GE, Viacom, DreamWorks and innovation.

Bruce Nussbaum

It is difficult to create a culture of innovation in big corporations and the snatching of movie studio DreamWorks, founded by David Geffen, Jeffrey Katzenberg and director Steven Spielberg, from General Electric's NBC-Universal studio by rival Viacom's Paramount Pictures proves that. Dreamworks has worked closely with Universal for years, since it's inception and this deal was expected to go to Universal. But weaker-than-anticipated performace by a couple of Dreamworks movies, led GE to crunch the numbers and come up with a slightly lower offer--and irritate the DreamWorks founders who were swept up by a slightly better offer (and perhaps more positive regard) from Paramount.

Crunching numbers, of course, is what GE is famous for. Process control, quality control, Six Sigma. And it may be that Jeff Immelt is correct in his calculations. Volatility is not something GE wants--Wall Street in particular punishes companies for volatility. And for low returns. The numbers crunching by GE showed that the returns were not high enough for its targets. But in partnering for innovation, crunching numbers is often not sufficient. Taking chances on creativity and creative people is most important and partnering with creative people is a crucial skill. Viacom's Paramount Pictures appears to understand that. In this instance, it looks like GE's Universial studios lost some of the great Hollywood innovators of our time. The numbers just didn't add up for them.

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