Sounds a bit like an oxymoron, I know, but a new study outlines the issue this way:
Management faces a fundamental tradeoff in organizing such activities. On the one hand,
since creativity cannot be achieved by command and control or by
monetary incentives, internal/contractual production of creative
products is plagued by hazards arising from their fundamental
characteristics: extremely high input, output and market uncertainty,
and the inherent informational advantages of creative talent. Procuring
highly creative products in the market place, though, exposes the
distributor to a fundamental risk: independently produced creative
goods are generic distribution-wise. Thus, in procuring creative
products in the marketplace, distributors face the unavoidable winner’s
curse risk. Since this risk is, to a large extent, independent of the
creative nature of the product, the higher the creative content, the
higher the relative hazards associated with internal or contractual
production. Thus, internal/contractual production of creative goods
will tend to be less prevalent the higher the creative content
associated with its production. We apply this insight to the evolution
of the U.S. film industry in the mid-XXth century. … We develop
empirical implications which we test by analyzing in detail the
decision by distributors to produce films internally or to procure then
in the market place, in the face of an increase in the demand for
creative content.
The study by Ricard Gil and Pablo Spiller is here (pointer via Organizations and Markets).
November 13th, 2007 at 2:12 pm
This is quite cryptic.
The authors seem more concerned with distributors of creative content than the creative originators.
When engaging creative talent (whether internal or contractual) management needs to be sure the talent’s contributions are fully valued and rewarded in order to enable innovation and prolific output. Failing here should be the demise of management not creativity.
A few stories come to mind.
John Fogerty – an originator who could not perform his own songs due to unfortunate distribution agreements.
Do these agreements still exist?
If so, are they really creating value?
Keanu Reeves – gave up performance fees in The Matrix for a piece of the distributors pie. A risk that paid off for Keanu as one of the originators.
Pearl Jam – fights Ticketmaster and labels, in the end producing and distributing an amazing amount of original material on their own.
Creative Organization or Creative Management are only contradictory when creativity is misunderstood.
Thanks for allowing me to join the conversation.
November 14th, 2007 at 9:40 pm
Richard, I found a free version of the same paper here:
http://imio.haas.berkeley.edu/spiller090607.pdf