Certain projects, by their very nature, require years of planning and many millions (or billions) of dollars before they are unveiled. It used to be that a project was de-risked by investing huge sums of money and spending thousands of man-years designing and executing. If projects were like a navy, these would be the aircraft carriers.
However, many companies now live in a speed boat world. New ideas are deployed, tested, refined, and perfected while the aircraft carrier projects are still on the drawing board.
I was thinking about this when I read this story about how the summer blockbuster movie The Lone Ranger is likely going to lead to a massive loss for Disney Studios. It must be awful to invest $225,000,000 into a project (not counting the $175,000,000 marketing budget) and find out in one weekend whether you made the right bet. It must be worse than awful to be hopeful before the opening weekend, and despondent by the following Monday.
Johnny Depp probably isn’t feeling too good either, although his $20,000,000 salary probably eases the disappointment.
Two observations about size and speed.
Feedback Loops Rule. The faster you deploy version 1.0, the faster you get to 2.0. Big budget projects, by their nature, are slow. Although the Disney had more than an inkling they were headed for a flop, they didn’t really know until it was too late.
Speed Enables Hedging. Of course, Disney is big enough to absorb a summer flop because they have so many lucrative projects that work. This is the same reasoning behind Venture Capital portfolios. But the benefits of hedging are no longer reserved for big studios or financiers. They can accrue to business leaders who quickly engage with the market and test with different user groups. Airbnb is a media darling for good reasons, but it probably owes part of it’s success to its founders jumping on their idea during the week of a conference in their city.
A couple guys test a crazy idea immediately, and wind up with Airbnb.
A huge studio invest nearly a half a billion dollars in an idea with minimal feedback, and wind up with The Lone Ranger.
Failure is inevitable in life. In today’s economy, failing fast will beat failing slow every time.