When to Sell Your Idea: Theory and Evidence from the Movie Industry

EXECUTIVE SUMMARY — How completely should an innovator develop his idea before selling it? HBS assistant professor Hong Luo addresses this question in a theoretical framework that links the sales stage to the innovator’s “observable quality.” She uses the context of Hollywood movie script writing-looking at whether it’s better to pitch the mere idea for a film or to write the entire screenplay and then try to sell it “on spec.” Key concepts include:

  • Pitching an idea before a script is written can be advantageous in that it affords the opportunity to get early feedback from a prospective buyer, and saves time for the writer if the buyer thinks the idea is worthless. However, pitching comes with the risk of expropriation.
  • Lesser-known, inexperienced writers are excluded from the market for pitches, forcing them to either fully develop the idea or drop it entirely.
  • Writers who have a choice in the matter tend to sell their better ideas on spec-turning them into fully-formed screenplays before introducing them to prospective buyers. But they will pitch their worse ideas at an early stage.

Download the Full Text by Hong Luo – Harvard Business School

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