Entrepreneurship is an Art, Not a Science

Street Lights 2 photo
Street Lights 2 photo by Michael Lorenzo, Pasig, Philippines

The earliest reference I can find is by Paul Willax from 1 July 1996

Entrepreneurship is an art, not a science. The Greeks recognized that there were techniques (“techne”) that could not be explained in words, but learned only through apprenticeship and experience.

My search was not extensive, but I’m happy that the quote has been around for at least 17 years.

This is why competing advice is possible and can lead to failure and success. Even more importantly, this is why Entrepreneurship is learnt and perfected by experience.

There are subject matter experts who can teach or manage accounting, marketing, logistics, customer service, manufacturing, supply chain, procurement, finance, human resources, leadership and development, training, quality control and assurance, risk management, legal affairs, decision support, corporate governance, and even sales. However the unique mix of problems and opportunities that every business faces do not work in a reductionist, reproducible manner. What experience teaches is to be comfortable with uncertainty.

Actually experienced has taught me that when the going gets tough how to pivot and fight for revenue. I know I don’t have all the answers, I don’t even know all the questions.

Experience is a proxy for flexibility and insight. Some people, particularly those who have had success early often mistake that experience for wisdom. Nothing is more painful than thinking your previous business or entrepreneurial experience is applicable in the current circumstances only to discover that this situation is different. Successful people pick themselves up from under that misapprehension, dust themselves off and learn from the experience.

Some people learn to avoid risk altogether after a failure. While I feel a little sad for them, I totally understand where they are coming from. Failure batters the ego. That is why I celebrate the people with multiple successes. They almost certainly have failed forward along the way. That’s also why I admire successful, experienced sports people. I don’t really spend time wondering about the lucky few for whom success comes easily. I want to hear about people looking at themselves late at night, with no one else around, and deciding to get up one more time after being knocked over. That’s a cliched statement, but it’s a story I never tire of.

Problems Facing the Film Industry

Red Curtain
Red Curtain by djnorway http://www.sxc.hu/photo/1374248

There is a lot of gnashing of teeth about the future of the film industry given that “Between 2007 and 2011, pre-tax profits of the five studios controlled by large media conglomerates fell by around 40%”.

The business of film making (as opposed to TV) will change. The Internet has disrupted theatrical distribution, home video and home entertainment.

Hollywood has responded to the threat to their business model by pursuing tentpole releases. Big event movies that prop up the bottom line the way a pole props up a tent at the circus. That’s still a broken business model which sees the studios make fewer movies which each carry a greater share of the risk. $300 million USD to make and another $50-100 million to market. Now in the world on mega corporations those numbers are not significant.

The problem is that the large media conglomerates are too big. If they had a movie that cost $25 million to make and market, and it made $75 million that’s a great result. But it doesn’t mean a drop in the ocean for conglomerates that big.

In the long run I expect the film production business will be a big but not huge business. Mature competitive markets eventually generate zero abnormal profits. In the long run mature markets can be measured by return on equity (ROE pr ROCE). I don’t see something as bespoke as film production becoming that reliable. Television drama with it’s focus on reaching 100 episodes can produce a product range over 3 or 4 years.

Public ownership of movie production companies is not a good fit for the model. Smaller companies and smaller movies will always find a way to make money in a smaller market.

Interestingly, are there any publicly listed Art production companies? No, but that doesn’t stop artists from creating work, and the most successful of them making a very good living at it.