Noreena Hertz is author of "Eyes Wide Open: How to Make Smart Decisions in a Confusing World".
Getting stuck in your own success can be the death knell for innovation, she writes.
Hertz argues making smart decisions is a mindset that openly monitors shifting tides and new information.
Editor’s Note: Noreena Hertz is an economist and author of “Eyes Wide Open: How to Make Smart Decisions in a Confusing World”. “Thinking Business” focuses on the psychology of getting ahead in the workplace by exploring techniques to boost employee performance, increase creativity and productivity and encourage strategic thinking.
Dick Zanuck was one of the most successful film producers of recent times. His hits include such classics as “The Sting”, “Jaws”, “Cocoon”, “Driving Miss Daisy” and more recently Tim Burton’s “Alice in Wonderland” which grossed more than $1 billion.
Hollywood royalty who spoke at his funeral and memorial services included Clint Eastwood and Steven Spielberg, who called him a ‘cornerstone of the film industry’.
But when I had lunch with Dick Zanuck last year just days before he died, we discussed one of the rare moments when his decision-making had gone very wrong.
In 1965 a movie produced by Zanuck broke all box office records. The movie, a musical about an errant trainee nun in the Austrian Alps, starring actress Julie Andrews - “The Sound of Music” - became a gargantuan commercial success. It remains in inflation-adjusted dollars, the third biggest grossing film of all time.
Zanuck was thirty years old and this was his first big hit. So what did he do next?
Understandably he tried to repeat what he’d just done.
‘I was convinced that the musical was back, and a lot of people, a lot of other studio heads were convinced that this was the way to go’, Zanuck told me. He thus commissioned three more musicals, all in a similar sugary vein. Doctor Doolittle, Star!, which also starred Julie Andrew and used the same director, producer and choreographer as the Sound of Music, and Hello Dolly!
All three were box office flops.
What could have gone so wrong?
Well by the time the back-to-back movie flops were released the Vietnam war has begun, Martin Luther King had been assassinated, the civil rights movements had politicized the American public, and pop and rock music had become dominant - Saccharine-sweet family productions had lost their appeal.
It’s not that the past is never a good predictor of what lies ahead. It’s that we cannot assume a linear trajectory.
Just ask Nokia.
From the 1990s onwards, Nokia dominated the mobile phone industry. At its peak the company had a market value of $303 billion and by 2007 around 4 in 10 handsets bought worldwide were made by Nokia.
But when Apple introduced its game changing iPhone in 2007, Nokia was caught sleeping on the job. Although it had actually developed an iPhone-style device – complete with a color touchscreen, maps, online shopping, the lot – some seven years earlier.
Astonishingly, it never released the product. Instead Nokia decided better to stick with what they knew worked - good, solid, reliable mobile phones of the kind that had brought them success until then. Nokia’s management believed that their successful past would continue to provide a reliable guide to the future. But as we now know it didn’t.
In the six years since the iPhone was introduced Nokia lost about 90 percent of its market value. And when Microsoft bought Nokia’s phone business earlier this month, the fire sale price it paid for it - only half what Google paid for Motorola last year - firmly reflected just how far it had fallen.
Success can be the death knell for innovation and creativity especially nowadays given how fast moving the world is. It can also breed complacency, a sense that we know best, that risks blinding us to new truths as they emerge.
So key for making smart decisions is a mindset that actively monitors and is open to shifting tides and new information, one that is acutely aware that the interplay between our environment and its outcomes is ever in flux.
A mindset that recognizes that decisions right for the world of today will not necessarily be right for the world of tomorrow and therefore that choices must be made as late in the day as possible.
A mindset that is flexible, that understands that when the facts change so must our initial assessment and analysis.
And if you do get it wrong, then what? Remember that imperative to learn from your mistakes.
That’s what Dick Zanuck did. He realized that he had based his decisions too firmly on past experiences and assumed that what was right yesterday would be just as successful tomorrow.
It is testament to both his creative energy, and his willingness to introspect that he came back from these harsh experiences to produce some of the greatest movies of all time.
The opinions expressed in this commentary are solely those of Noreena Hertz.