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DeGraff Challenges M&E Industry to Innovate at THE Summit

LOS ANGELES — Jeff DeGraff, professor of management and organizations at the Ross School of Business at the University of Michigan, sympathizes with the entertainment industry’s problems.

He knows its dealing with a generation — millennials — that don’t respect intellectual property, want everything shared for free, yet still feel entitled to have a say in creation.

DeGraff sympathizes. But that doesn’t mean anything’s going to change. “Hate it as much as you want, just get used to it,” the celebrated “Dean of Innovation” said June 14 during a morning keynote at the Transforming Home Entertainment (THE) Summit. “It’s not going away any time soon.”

To deal with an entitled generation, ever-changing technologies, shifting consumer demands, and a lot of legacy business models that just don’t make sense anymore, DeGraff said media and entertainment companies need to think differently, act as if Hollywood didn’t have a record $11 billion year at the box office in 2015, behave like a small company on the ropes. Basically, innovate now, and do so radically

“When you really changed was when your life sucked,” he said. “Organizations don’t change when things are OK.”

He pointed to Apple, which was trading just under $100 a share on June 14. In 1997 it was under $7, the press was writing the company’s obituary and they were almost bankrupt. “When you’re almost dead, you’ll start trying new things,” DeGraff said.

For the home entertainment industry, DeGraff sees companies mostly moving to adjacencies (3D, 4K, high dynamic range, etc.) instead of truly innovating. And while Hollywood is far from dying, it can’t just rest on its laurels either, he stressed.

He suggested that media and entertainment companies’ best bet for true innovation is to start looking at areas that might already be failing, because “when you’ve got nothing, you’ve got nothing to lose.” Because the home entertainment industry doesn’t want its products to go the way of saddles, he said using one particularly funny analogy. “The best saddle makers are the last saddle makers,” he laughed.

Part of what’s changed — and something M&E companies need to keep an eye on — is how much technology has automated businesses, DeGraff added. Phone operators, bank tellers, even attorneys, have seen their jobs eaten up by things like ATMs and LegalZoom. To keep from become obsolete, start innovating now, he said.

“Innovation isn’t your best friend,” DeGraff said. “It’s your only friend.”

He said one of the biggest mistakes bigger, legacy companies makes (see: Blockbuster) is that they don’t see any reason to change until it’s too late. “Incumbents [are the] last to leave the building when it’s on fire,” he said. “There’s a first-mover advantage, and that’s why small firms move first.”

And don’t be afraid to fail. That’s how innovation works, DeGraff stressed.