Hollywood's Dinosaur Moment

12/12/2007 10:17 pm ET | Updated May 25, 2011

I'm not a screenwriter. Or a studio bigwig. And with the writer's strike, I don't have a dog in this hunt. But as an expert in innovation, I can say with authority that Hollywood is desperate for a little innovation.

Many will say, "Innovation? That's what got us into this mess in the first place!"

But in the long term, this is not about finding new ways to monetize content. There are much bigger changes to come.

In a digital world, we'll always have writers. And we'll always have content. The Hollywood studios however, will only be around so long as they can innovate to deliver the kind of entertainment experiences the public wants.

Consider the auto industry in Detroit, which lost the innovation sweepstakes to Asian car companies. Or New England, which snubbed PCs to stick with the minicomputer.

In many ways, the internecine warfare between the Unix operating systems for minicomputers during the PC revolution is chillingly similar to the WGA negotiations.

If past is prologue, innovation will change the way we live, work, and play -- in ways we can't even imagine today. This will happen with or without the Hollywood studios. The center of the entertainment industry today is unquestionably in Los Angeles, and there is no reason it can't stay that way. But, if we're not vigilant, it may just as easily move somewhere else.

Think of Los Angeles without the entertainment business, its third-largest sector, with more than 250,000 local employees and countless others depending on it for their business.

There's already plenty of competition ready to claim production as its own. (Orlando and Vancouver, anyone?) But L.A. without the entertainment industry would be like L.A. without the mountain views from the palm-lined beaches.

Los Angeles has the talent, diversity, entrepreneurial spirit, creative culture, and growing high-tech industry needed to maintain the lead. So, it may benefit the studio execs to consider a few guidelines for innovation, as they continue negotiations:

Innovators Can Be Irritants

Innovators are rebels. They disrupt the status quo, threaten existing models, and frankly, put some people out of business. Innovators are like sand in an oyster. But don't banish the irritant. Listen. Because in the end, they might produce a pearl.

Embrace Failure

There's no roadmap for how the entertainment business will succeed in a digital world. Embrace risk-taking and opportunity for new models to emerge. Ultimately, learning from mistakes is just as important to the innovation process as developing the business model.

No-Star System

We love the myth of the "lone innovator" who has a stroke of genius in the shower, but big innovations -- the kind that seismically impact our lives -- almost never come from one person alone. Consider biotech, the Internet, or even democracy. Hollywood is one of the few industries where teams are core to the model. Let's build on our existing infrastructure and value every contributor as we lead the way.

Innovation Doesn't Always Mean Immediate $$$

Sir Tim Berners-Lee, the key developer behind the World Wide Web, is no mogul. And Sean Fanning, who single-handedly turned the music industry upside-down, didn't create Napster to make money. But these innovations changed the game and opened up revenue streams unimaginable even a decade ago.

You Don't Have to Be First. But You Do Have to Adapt

Even if you're not first, it's not too late to come out on top. The concept for a Windows interface on PCs didn't come from Microsoft. Or Apple. It came from Xerox PARC. Be receptive to new ideas, even if it may seem to put you out of business.

Small is the New Big

High-growth start-up companies often unleash the most radical innovations. They don't worry too much about traditional models. MySpace is a perfect example. Fortunately, venture investing has been robust in Southern California. If we want L.A. to remain the center of the entertainment universe, we need to encourage a strong ecosystem where established corporations and creatives collaborate with entrepreneurs.

As most Angelinos, I hope the writers strike ends soon, and fairly. Not just so people can get back to work and continue supporting their families. But because the studios have bigger worries on the horizon, like how to embrace the ideas that might threaten business models today, but will keep Los Angeles in business tomorrow. The good news is that it's our fight to lose. Whatever the entertainment industry landscape looks like, I hope it features mountain views from the palm-lined beaches.

This post first appeared on BusinessWeek.

Read more about the strike on the Huffington Post's writers' strike page.