise could generate in ancillary toy, comic book, video game, and other product sales.

Armed with what he saw as a self-evident blockbuster idea, Uslan made the rounds of the Hollywood studios. He was rejected at every turn. “I was told I was crazy. They told me it was the worst idea they had ever heard.” In fact, it took 10 years to get the first film, 1989’s Batman, greenlighted; but that break gave Uslan the chance to launch, almost single-handedly, a franchise that has achieved No. 1 box-office rankings and grossed billions of dollars worldwide.

Missed Opportunities

Uslan’s experience is reminiscent of other cases in which visionary concepts were initially pooh-poohed by power brokers and industry leaders who couldn’t believe that customers would respond to something different from the status quo. Consider these two examples, cited by speakers at last year’s NACD annual meeting: John Backus, co-founder and managing partner for New Atlantic Ventures, described his company’s failure to foresee the transformative power of the World Wide Web: “I ran an Internet banking company. We were focused on the phone in the home. We missed the Internet. We missed the Internet because we had our blinders on.” Scott Kupor, managing director at Andreessen Horowitz, summed up how his company missed the boat on AirBnB: “When we first saw it, we thought, ‘This is crazy.’ We made the cardinal mistake in venture capital that I hope we never make again, which is we thought about [the proposal] in the context of our own frame of mind and what we thought was appropriate…. [W]e viewed it through the lens of our current biases.”

Digital Disruption Fuels the Rise of Techtainment

Hollywood is notoriously insular. A colleague who is both a corporate director and a veteran of the studio system once observed, “They have a model that locks others out, but the problem when you lock others out is that you lock yourself in.” Uslan noted that Hollywood is making fewer and fewer movies. As revenue models contract to a handful of familiar formulas, it becomes harder to make groundbreaking films like 1989’s Batman and the hits that followed it. None other than Steven Spielberg and George Lucas famously predicted the implosion of the U.S. film industry in a 2013 lecture at USC’s film school, citing as its principal cause the big studios’ collective fear of straying from the tried and true.

At the same time, Hollywood is facing increased competition from indie upstarts, much of it attributable to the studios themselves for underestimating the importance of mobile technology and innovative delivery systems for their products. The fate of distribution outlets like Blockbuster is already the stuff of b-school case-study legend, while major cable networks and big studios are fighting to stay relevant in a creative space that is now being rapidly colonized by newcomers like Amazon Studios, Netflix, and Hulu.

“It’s a new world,” Uslan observed, “and it’s changing so fast.… Netflix, Amazon, Google, Yahoo, Microsoft—these are the names that are becoming more and more prominent; as you look to the future, they may be the names that compete with or even supplant the names of the studios and networks we know today. Add to that rapid changes in technology [that enable filmmakers] to get their products directly to the individual consumers—whether they want to see it on a big screen, on their wristwatch, in their glasses, or maybe one day projected on the moon.”

Uslan also cautioned against becoming so enamored with a product that a company loses sight of its overarching value proposition. He cited both the decline in box-office revenues and in the target age of audience members, which has dipped to 25 years old. Couple that with the aforementioned fear of innovation, and Uslan sees a clear connection. “I always say there are 10 great rules to making a great movie,” he said: “No. 1, story; No. 2, story; 3, story; 4, story; 5, characters; 6, characters; 7, characters; 8, story; 9, story; 10, story. And as long as they remember that, we’re great. If instead they become enamored of these toys, these special effects, and just want to top the person who came before them, then you wind up with shoot-’em-up–blow-’em-ups that are unsatisfying to anyone over the age of 18.” Substitute the phrases “value proposition” and “corporate mission” for the words character and story in Uslan’s rules, and you have a prescient lesson for every company.

Beyond Borders: The New Hollywood

Discussion of disruption wasn’t limited to technology. Uslan’s message for the director audience: “China, China, and China.” The Asian continent is home to 1.5 billion new media consumers, and by 2018, China will surpass the U.S. as the largest film market in the world. When that happens, decision-making will move from Hollywood to Beijing and Shanghai, generating seismic aftershocks in the way that media is created and consumed. It comes as no surprise then that Uslan is looking to that region of the world for much of his future business. Last month he inked a large deal with one of China’s leading production companies, Huace, and just this week announced a deal with Huayi Brothers Media to launch a film and TV franchise based on the “Thunder Agents” comic book series. “The sleeping giant has awakened,” Uslan says of China and cautions that success in the region hinges on building both relationships and true cultural understanding.

“We have spent the past two years going to China, having a presence there, developing relationships, nurturing friendships, building trust—investing two years before we sat down to make deals—and that I think has been one of the most important aspects of what we’re doing and how we’re approaching it,” Uslan observed. “We are looking for true partners; we want full, 50/50 partnership; we want you sitting at the table with us; we want you engaged with us; and we want you to make us understand what is authentic to China, what is culturally sensitive to China, so that it’s not just our Westerner’s imposition,” he continued.

When asked about the Chinese consumer base, Uslan shared perhaps his biggest surprise to date—the success of a decidedly American superhero movie. “I have been absolutely amazed…. Consider this in the last year: the movie Captain America played well in China. Captain America! Dressed in a red, white, and blue American flag, solving everyone’s problems—culturally that was amazing to me and a real eye opener.… The Chinese are open to American culture and world culture, and we must be open to theirs as well,” he said. “That is the only way this is going to work.”

Uslan shared similar observations about working with Chinese executives. “What I love about the business culture in China is that it’s very close to ours,” he said, “I worked for a number of years in Japan, and I have to tell you that in all the meetings I had in Japan, there was never one situation where there was a female executive at any of the meetings I attended. In China, it’s probably 50 percent, and it’s a very comfortable feeling working with them; and they are open to learning and sharing on that level. Our relationship has been one truly built on friendship and, hopefully, trust going forward.”

Uslan summed up his observations with a challenge to the audience—stay curious, move outside your comfort zones, and be willing to re-imagine what’s possible: “Things are changing so fast now—if you don’t do that, the risk of your becoming irrelevant is very high.”

Through the Boardroom Lens

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Directors attending the recent NACD Directorship 2020® event in Denver, Colorado engaged in group discussions about how boards can anticipate and effectively respond to environmental and competitive disruptors in the marketplace.

The half-day symposium at the Ritz-Carlton on July 15 was the second of three NACD Directorship 2020 events this year addressing seven disruptive forces and their implications for the boardroom. Summaries of the Denver speakers’ main points are available here.

Following each speaker, directors developed key takeaways for boards. Those takeaways fell within the parameters of the five elements of effective board leadership defined at last year’s NACD Directorship 2020 forums: strategic board leadership and processes, boardroom dynamics and culture, information and awareness, board composition, and goals and metrics.

Environmental Disruptor Takeaways

Strategic Board Leadership and Processes

  • Crisis response plan. Ensure that the company has a contingency plan in place that takes into account a potential environmental crisis. The plan should include how the company will respond to disruptions in the supply chain and production cycle, as well as to employees, customers, and investors.

Boardroom Dynamics and Culture

  • Culture. Boardroom culture should reflect that directors are ready and willing to be held accountable for environmental or climatological issues that arise for the company.

Information and Awareness

  • Engagement. The company should have an established communications plan to use in response to requests from shareholders and stakeholders regarding environmental matters.

Goals and Metrics

  • Green metrics. Becoming a sustainability-focused company requires adopting a long-term commitment to the cause. The board can communicate that commitment by establishing environment-related performance metrics that align with the corporate strategy.

Competitive Disruptor Takeaways

Strategic Board Leadership and Processes

  • Board agenda. Set aside time on the board agenda to discuss forward-looking strategy, so that the board’s focus is not limited to reviewing the company’s past performance.

Boardroom Dynamics and Culture

  • Culture. Fostering innovation requires risk. The culture throughout the organization should support failure and risk taking within the company’s tolerances. Also invite outside experts—or “white space” teams—to help trigger new, innovative thoughts.

Board Composition

  • Composition. Board composition should reflect a diversity of thought and experience. Regardless of background, directors should be willing to ask probing questions and stay aware of marketplace trends.

Goals and metrics

  • Understanding the marketplace. Management should be able to answer who future competitors might be and what trends might gain traction.

The Environmental and Competitive Disruptors That Lie Ahead

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More than 100 directors gathered at The Ritz-Carlton, Denver on July 15 to hear expert speakers put a boardroom lens on the competitive and environmental forces that are having a far-reaching impact on companies across industries.

The half-day symposium was the second of three NACD Directorship 2020®events this year. The forums are addressing seven disruptive forces (competition, demographics, economics, environment, geopolitics, innovation, and technology)—the major trends and transitions expected to drive significant change for companies and industries in the near future—and the implications for directors.

Environmental Disruptors

Linda J. Fisher, vice president of safety, health, and environment and chief sustainability officer at DuPont, called attention to five key sustainability trends—population growth, water supply, climate change, resource scarcity, and “circular economies”—that will have significant influence on markets, regulators, and investors.

Population growth. The earth’s population already has surpassed seven billion and is expected to reach nine billion by 2050. Population growth will lead to increased demand for food and other goods, while supply may be limited. This could lead to price hikes, increased regulation, and shortages.

Water supply. Water will become limited somewhere within businesses’ value chains, potentially affecting—among other things—transportation of goods and power production. Data from General Electric Co. show that 66 percent of the U.S.’ water-reliant power production in 2012 resided in areas experiencing water stress. In December 2012 and January 2013, low levels in Mississippi waterways resulted in more than $6 billion in commodity losses when barges carrying goods were unable to pass through the river, according to waterways groups.

Climate change. The Intergovernmental Panel on Climate Change reported last year that they are 95 percent sure that human activity is primarily responsible for global warming. Carbon dioxide is at an unprecedented level not seen for the last 800,000 years, and ice sheets and glaciers have been melting over the past 20 years.

Resource scarcity. Focus also should be placed on resource efficiency, concentrating mostly on improving building performance and food waste reduction.

Circular economies. Also gaining traction is the trend of circular economies in which products are designed so they can be used, deconstructed, and have the remaining materials captured for reuse or recycle.

And while companies are accustomed to the government regulating environmental issues, concerned consumers now are playing a regulatory role. These consumers increasingly are business savvy, understanding the degree to which companies rely on their reputations and brands. Activist consumers can call negative attention to a company’s brand until they see the change for which they have advocated.

These increased demands mean that companies should stay abreast of environmental and sustainability issues. Directors can ask management the following questions to ensure the company is forward-thinking about sustainability:

  1. Climate change. What is the company doing to mitigate greenhouse gas emissions and consider adaptation to climate changes within its operations, its supply chain, and consumers’ use of their products?
  2. Resource efficiency. How is the consideration of the efficient use of resources being embedded into the company’s innovation and operational strategy?
  3. Supply chain resiliency. How is the company managing its supply chain to reduce risk and assure resiliency? What is the process for assessing, prioritizing, and managing for potential risks that could threaten their ability to deliver products/services?
  4. Circular economy. How is the company planning for products’ end of life? Or, if the company does not directly sell to consumers, how are the materials that the company provides aiding in the eventual disassemble/recycling/take back of the final product?
  5. Transparency. How prepared is the company for increased sustainability expectations around transparency from investors, customers, retailers, NGOs, and others?

Competitive Disruptors

Adam Hartung, managing partner at strategy consultancy Spark Partners, CEO of Soparfilm Energy Corp., board member of 6 Dimensions, and an NACD Fellow, shared his thoughts and concerns about the impact of competitive disruptors and how boards should help set the competitive edge at their companies.

People often think about bankruptcy filings as being the sign of business failure, but Hartung proposed that business failure begins when a company loses its relevancy.

Hartung said the biggest risk to companies’ competitiveness is getting stuck maintaining the status quo. The secret of being successful in today’s marketplace is to overcome the “lock-in” to past successes.

Boards can encourage company management to take four steps to stay competitive:

  1. Focus on trends and potential future competitors, rather than on companies that have been competitors in the past.
  2. Shift direction away from current solutions and customers’ desires and instead steer more toward marketplace needs and competitors.
  3. Ask how your company can disrupt the marketplace—not just how it can do things better, cheaper, and faster.
  4. Allow for white space innovation, in which creative thinkers can develop business or product ideas that are outside the status quo. White space innovation can lead to ideas that will set the competitive curve in your industry.

Following each speaker’s presentation, attendee directors developed key takeaways for boards. Those responses may be found in follow-up blog post Through the Boardroom Lens.