A smart example of an integrative strategy

Roger Martin

Here is an excerpt from an article written by Roger Martin for the Harvard Business Review blog. To read the complete article, check out other articles and resources, and/or sign up for a free subscription to Harvard Business Review’s Daily Alerts, please click here.

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In previous posts I have argued that a logical trap to which we easily succumb is to take two opposing but logically-sound IF/THEN/BUT chains and mash them into one logically flawed IF/THEN/AND chain with disastrous results.

But it is possible to combine two logical structures to build a better, integrative model. What it takes is to go deeper into the logic of the conflicting IF/THEN/BUT causal chains to understand ‘the thinking behind the thinking.’

An example of this integrative approach comes to us from Piers Handling, who runs the Toronto International Film Festival.

When he took the helm, it was not even the #1 film festival in Canada. Under his leadership it now vies with Cannes.

Before Piers, most successful film festivals (including Cannes) operated on the basis of the following simple conditional relationship:

1) IF you create exclusivity, THEN you will generate buzz (i.e. media interest), making the industry want to attend BUT the local community is all but shut out from the fun.

In this structure, the festival invites a small number of films to participate and has a jury of insiders award a prize to one of the ‘special few’. The presence of the stars and the announcement of a big award draw media attention to the films and make the industry happy. But the local community has to stay behind the velvet ropes and be content with no more than a movie star sighting or two.

There is also a second type of festival, predicated on an alternative string of conditional logic:

2) IF you create inclusivity, THEN you will develop a community of local film lovers, plus a vibrant local industry BUT the broader industry will be far less interested in attending your festival.

This second model had been the foundation of the Toronto festival from its inception. In this case, the festival works to be as inclusive as possible, engaging with the local community and nurturing a passion for film within it. This creates a strong local base of filmgoers and volunteers, but there isn’t much reason for the industry to pay attention.

Had Handling failed to understand the causal logic at play, he might have just assumed away the problem and tried to mash the two models together without questioning to what extent such a move was possible.

Instead, he and his team took a deeper look and asked: Who matters to the festival, and what do they want? Audiences want to see films they’ll love and maybe catch sight of Brad Pitt; stars want media attention for their films; sponsors want exposure and access to an audience; media want a story to cover; and the industry wants a financial incentive — a real reason to attend.

In these incentives, Handling saw a way to leverage causal relationships that all the other festivals had missed. The industry attends Cannes because of the buzz generated by the Palme D’Or. But the top prize at Cannes is ultimately a hollow one. The last five winners of the Palme D’or, including l’Enfant and The Wind that Shakes the Barley, have gone on to average just $16.5 million at the box office worldwide. This is because the winners are picked by a small group of insiders who have no real predictive power. Here, Toronto had an advantage that Cannes and Sundance didn’t have: a massive local community of film lovers that look (and spend) an awful lot like the rest of the North American movie marketplace.

Handling knew that he needed to leverage the similarity between the Toronto audience and the rest of the world to provide a financial incentive to the industry and to create a story for the media and coverage for stars. But how?

It was through the People’s Choice Award, which was already in the Festival’s repertoire but not placed front and centre. Handling recognized that the People’s Choice Award was a signal to producers and distributors of what would really sell in the commercial market; if it became a centerpiece of the Festival, it would create a story for the media and a draw for the stars.

And it turned out that he couldn’t have been more right. The People’s Choice Award has since become a globally recognized laurel. Why? The last five winners of the People’s Choice award at Toronto, including Slumdog Millionaire and Precious, went on to earn a whopping average of $103 million and a slew of Oscar nominations.

Because he recognized that success amongst the crowds in Toronto could be a predictor of a film’s success more broadly, Handling was able to realize the greatest benefit of the inclusive model — a large and engaged audience — to deliver the greatest benefit of the exclusive model — buzz (and through buzz, industry engagement).

The growth of the Toronto International Film Festival aptly demonstrates the gains that are possible when we dig into competing causal logics, seeking a way to integrate them thoughtfully and strategically, rather than mashing them together without insight or analysis. More on the technique Handling used next time…

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Roger Martin (www.rogerlmartin.com) is the Dean of the Rotman School of Management at the University of Toronto in Canada. He is the author of The Design of Business: How Design Thinking is the Next Competitive Advantage (Harvard Business Press, 2009).

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