History reveals numerous examples of how blind influential executives and managers can be to breakthrough advances in their industry. For example, Digital Equipment Corporation (DEC) had a dramatic rise and fall due to blindness and perhaps resistance to change. DEC was an entrepreneurial computer company that grew to $14 billion in sales and employed an estimated 130,000 people worldwide at one point. But Digital failed to successfully adapt after the personal computer eroded its minicomputer market. DEC’s CEO at the time is unfortunately famous for his quote, “There is no reason for any individual to have a computer in his home.”
Thomas J. Watson, who became CEO of the Computing Tabulating Recording Corporation and renamed it International Business Machines (IBM), is tagged with an alleged 1943 statement "I think there is a world market for maybe five computers.” Historians debate if he actually said it. Regardless, the point is that tradition can block one’s vision of what the possibilities (and probabilities) can be.
A breakthrough for analytics in the Hollywood film industry
Joseph Farrell, who passed away on December 7, 2011 at the age of 76, is an example of someone who challenged traditional thinking in an industry. His story is similar to the recent Moneyball book and movie story about how Billy Beane, the general manager of the Oakland Athletics baseball team, challenged the traditional views of baseball scouts. Scouts relied on intuition whereas Beane believed in using performance statistics of players to assemble a winning team. (For more, read my blog “Moneyball: turning the odds on the casino with analytics.”)
Farrell is widely credited with applying the use of opinion-tracking strategies for all the major Hollywood film studios. This transformed the cinema industry in how to view audiences and pitted the art of film writing and directing against the business of selling tickets. With opinion-tracking focus groups, people would preview a movie prior to its release, and adjustments would be made.
Farrell demonstrated his impact by causing a change in the ending of the 1987 thriller film, Fatal Attraction. The original ending had the psychopathic woman, played by Glenn Close, who terrorized a married man played by Michael Douglas, commit suicide. The focus group was annoyed by this film ending because they wanted to see the woman killed rather doing it herself. The ending was changed, and the movie became a big hit.
Farrell’s career began with the Louis Harris polling firm. In 1978 he moved to Hollywood and founded his market research firm for films. He was described by a marketing director of the Paramount film studio, Sidney M. Ganis, as a “meddling numbers man” and was not initially welcomed by the Hollywood old-boy network. Ganis said, “He was different; he was intellectual. He was a suit to the nth degree, highly educated, highly verbal, and with this questionable program that none of us understood very well. We’d all been taught it all begins with the gut – and how you’re feeling about material, how a scene should look, and how a movie should be marketed.”
Farrell’s firm became the largest and most influential consulting firm in the motion picture industry. It provided studios with demographic analysis and tracking surveys to aid the studios to develop film trailers, advertising, and scheduling release dates. Farrell is noted for his quote, “The film is the athlete; I just give it every training tip I know.”
Sound familiar to advocates of analytics?
It is people like Joseph Farrell who inspire me. They demonstrated that relying on fact-based information derived from analytics for insights and decisions is much more superior to relying on intuition and gut feel.