Lightstorm Entertainment: A Titanic Picture of Strategic Management

Scenario: the chief operating officer at ABC Company is concerned about the firm’s future.  This pre-meeting document reviews strategic management with stakeholders to brief them on an upcoming management session.  The COO remains upbeat, providing two good examples of strategic management ABC Company could emulate. 

Footnotes are on the last page of this posting.

Overview

At ABC Company, we have just experienced our third down quarter in two years.  I am concerned.  At our planning meeting next week, we need to:

• Discuss successful strategic management
• Explore winning processes
• Apply the lessons learned to ABC Company
• Suggest a path we might take to success

I have found two excellent examples of long-range planning, and our purpose will be to discover if both follow good strategic management principles to reach desired objectives.  We will visit Robert Ballard’s skill in furthering underwater research, but my focus turns mostly to a little-known movie production company: Lightstorm Entertainment (Lightstorm or LE)[1].  While the company name may be unfamiliar, the CEO is not: James Cameron of “Titanic” fame. 

My original hypothesis about both men was that their interest in Titanic was publicity stunt fodder.  I quickly discovered I was in error and that our company can learn from these explorers with proven track records in strategic management.

Biographical Sketches

The two people most responsible for photos and film of the Titanic began their fascination with the ocean thousands of miles – and many years – apart.

James Cameron

As a boy from Canada in the late 1960s, James Cameron lived in a world where astronauts were traveling to the Moon and Jacques Cousteau was on television exploring the deep ocean.  Jim was fascinated with both. “… Jacques Cousteau …got me excited that there was an alien world right here on earth….[where] I could go to [without getting into a spaceship].” ⁽¹³⁾

Without realizing it, this mindset started Jim on the path to strategic management.  As we will see, he was following part of the business strategy diamond, answering questions we each must ask: what is the goal, and how do I get there?

Although he was landlocked in Ontario, Cameron decided ocean exploration was his future and began taking steps to secure the journey.  Speaking not only to his personal tenacity but the importance of a good support team (in this case, Jim’s parents), Cameron traveled to the U.S. to become certified in SCUBA at age 15.  He saw the ocean for the first time two years later. ⁽¹³⁾  The important lesson for us at ABC is: some of the vehicles for achieving our goals may not be in sight, but we can work toward them.

By early 2010, Cameron had spent about 3,000 hours under water, 500 of them in submersibles[2] (including his “Titanic” excursions).  “Nature’s imagination is so boundless….I still stand in…awe of what I see when I make these dives.”  ⁽¹³⁾

Interestingly, when Jim Cameron headed to college it was to obtain a degree in physics, not oceanography. ^{(11, p. 1)}  Being a “techie” would serve him well in the future, however, when Vince Pace, Jim, and his brother Mike – an engineer like their dad – collaborated on creating the technology necessary for “Ghosts of the Abyss” and “Avatar.” ^{(14, Part 1, p. 3)}

Robert Ballard

When Robert  Ballard and his team discovered the final resting place of the R.M.S. Titanic and first began photographing the ship, his reasons for exploration  were far removed from fortune hunters who had come before him.  His goal was to further oceanographic science. ⁽¹⁾

As with James Cameron, Dr. Ballard was  an excellent strategist in this effort.  He kept the scientific goal in sight but realized investors might need motivation.

“I felt the magic of the lost ship would help attract funding that would enable me to make a major step forward in underwater research and technology.” ^{(1,  p. 31)}

In 1973, Dr. Ballard worked at Woods Hole Oceanographic Institution (Woods Hole), in Massachusetts, as a team member with the small three-man submersible Alvin and the accompanying remotely operated vehicle (ROV) Jason. ⁽¹⁾   Alvin, built in 1964, was named after an early ocean research project champion, Al Vine.  The sub would become a media darling during Ballard’s 1985 expedition to the  Titanic after a considerable investment in new equipment. ⁽¹⁾

Intertwining Evolving Technologies

“Putting a 35mm camera…with a 12-minute film load outside the submersible was a six-month engineering problem….With the digital camera, we were able to shoot six to 10 hours of footage per dive [immediately]….[The] high definition 3D
camera was developed for a completely other project and we just realized that
applying it to this [the Titanic] environment would work really well.” ^{(14,  Part 2, p. 2)}

When I discovered this quote from director James Cameron, I immediately saw Lightstorm Entertainment as an  excellent example of strategic management initiative.  A quick look at the Strategy Timeline [found later in this post] demonstrates another valuable lesson for our team: methodically crafting the newest technology to create a sensation with an audience.  Note also, on the Timeline, that Cameron moves technology forward to other projects, while improving it along the way. 

Woods Hole also followed principles we should embrace.  Before approaching investors, Ballard’s group replaced Alvin’s steel hull with a titanium alloy that would allow the submersible to dive twice its original maximum depth of 6,000 ft. below sea level.  This is tantamount to taking a problem to the boss, but also suggesting a solution. The new capability made Alvin the only submersible (at that time) certified to carry people to Titanic. ^{(2,  pp.33-34)}

We can learn another valuable lesson from this mindset.  Instead of reinventing the wheel with a totally new machine, Woods Hole modified Alvin. Of course, this may not always be possible in our case, but we must admit our company tends to have a grand idea, “throw it out there,” start something entirely new, and plunge ahead without proper planning. 

Market Reinvigoration

The researchers at Woods Hole were, in industry life cycle terms, creating a path for market reinvigoration. ^{(5,  p.135)}  Underwater  R&D a little boring?  Let the sponsors know a trip to Titanic will make great strides! Take disciplined, incremental, strategic steps to further the cause.

The first photos of Titanic, released in 1985, were mosaics assembled from hundreds of 35mm “stills.”  Jim Cameron – then in his early 30s – watched intently.  Movies of the ship, created outside a submersible, would have to wait, but Ballard and his team accomplished other feats: they propelled a 73-year-old story onto the front page of newspapers worldwide, created a media frenzy that continued for months, and reinvigorated the market for underwater exploration and its equipment.

The Business Strategy Diamond

Did James Cameron follow good strategic management principles to reach his
objectives?  The business strategy diamond focuses on the five elements – successful choices – we must make to create an effective strategy and manage it properly. ⁽⁴⁾

Figure 1: Business Strategy Diamond. Modified from M.J. Anderson, Adjunct Professor, Embry-Riddle Aeronautical University.  From Carpenter, M.A. & Sanders, W.G.  (2009). Strategic Management. Reproduced by permission.

 

As we view Lightstorm Entertainment through the lens of this business strategy diamond,
keep in mind the idea of industry evolution. ^{(4, p. 208)} The technology outlined here is “first mover” and “disruptor.” ^{(4, pp.286, 136)}  The team was first-to-market (first mover) in creating items that were monetarily viable to their industry.  They also changed the industry by offering technology no one else possessed (disruptor).

Lightstorm and the Business Strategy Diamond

 

Table 1: Lightstorm Entertainment and the Business Strategy Diamond

(LE except for first item. The terms “film” and “filming” refer to digital motion pictures.)

Business Strategy Diamond	Definition	Goal*	Old Technology	Technology    Created
Arena (Woods Hole)	“Selling” advancement in underwater exploration	Furthering underwater science	6,000 ft. depth (possible) Alvin submersible and ROV Jason	12,000 ft. depth (possible) and internal updates to  Alvin; new ROV Jason Jr.
Arena	Movie production	Explore undersea “alien world” Underwater filming (eventually in 3D) inside Titanic	35 mm still photography from inside submersible	Updated ROVs Filming available to 12,000 ft. bsl Fusion 3D movie    cameras
Vehicles	Joint ventures with Keldysh[1] (ship) and Sony (cameras); internal development	Continually surprise audience with new  technology/effects
Differentiators	Evolving, custom filming methods on actual Titanic	New technology in every project (e.g., Fusion 3D)
Staging/Pacing	New tech creation on steady schedule; 3D filming for NASA?	Fiscally responsible in initiating new tech and expansion		[See notations for “Arena”]
Economic Logic	Joint venture $$; licensing (movies, DVDs, IMAX, etc.); public pays for final products; unmatchable technology	Cameron reputation becomes ‘draw’ for all ventures

* Goals as they relate to this presentation

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[1] Akademik Mistislav Keldysh research vessel from P.P. Shirshov Institute of Oceanology, Russian Academy of Sciences (group that worked with Ballard’s group at Woods Hole). ⁽³⁾

 

Table 1 will be available at the planning session next Friday.  We will use it as a referent when we work through strategies in our afternoon session.

The VRINE Model

We will also use Table 1 to discuss an analytical tool: VRINE. The VRINE model suggests a benefit is achieved if a company’s strategy includes resources which are valuable, rare, inimitable or nonsubstitutable, and exploitable. ^{(4, pp. 78-86)}   Note that most items on Table 1 fit the VRINE model as contributing to competitive advantage.  

The answer to the question “Did James Cameron follow good strategic management
principles to reach his objectives?” seems to be “Yes.”  

I think ABC Company can make it back to the top of our industry if we emulate his approach. Where might we plug innovations into the Table 1 grid?  What “Differentiator” might we exploit, for example? What could we create that would be nonsubstitutable (customers would have to come to us, or go without)?

Next Friday, we meet to seriously consider our future and begin formatting our own strategic management plan.  To get the creative juices flowing, Table 2: Lightstorm Entertainment’s First Mover/Disruptor Strategy Timeline (See “Appendix”) fills in a few gaps from the synopsis.  Table 2 demonstrates a methodical, measured approach to achieving goals.  This is the same tactic we must use as we set our objectives for our 1-, 5-, and 10-year plans. 

I will email you a Goal Setting Form [not provided in this blog post] and ask that you list at least three goals/objectives regarding one critical problem at ABC Company.  Please return the completed form to Jean Sullivan no later than COB next Tuesday.  All entries will be printed in a workbook for  discussion in study groups.

I look forward to working with you,

Kathie York, COO
ABC Company

Appendix Lightstorm Entertainment’s Strategy Timeline (Note: The terms “film” and “filming” refer to digital motion pictures.) This table expands on some information from Table 1.  It serves as a “lessons     learned” on successful staging and pacing of development in a company.  Please use these ideas to help format your thoughts for the goal setting portion of our meeting. Table 2: Lightstorm Lightstorm Entertainment’s First Mover/Disruptor Strategy Timeline

(1960s-1994)

• Landlocked in Canada, James Cameron took lessons at a YMCA in New York and became certified in SCUBA at the age of 15 ⁽¹³⁾
• After college (physics degree), drove a truck to support screen-writing ambition. After viewing 1^st  “Star Wars” movie (1977), entered film industry full-time ⁽⁷⁾
• First professional “movie job” – special effects – 1980 ⁽¹¹⁾
• It’s a start: some scenes in “The Abyss” (1989) filmed underwater; also developed process to create computer graphic image (CGI) water ⁽¹¹⁾
• Cameron founded Lightstorm Entertainment (movie production) in 1990; co-founded Digital Domain (computer graphics) with IBM in 1993 ^{(2, 11)}
• New special effects ability from “Terminator 2” (1991) gave rise to removng/ replacing objects digitally[4] in “True Lies” (1994) ⁽⁹⁾

“Titanic” (1995)

• Cameron: “I was trying to figure out a way to dive the Titanic wreck and the only
  tools at my disposal were that I could tell a major studio that I would make a movie about it if they would fund the expedition” ⁽¹⁴⁾
• Joint venture with Cameron, Twentieth Century Fox, and Russian Academy of Sciences (owner of the research vessel Akademik Mistislav Keldysh) ⁽¹⁴⁾
• Miramax Home Entertainment’s “Titanica” laid groundwork for Cameron’s “Titanic.” He improved and exploited advanced remote cameras and deep ocean
  lighting systems developed for the earlier project ⁽¹²⁾

Early 2000s (Fusion 3D camera)

• Cameron and Vince Pace (Director of Photography on “Avatar”) invented Fusion 3D camera system (lenses work much like a human eye) ⁽⁶⁾
• Joint venture with Sony to build cameras (one for each ‘bot’); five months to build housing to withstand 12,000 ft. bsl pressure ⁽¹⁴⁾
• Technology carried from development for 2003 “Ghosts of the Abyss” documentary to 2009 movie “Avatar”. ⁽⁶⁾

References

1. Ballard, R.D.  (1998). , The. New York, NY: Warner Books Inc.
2. Bloomberg BusinessWeek. (03/25/2011). Lightstorm Entertainment, Inc. media review.  Retrieved from: http://investing.businessweek.com/research/common/symbollookup/symbollookup.asp?region=ALL&textIn=Lightstorm+Entertainment&lookuptype=private
3. Cameron, J.  (Producer).  (2004). Ghosts of the Abyss [DVD]. Available from Buena Vista Home Entertainment, Inc. and Amazon.com
4. Carpenter, M.A. & Sanders, W.G. (2009). Strategic Management: a Dynamic Perspective Concepts and Cases (2^nd  ed.). Upper Saddle River, NJ: Pearson/Prentice Hall.
5. Google Video (2007).  James Cameron Stereoscopic 3D Camera. Watched from http://video.google.com/videoplay?docid=-241532803911842846#.
6. Hand, R. (10/27/2009). The Fusion 3d Camera System in [the movie] Avatar.
   Retrieved from http://www.vizworld.com/2009/10/fusion-3d-camera-system-avatar/
7. IMDb  (Internet Movie Database). Biography for James Cameron. Retrieved  
   from http://www.imdb.com/name/nm0000116/bio 
8. IMDb.  (03/27/2011). Lightstorm Entertainment filmography.  Retrieved from http://www.imdb.com/company/co0038663/
9. Low, S.  (Producer/Director). (1992). Titanica [DVD]. Available from Buena Vista Home Entertainment, Inc. and Amazon.com 
10. Lynch, D. & Marschall, K. (2003). Ghosts of the Abyss: a Journey into the
    Heart of the Titanic. Toronto, Ontario, Canada: Madison Press Books.
11. Routledge, C. Cameron, James (biography). Retrieved from Filmreference.com: http://www.filmreference.com/Directors-Bu-Co/Cameron-James.html 
12. Stewart, J. (2/13/2008). Ralph Bradshaw White, 66, found Titanic
    Wreckage and Salvaged Artifacts. Retrieved from http://
    http://www.latimes.com/news/obituaries/la-me-white (Note: author printed
    article in 2008.  Link has expired.  Search for title yields brief synopsis.)
13. TED.com. (02/2010).   James Cameron before Avatar: a Curious Boy.  Video interview captured from http://video.google.com/videoplay?docid=-241532803911842846#docid=-1545231130025337567
14. Wootton, A.  (04/13/2003).  James Cameron [interview]. Retrieved from [Part 1] http://www.guardian.co.uk/film/2003/apr/13/guardianinterviewsatbfisouthbank/print/ [Part   2] http://www.guardian.co.uk/film/2003/apr/13/guardian
    interviewsatbfisouthbank1/print

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Footnotes

[1] Digital Domain is a computer graphics firm joint venture between IBM and James Cameron. It is not called out separately in this document but is considered part of Lightstorm Entertainment for our purposes.

[2] Submersibles must return to a ship.  Submarines are self-sufficient. ⁽3⁾

[3] Akademik Mistislav Keldysh research vessel from P.P. Shirshov Institute of
Oceanology, Russian Academy of Sciences (also worked with Woods Hole team). ⁽³⁾

[4] The limo did not, originally, crash into the water as scripted!