Executive Chairman, Asia Pacific
This Week in Leadership (Nov 29 - Dec 5)
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Agility may well be the best predictor of corporate success—and will only become more crucial as workforces and the economy change. Yet studies show only a fraction of the global workforce is considered highly agile. In this regular column, Michael Distefano, chief marketing officer and president of the Korn Ferry Institute, will explore the concept of agility: who has it, who doesn’t, what it is and what companies can do to mold it.
First the streaming video services came for the Emmys. Now, they are coming for the Oscars.
We are talking, of course, about both Amazon and Netflix, which, ahead of Sunday’s big awards show, may have already turned in two of the best performances in recent entertainment history. Amazon—which we must remember is a retailer by business (and the world’s largest at that)—scored an eye-popping six Oscar nominations, for Manchester by the Sea, including Best Picture, in only its first full season of original theatrical movie making. It’s the first time a streaming video service has received a nomination in the Best Picture category. Then there’s Netflix, which has already ascended to sit alongside HBO for Emmy supremacy; it received a Best Documentary nomination for 13th.
Update: Moonlight won Best Picture, while Manchester by the Sea won awards for Best Actor and Best Original Screenplay.
Without question, we are witnessing a remarkable case of corporate agility. In a plotline that a reasonable studio might reject as implausible, these two firms have taken both mind share and market share from traditional movie studios and television networks, and left moviemakers in La-La Land (the real Hollywood, not the movie) pondering one head-scratching question: How are they doing it?
Naturally, one answer is that studios and networks have been too beholden to their legacy business models. Amazon and Netflix’s agility can be traced directly back to their CEOs, Jeff Bezos and Reed Hastings, respectively. Both Bezos and Hastings exhibit high levels of what we identify here at Korn Ferry as learning agility, or the ability to continually acquire new skills, learn from experience, face new challenges, and perform well under changing conditions. Executives with high levels of learning agility are five times more likely to be highly engaged, our research shows—which no one would dispute Bezos and Hastings both are. Of the seven different types of learning-agile profiles we’ve identified, Bezos and Hastings are “trailblazers,” or executives who have a clear sense of where they need to be and are determined to make it there by whatever means necessary, and “energizers,” or achievement-oriented, hard-working executives with iconic reputations.
When leaders in an organization show a knack for learning agility, the entire enterprise tends to absorb those traits. A 2013 study by Korn Ferry’s Senior Director of Research and Analytics James Lewis, for example, found that companies with the greatest rates of highly learning-agile executives produced 25% higher profit margins compared with peer companies. The very fact that in just a few years an online bookseller and a DVD-by-mail company started producing original content underscores how Amazon and Netflix have been able to anticipate and take advantage of significant change in the entertainment industry driven by technology and changes in consumer behavior.
Conversely, traditional movie studios and television networks apparently haven’t been agile enough to respond to those shifts. Netflix has been able to grow to 89 million paying subscribers worldwide in part by being first to market with a low-cost, over-the-top, ad-free service featuring a bundle of licensed and original content that is compelling enough to convince many to cut the pay-TV cord. Research firm eMarketer predicts the number of households in the U.S. that subscribe to a traditional cable, satellite, or telco pay-TV service will decline by nearly 4 million from 98.7 million homes this year to 95 million homes by 2020. And while traditional TV networks in recent years have launched their own over-the-top offerings, the delay caused by carriage deals with distributors and a desire to still run ads has hurt their ability to gain ground.
On the film side, movie studios have taken to focusing on franchise or tentpole films, the kind of big blockbuster action or superhero pictures needed to produce enough box-office revenue to move the needle at the larger entertainment conglomerates of which they are a part. That has opened up the market for mid-budget, independent, and art-house films for Amazon and others to exploit. At the same time, the anachronistic “theatrical window,” the period when a film is only available on the big screen, is at odds with the preference of the vast majority of the global audience to have content available when, where, and how they want to watch it. Last year’s U.S. theatrical movie attendance of 1.32 billion was not only flat against 2015 but also 250 million people below the record attendance figure of 1.57 billion in 2002 (the record box-office revenue figure came from higher tickets costs).
In short, a learning-agile organization has more lessons, more tools, and more solutions to draw on when faced with new business challenges. On Sunday night, Amazon’s Manchester by the Sea may or may not win Best Picture. But as digital technology advances and consumer behavior continues to reshape the entertainment landscape, it will be interesting to see if legacy companies can adapt quickly enough to the changes.