A Stages Model of Music-Business Venturing

Home , Alexi Laiho, Children of Bodom

A stages model of music-business venturing:

Entrepreneurial intent, opportunity creation, and opportunity exploitation

Laura Laaksonen Aalto University School of Economics

Antti Ainamo IASM / Sociology, University of Turku

Toni-Matti Karjalainen Aalto University School of Economics

Keywords:

Entrepreneurship, Effectuation, Prediction, Entrepreneurial opportunity, Music industry

Abstract

In this paper we report on our study of how entrepreneurial prediction and effectuation combine in real-world setting. We represent the activities of the musicians in a heavy-metal music band as an entrepreneurial project to develop expertise in music, to create business opportunities, and to exploit those business opportunities. The musicians developed the expertise before they created business opportunities. They developed the opportunities before exploiting them. Taking across the board, our findings suggest that developing expertise is a predictable prelude to the process of entrepreneurial effectuation.

1. INTRODUCTION

Entrepreneurship comes in many forms and shapes in today’s society, making it a relevant and fruitful field to study from many angles and disciplines. Effectuation is a theory about entrepreneurship that has recently been touted on the pages of top journals (Wiltbank et al.

2006, Sarasvathy et al. 2008). It is a theory about an alternative process of decision making in management literature, in comparison to the dominant one of causation or prediction

(Sarasvathy 2001, Read et al. 2009). The theory has not been operationalized priorly outside laboratory studies, however. All of the papers have been classroom experiments or literature reviews. The process of effectuation is thus a process of decision making that has not been operationalized in real-world settings.

In this paper, in the spirit of effectuation, we study entrepreneurship in the popular music industry and, more specifically, the heavy metal niche in the popular music industries. These research choices resonate also with who we are, what we know, and who we know. We represent evidence from our longitudinal ethnographic case study of musicians in a metal- music band to operationalizes the theory of effectuation..

Our focus in this paper is how and why Children of Bodom, a metal-music group coming from Finland generally went through cycles of entrepreneurial action, both predictive and effectual, from its founding in 1995 until 2010 or the time of writing this paper. More specifically, we show in this paper how the childhood dreams of the novice musicians who founded this band, drove them to eminate the songs of their influences, to develop expertise in playing and composing, to have tightly knit experiences together, and to create music on their

3 own right. Along this process of process of transformation, some of the original founders exited the venture even if artistic expertise and entrepreneurial opportunities had been created.

Those who remained made decisions about exploiting the opportunities. The decisions included responsiveness to what worked from the perspectives of popularity and the overall business of selling live performance and recordings.

In sum, the contribution of the study is an empirical operationalization of the theory of effectuation, which has not been operationalized priorly outside laboratory studies. Taking across the board, our findings suggest that developing expertise a predictable prelude to effectuation. In sum, we introduce ‘developing expertise’ as a phase that is prior to prediction.

We propose that expertise, prediction and effectuation amount to a three-stage model of entrepreneurial effectuation. We also make evidence-based links between the theory of effectuation and theories of instrumental expertise, entrepreneurial intent (Thompson 2009), entrepreneurial action (McMullen and Shepherd 2006), and the discovery and exploitation of entrepreneurial opportunities (Shane & Venkataraman 2000).

2. ENTREPRENEURSHIP, EFFECTUATION, AND PREDICTION

The recent research on effectuation has drawn a wide interest among researchers in the field of entrepreneurship (Baron, 2008; Chiles et al., 2008; Dew, 2009; Dew et al., 2009; Goel and

Karri 2006; Harmeling, 2009; Read and Sarasvathy, 2005, Read et al., 2009; Sarasvathy,

2004, Sarasvathy et al., 2008, Wiltbank et al., 2006; Wiltbank et al., 2009), still only a few systematic empirical studies exist. In this paper, we first review entrepreneurial effectuation in the context of entrepreneurial theories to which it belongs.

Entrepreneurship has generally been defined as the process by which future goods and services come into being. Shane and Venkataraman (2000) specify that the central questions of entrepreneurship research are: (1) why, when, and how opportunities for the creation of goods and services come into existence; (2) why, when, and how some, people and not others discover and exploit these opportunities; and (3) why, when, and how different modes of action are used to exploit entrepreneurial opportunities.

According to Autio et al. (2011), entrepreneurs operate in two interconnected knowledge and opportunity landscapes. On the one hand, entrepreneurs operate in a landscape associated with technical advances. On the other hand, they operate in a landscape associated with innovation opportunities (as opposed to, e.g., arbitrage opportunities) associated with evolving user needs. Knowledge characterizing the first landscape differs from the knowledge that characterizes the second landscape. Knowledge about technical advances is systemic and structured, organized around technological trajectories, and constrained by dominant designs and product technologies. In partial contrast to knowledge about technical advances, changes in cultural interpretations of appropriateness and value are produced through complex social interactions. Hence, knowledge about innovation opportunities is less predictable and transient. Opportunity discovery has also been viewed as dependent on the distribution of knowledge within social systems. (Autio et al. 2011).

In this paper, we propose that in a creative and cultural industry such as the popular music industry, introducing new opportunities into the innovation landscape and learning to operate in the new landscape is a predictable systemic, structured and organized process of developing one’s musical and dramatic skills through intensive practice. Musical talent or even skills and abilities are no guarantee of becoming a successful recording artist, as the history of popular music has shown. The opportunity landscape related to audience and industry preferences is a socially constructed and unpredictable entirety where timing often

5 matters more than do talent, skills, or other abilities.

In this paper we take on Harmeling’s (2009) broad definition of entrepreneurship relevant also in the realm of human enterprise, and we adapt it to study being a musician in the popular music business as a form of entrepreneurship. Harmeling (2009) discusses entrepreneurship in broad sense, as a realm of human enterprise in general, instead of a realm of existing commercial markets. She defines entrepreneurial opportunities both as made by an entrepreneur and discovered by others. Below, we review how the above ideas relate to theories, of effectuation, innovation landscapes, and expertise

2.1 The theory of effectuation

Like Harmeling (2009), also Sarasvathy (2008) defines entrepreneurial opportunities as both discovered and made. In the standard version of the theory, effectuation (decision) process takes a set of means as given and focus on selecting between possible effects that can be created with that se of means (e.g. Sarasvathy 2001). This kind of decision-making is portrayed as a process of that takes a set of means (e.g. traits, tastes, skills and networks) as given and focuses on selecting between possible effects of the process. New ventures following the logic of effectuation open up new markets and industries, plugging into and exploiting social and technological contingencies that are difficult to plan for or to anticipate.

As such, this process differs from prediction, or what Dew et al. (2004; see also Sarasvathy

2001) consider the dominant process of decision making in management literature. Prediction takes a particular effect as given and focuses on “how to achieve a preset goal” by selecting between means to create the effect.

Where predictions rests on the logic whereby reaching any goal in the future will be linked in more or linear ways to underlying causes, effectuation rests on logic of control of the present.

The focus in effectuation is on choosing among alternative (desirable) effects that can be produced with the given set of means. While goals are not eliminated as such, what is key is that the assumption of preexistent goals and sticking to such goals is abandoned. Put differently, effectuation begins with a given set of causes consisting of mostly unalterable characteristics and circumstances of the decision maker, rather than with desired effect or goal. Effectuation and prediction are integral parts of human reasoning that may overlap and intertwine over different contexts of decisions and actions but the key insight is that a decision-maker will emphasize one or the other kind of decision-making process and logic

(Sarasvathy 2001).

With her theory Sarasvathy (2001) defines that an effectuator’s given set of means include who I am, what I know and whom I know. At individual level this includes tastes, traits and abilities, knowledge corridors and social networks. At the firm level this means physical resources, human resources, and organizational resources. The successful early entrant in a new industry are more likely to use effectuation than causation processes. Sarasvathy (2001) proposes that successful firms at their early stages are more likely to form alliances and partnerships than other types of competitive analysis. At the same industry level, this trend is often reversed when later entrants often revert to causation, improving upon the best practices of incumbents. And at the level of economy this includes demographics, technology regimes and sociopolitical institutions. At the level of the economy, firms created through effectuation process fail early and at lower levels of investment than firms created through causation processes.

Few studies of effectuation have focused on effectuation in the perspective of the founder entrepreneur. At the level of the founder/decision maker, Sarasvathy (2001) makes four conjectures about what effectuators are more likely than are causators, however:

• Effectuators are more likely to dive into marketing and selling activities and alliances,

without traditional market research, such as surveys.

• Effectuators are more likely to rely on short term informal planning in financial

decisions, abandoning formal long term planning.

• Effectuators are more likely to build strong participatory cultures, instead of

hierarchies.

At the level of the individual, Sarasvathy (2001, 2008) and Dew et al. (2004) recognize personal contingency in creation of products, firms and markets, however. Sarasvathy (2008) lists different ways that people might become entrepreneurs. These ways include necessity, celebrity, habit, incentives, and collectivism. Effectuators are more likely to fail often and to manage these failures more effectively so that in the long run they are more likely to build larger and more successful firms, even if they in the long term may need to hire professionals to help run any large firms they may have successfully created.

Especially in a situation where resources are scarce, effectual strategies are more likely than predictive strategies, simply because the resources required for implementing causal strategies may not be available effectuators imagine and create new cultural values, inspired by ambitions in sports, art, science or philosophy, for example, that may in a variety of ways fulfill the aspirations of various audiences (Sarasvathy 2001).

2.2 Expertise and creating and exploiting opportunities

Read and Sarasvathy (2005) define expertise “someone who has attained a high level of performance in the domain as a result of years of experience and deliberate practice. They discuss “strong-form” expertise, associated with deep personal ability and knowledge derived from extensive practice and experience based on immersion in the relevant domain. Expertise literature has identified four theoretical approaches to expertise, which are individual differences, knowledge structures, experience and deliberate practice. Deliberate practice is a sophisticated articulation of the experience view and suggests that the expertise that that leads to superior performance is developed through a special type of experience that involves

“deliberate practice”. Differences between experts and less proficient individuals within a domain nearly always reflect attributes acquired by experts during a lengthy period (“the 10 year-rule”) of deliberate practice.

Sarasvathy (2001) and Read and Sarasvathy (2005) can be synthesized so that there are five necessary requirements of deliberate practice: motivation, understandability, feedback, repetition and fit. Development of expertise involves three phases or levels of analysis.

1. The first and most elementary level is what Read and Sarasvathy (2005) “deliberate

practice”; that is, a phase of causation that forms the foundation for superior expert

practice, which is a requirement for building, developing and marketing novel and

authentic cultural products.

2. Once a sufficient amount of deliberate practice has been carried out, entrepreneurs, their

ventures, or both have necessary skills and competences to be more effectual in their

decision making processes. Because their base of competence is still relatively a new one,

the entrepreneurs and/or their ventures are not yet recognized for expertise; that is, a

successful track record of success in their field of specialization. Hence, their actions and

performance tend to be still constrained by scarce available resources.

3. If the high level of competence leads to the attraction and exploitation of resources, the

venture grows in size and significance and the number of international partners increases

so that the business processes and frequency of decision-making grow to a point whereby

the limited information-processing capacity of the founders and their immediate business

partners require that processes of decision making revert back to causation that enables

delegation and professional management.

Read et al. (2009) presented the contrasting process models of effectual process and the predictive process (adapted from Sarasvathy & Dew 2005 and Gartner 1985). In this paper we adapt these process models, in Figure 1. to demonstrate the predictive and effectual processes based on our analysis.

[ Insert Figure 1. about here]

2.3 Effectuation and expertise: An integrated framework

In the popular music industry, aspiring artists spend their own time and resources to pursue their peculiar choice of career, thus keeping the level of risk encounter by professional producers affordable for these professional producers (Sarasvathy 2001). Hence, professional producers may be construed as the venture capitalists of the popular music industry. Then again, when effectuation is met with success, the venture capitalists of the industry are quick to jump in and become involved (e.g. publishers and record labels). More resources become available to the artists. When more resources become available, scaling up the volume of

10 artistic activities become possible. Managing such growth, in turn, takes away from the artists’ abilities to dedicate oneself to effectuation. Hence, return to prediction is likely.

In the fuzzy front end before professional producers or other venture capitalists become involved, it is up to the economic ingenuity of the entrepreneurs to translate and transform the products of his or her imagination into goods or services for customers or clients. In other words, first there are imaginings and good ideas that develop (an idea of) a commercial offering. Imagining, creation and development of economic artifacts demand inspiration and protracted endeavor. Then, concrete actions construct the market. The essential agent of such cultural entrepreneurship is the effectuator, argues the theory on effectuation. The effectuator is an imaginative actor who seizes contingent opportunities and exploits any and all means at hand to fulfill current and future aspirations. According to the theory, these opportunities are created through and shaped by the process of economic decision making and not given a priori.

To summarize, the basic differences of causal and effectual thought using six constructs: prediction, commitment, action, planning, risk and attitude toward outside firms, in Table 1, appendix (Read and Sarasvathy, 2005).

[Insert Table 1. about here]

3. DATA AND METHODS

We analyze the peculiar kind of a venture in the popular-music industry: the band, also known as the music group. For this study, we chose to study the popular-music industry and one of the most internationally successful Finnish bands: Children of Bodom.

3.1 The heavy metal segment of popular music industry

Heavy metal might be the single most successful and enduring musical genre in the past thirty years (Walser, 1993). The business differs from mainstream popular music business in an important way: The customer/audience spends more money on buying CD’s, they are frequent concert goers, they buy the merchandise at the concert and they are loyal to the bands they like. For these “kids”, music means more than money. In heavy metal, the music remains under the control of the artist. Authenticity is equated in metal with disinterest in commercial appeal. According to Billboard, metal attracts a greater proportion of live audiences than any other contemporary music form. (Walser, 1993)

The first step of becoming a heavy metal artist is a burning desire to be one, which is developed by being a member of the audience. (Weinstein, 2000)

“I still consider myself mostly just a music fan who digs for example Steve Vai” (Alexi Laiho,

2010)

For the artist heavy metal is a career that in its fullest realization becomes a vocation. This vocation includes total devotion to the music and deep loyalty to the subculture. Learning the skills of a performing heavy metal artist takes ingenuity and perseverance. Heavy metal artists are not neutral specialists but passionate lovers of the kind of music they play. (Weinstein,

2000)

“The most important thing is the love for music, the genuine kind. It is so deep in me and within us all (the band) that nothing can ever take that away.” (Alexi Laiho, 2010)

The time devoted to such learning must be snatched from school and leisure time and is financed usually by the parents. Recruits are self-selected and in large part self-motivated.

(Weinstein, 2000)

“At the age of 13 I told my parents that I hate school and I’m not going to upper secondary school because I just want to play the guitar.” (Alexi Laiho, 2010)

Becoming a heavy metal musician requires various abilities, most important ones being the skills to create and perform the music. The possession of musical talent and the willingness to develop it separates the developing artist from the hobbyist. Practicing is very hard work, but it can be gratifying with the opportunities for creativity, sense of mastery and experiences of social bonding. Heavy metal is a discipline and the artists must be willing and able to submit to that discipline. (Weinstein, 2000)

“My principle is that as long as I can make a living with music and I have a roof over my head I’m happy. Of course it’s nice to be able to earn enough to buy cars, but that’s all a bonus.” (Alexi Laiho, 2010)

Labels evaluate metal bands in terms of their songwriting but also in terms of management, equipment and financing. This means that the bands are more entrepreneurial because in the beginning, in many cases, they have to do everything themselves, without the support, because labels did not want to sign bands that did not fit one of the established radio station formats. They only wanted to sign metal bands that could generate their own promotion through touring to appreciative audiences. Even when the band has the support of the label the audiences must be gradually built by constant touring and it takes time before musicianship will provide living for the whole band. (Weinstein, 2000) According to a metal label CEO, an estimation of 40 000 copies per album sold enables the band to barely support themselves with music, when the band is actively touring and merchandise sales are efficient.

Much of the extant internationalization literature outlines the drivers and characteristics of rapidly internationalising small firms and their internationalisation trajectories, however, small cultural ventures, such as metal music bands, are different as growth is driven not only by the firm itself rather by the business partners the firm chooses to or is chosen to interact with. (Loane, 2010)

With the recent changes in the music industry structure, due to the changes in music distribution and technology advances in recording music, all bands and artists need to be entrepreneurial, since the roles of the gatekeepers are diminishing in all genres. Rock bands can’t rely on radio anymore (McDermott at MUSEXPO, Los Angeles CA, April 2010) and a

CD can be seen as an invite to the show. In sum: “it’s a tickets and t-shirt business” (Jampol at MUSEXPO, Los Angeles CA, April 2010).

3.2 Children of Bodom (COB)

COB is a globally recognized heavy metal band, successful business venture for the founders and the main employer for not only themselves, but also many of their technicians and supportive staff. They are significant clients of their record labels, management companies and booking agencies. They have also partnered with instrument manufacturers and distributors and instructional video producers. By 2010 they have sold over one million records globally. Alexi Laiho’s guitar-playing techniques have been recognized in the music media globally, leading to his consecration in Guitar World magazine as the most promising young guitar player in 2006 and as the best metal guitarist in 2009. COB has also been called

"technically dazzling" by the New York Times and “One of the most talented metal bands of our time” by contemporary media conglomerate VICE.

The band has three major sources of income: touring, record sales royalties and merchandise sales. There are also other sources of individual income for the members, such as royalties from signature model instruments and publishing royalties.

Alexi Laiho, the lead guitarist and vocalist of Children of Bodom (COB) is one of the two founders of the venture. As the lead entrepreneur (Timmons 1985, Ensley 2000) of the venture, he has been committed to developing as a musician and as a songwriter to a degree that he can unquestionably be considered an expert in the field. COB, when their breakthrough happened, was a source of ideas and practices that were considered “authentic” in the field. When Laiho was asked as a kid what he wants to be when he grows up, his answer was always “a rock star or a rally driver”.

3.3 Ethnography and embedded case study

Power and Hallencreuz (2008) have reported on the difficulties involved in conducting interviews in their music industry study: Interviews were cancelled at last minute due to legal advice, which led to a research strategy where vast majority of the interviewees came through earlier contacts. The same strategy was applied in this study. Also, many of the informants wanted their statements to be considered off-the-record, and no direct quotes were allowed.

The study is based on the use of an embedded case study approach. Case selection has been purposeful and based on (a) the success of the band in different foreign markets and (b) access

15 to information and knowledge. Case study method has been chosen, because of the potential to deepen the understanding of a research phenomenon for it allows the researcher to take a longitudinal approach.

Case study method is also an effective way of understanding the links between macro- environmental factors, industry –level relationships and firm decision-making (Ghauri and

Holstius, 1996; from Ghauri 2004). Multiple sources of data have been used (ethnography, interviews, and secondary data). The research is primarily conducted through ethnography and semi-structured interviews. As demonstrated by past research, the promise of ethnographic methods presents a bounty of opportunities for the sociological study of music.

Like music, ethnography is an interpretative practice; it requires participation and improvisation; its presentation invites a multiplicity of meanings as well as self-reflection.

(Grazian, 2004) The data deriving from ethnography and observation helps elicit interesting questions, which in-depth interviews develop further (Rasmussen et al., 2006).

The ethnographic method was chosen, because of the insider access to the data. This allowed the researcher to observe the individuals and their stakeholders, in their working environments in Europe, North America and Japan. Simultaneously with the ethnography, the venture’s stakeholders were interviewed, whenever possible. The band’s management, record labels, crew, former band mates, publicists and many others they have worked with over the years in Finland and abroad, were interviewed and in some cases observed. The researcher was not in a working relationship with the venture. Thus the researcher did know the entrepreneurs and some of their stakeholders beforehand through personal contacts.

Data collection and data analysis have been interweaved from the beginning as recommended

16 by Miles and Huberman (1994), allowing theory development alongside the growing volume of data and allowing the research problem to be formulated and reformulated throughout the data gathering process. This leads to not having a definite phase of data analysis, as suggested by Ghauri (2004). The process has been similar to ‘systematic combining’, an abductive approach to case research, where theoretical framework, empirical fieldwork, and case analysis evolve simultaneously (Dubois and Gadde, 2002).

Our perspective is to focus on one of the individual founders of the band, in particular. We look into the (1) existence of their opportunities, (2) how these opportunities are exploited and

(3) different modes of exploitation. We have taken a longitudinal approach and look throughout the history of this human venture. In doing so, we operationalize the causation- effectuation framework introduced by Sarasvathy (2001) and address the research gap presented in the literature review. Next we briefly discuss the case venture and describe the contexts in which they operate in.

4. Review And Analysis Of The Case Of Children Of Bodom

When they were at the age or 14, two youngsters called Alexi Laiho and Jaska Raatikainen started playing together in Laiho’s dad’s garage, with Laiho on guitar and Raatikainen on drums. They both had priorly played other instruments: Laiho had played the violin for five years and Raatikainen had played the piano and the French horn. At this point they decided to commit to the instruments they favoured over others. They both shared a love of heavy metal music and started with playing cover songs for two years. After two years of intensive practice the songs of their favourite artists, the duo wanted to start composing their own music and they wanted to become a real band. They were exceptionally ambitious in this personal

17 endeavour. Music represented a larger objective for both of them. Soon after the decision was made, they had a bassist, a rhythm guitarist and a keyboard played. The band started to play shows at youth clubs and recording demo tapes that they sent to labels all over the world, as expected from starting bands.

[ Insert Figure 2. about here]

In the early 1990s, Laiho and Raatikainen and their band recorded two demo tapes that did not get responses from potential partners. The planning was short term, one demo at a time.

Resources allocated to recording the demo tapes were based on how much they had to spend, and work with that. No loans were taken or big budgets were made, so the band was able to manage these “failures”. By the time the band had recorded three demo tapes, they finally got a response from Belgian label. The label wanted to sign the band, but the deal they offered was “a rip-off”. Because it was the only offer they got they took it, even though this meant they had to cover the recording costs and sell (buy) a large amount of the albums them selves.

Because they had to fund the recording themselves, they went to a studio they had used for recording their demo tapes in Lappeenranta and recorded the whole album in one week.

Usually heavy metal bands take at least 6 weeks to record a full-length album, a luxury they couldn’t afford, with covering the costs themselves.

Before the album was cut, a personal contingency occurred. A friend of their rhythm guitarist worked at the Finnish independent label Spinefarm, and he had passed the album to the label

A&R, Ewo Rytkönen, who immediately wanted to sign the band. After changing their name

(to escape the deal they had made), the band was signed to Spinefarm. Spinefarm had started as a mail order company importing small label’s albums. Their big break happened in 1994,

18 when Offspring’s Smash, which they imported, hit the charts in summer 1994. After this contingency, the company had resources to start a record label and start signing their own bands. As an early internationalizer, they had a vast international network of small specialized labels and distributors.

During COB’s debut release, the band had no expectations regarding the sales of their first album. They felt their style was not commercial enough to appeal to larger audiences. The bassist, Henkka Seppälä describes their feelings regarding the release: “We had no expectations with the sales…we were actually really afraid how people would react to our music because it was a weird mix of black metal and classical and this guitar-solo-Yngve-

Malmsted-thing…When it almost hit the charts in Finland it was quite unbelievable.” COB had stayed loyal to their style and genre of music, even though it could have been characterized as non-commercial at the time, in other words their means were fixed (who I am, what I know). They also got a good recording deal based on their personal contacts

(whom I know). With this deal in their pocket, they had access to Spinefarm’s resources.

Most importantly, the international links to other labels and distributors were now at the reach of COB. Soon they had signed licensing deals to central Europe and Japan and started touring with bigger names in the metal scene.

Slowly but surely budgets for albums grew and the band climbed their way up the tour bill.

Planning was short term, one album at a time. The environment was unpredictable for the band, with always having to deal with the possibility that what if the fans don’t like the next album. In 2002, then they realized they needed a professional manager, they relied on their friends’ advice, the band Stratovarius, and signed with a German management and booking agency Continental Concerts. With the help of their professional managers, they were able to

19 sign better contracts with labels and book better tours and festivals, with growing record sales and increasing number of markets they operated in. In 2006 the band described they views of the future as follows: “I don’t know…I don’t really like to plan stuff ahead anyway…all I know right now is that we are gonna tour…forever” (Alexi Laiho); “As long as we can have fun on tour, even though we are touring a lot, and as long as we can be proud of the music and enjoy the music we’re playing, I think we’re fine.” (Henkka Seppälä); “The band should sign a new three album record deal, and if everything goes well we keep on doing what we are doing.” (Janne Wirman).

The band has had some changes in their line-up over the years. New members have always been friends or acquaintances of the members. Instead of searching for the most talented and skilled individuals, they have rather chosen the people they know, like and trust. Thus sometimes they have been the most talented and skilled individuals available.

[ Insert Figure 3. about here]

5.ANALYSIS OF THE CASE OF CHILDREN OF BODOM

Our data implies that the managers and labels have also tendencies to use either causation or effectuation processes in their decision-making. Expertise built through extensive experience in the field of music management tends to lead to superior performance. In management practices we find divergence in expertise and experience in the field but also in competences, commitment and areas of specialization. Our research also implies that the longer the venture can operate independently, the better bargaining position they have in negotiating with

20 potential business partners. This is due to the time and effort invested in the venture development, and applies in ventures regardless of industry.

It should be noted, that once the band has become a player in the global music business, the partnerships have changed from small local firms, to larger multinational firms. It has been inevitable, since the distribution of records globally and marketing efforts requires resources and channels that smaller local firms just do not have. Then the business of the venture is more or less in the hands of their partners. One of their major influences here being Universal

Music Group, that COB signed a three album deal with after their first four with Spinefarm

(Spinefarm was acquired by Universal Music Group in early 2000’s). These partners use the process of prediction, as presented in Figure 4. below.

[ Insert Figure 4. about here]

Aligned with Autio et al. (2011) we find that these entrepreneurs operate in two separate landscapes. First being the instrumental knowledge landscape, where acquiring knowledge is a predictable process. Thus it is a demanding process that one needs to commit to, actually becoming an expert in one’s field, be it for example computer programming or playing a musical instrument. We suggest that the musician entrepreneurs go through a phase of deliberate practice, to become experts in their field of art. Becoming an expert in writing and performing music is developed through a combination of strictly technical mastery of one’s instrument and also developing an artistic style. We find that the process of becoming an expert is a process of causation (prediction), taking place in the predictable landscape of instrumental knowledge and learning. In foregoing Figure 2., adapted from Read et al. (2009) we demonstrate the process of causation, the process of knowledge acquiring and building expertise, which creates entrepreneurial opportunities for these ventures.

In the second cycle of entrepreneurial action, in the landscape of market opportunities and user needs, the band has used the effectual process. The market landscape is less predictable than the technology landscape, because changes in cultural interpretations of appropriateness and value, being produced through complex social interactions (Autio et al. 2011). For this venture, the future has not been predicted, but rather created. The venture has also done what they have “been able” to do instead of what they “should have” done. Their action is based on the means: who they are, what they know and whom they know. Instead of fixing a goal (e.g. becoming a financially successful band, where focus would be trying to get a record deal with a large record company with plenty of financial resources, and compromising one’s musical preferences in order to get radio airplay) they have fixed their means, who they are, what they know musically and who they know from the music industry. They also have taken affordable financial risks, instead of focusing on expected return. This process of effectuation is represented in the foregoing Figure 3.

6. CONCLUSIONS AND DISCUSSION

According to Sarasvathy (2001) the focus in management literature should shift from “How to build a successful firm?” or “How to become a successful Entrepreneur?” to “What types of ideas and opportunities should YOU pursue?” and “Given who you are, what you know, and whom you know, what kind of economic and/or social artefacts can you, would you want to, and should you create?” Within this spirit, in this paper, we have applied Saravathy’s (2001) effectuation theory and her theory of expertise (Read and Sarasvathy, 2006) into an empirical setting where it has been not applied before, but which was in line with who we are, what we

22 known, who we know, and in what we are interested: music entrepreneurship in the field of heavy metal.

In our empirical study, we have investigated the entrepreneurial effectuation within the cultural and creative industries, more specifically in the heavy metal niche of popular music industry. The founder or lead entrepreneur in this venture is an agent of cultural entrepreneurship; an effectuator, who is an imaginative actor, that seizes contingent opportunities and exploits any and all means at hand to fulfill current and future aspirations, which are created through and shaped by the process of economic decision making and not given a priori. In this case creating and performing music with novelty value combined with exterior appeal.

Based on our analysis, we find extensions in Sarasvathy (2001) and Read and Sarasvathy

(2005) on two levels. First of all, we find that the causation (predictive) process in the bands that we have studied is more advantageous in the kind of “deliberate practice” (Read and

Sarasvathy, 2005; McPherson 2005) that forms the foundation phase upon which superior expert practice is built and that, in turn, is a necessity for building novel and authentic cultural products. We find that during this process, which starts with an entrepreneurial intent in becoming a musician or a rock star, the entrepreneurial opportunity is created by the entrepreneurs by acquiring instrumental knowledge in one’s art form. In other words, the expertise in the field is acquired through a process of causation, when the entrepreneurs are novices. It is when they become experts in their field when their ventures are more likely to use the effectuation process, and move to the process of entrepreneurial action. Consistent with the research literature we have reviewed, we also find that these ventures have not used traditional types of market research before or during their start-up phase and breakthrough,

23 but rather have dived directly into marketing/selling activities and alliances. At the early phase of their development, their business models focused on short term planning, rather than long term planning or net present value (NPV) analysis, for example. Also, they have built participatory cultures of work instead of hierarchy- or procedure-based ones. Also, their predisposition to risk taking is rather affordable loss than expected return. Their processes of effectuation have evolved along with the growth in the size of their businesses and organizations. All of these features and dynamics are predicted by Sarasvathy (2001).

Supporting existing literature (Read and Sarasvathy, 2005), we find that large multinational record labels are more likely to be causation driven than independent record labels that, according to our study, use effectuation process more often. In conclusion, all of these stakeholders have a significant impact on the prospects of these bands. And also it is up to the band to choose their business partners, when they have reached a sufficient level of skills, competences and recognition.

We find that both processes are necessary for the development of the venture: the predictable cycle of developing instrumental expertise and the effectual cycle of exploiting the entrepreneurial opportunities (enabled by the expertise). In this sense we find that these opportunities are not pre-existent but actually created (made) by the entrepreneurs.

Remember that originally (from the 1960 to the 1980s), heavy metal bands got rejected by radio and by major labels. This forced them to be more entrepreneurial than artists in the mainstream of popular music, for example. Many of the gatekeepers in the cultural industry of popular music have been recently pushed to background as a result of technological advances of the internet and music recording programs, that have shifted the social practices and buying

24 behaviour patterns of consumers, not only in the field of popular music but also in other fields of music as well. What makes the approach taken in this paper a novel one is this reinvention of an industry. We propose that our findings may hold not only in other cases in heavy metal music, but also more generally in popular music. In addition, we speculate that our findings may have valence also in other cultural industries than music, perhaps also in entrepreneurial ventures generally.

To conclude our findings: We find that these entrepreneurs operate in two different landscapes: the predictable landscape of instrumental expertise and the unpredictable market landscape. The instrumental expertise is acquired through a process of prediction and causation, which is followed by an effectual process in the market landscape. Existing research has focused efforts on studying expert entrepreneurs who use the effectual process.

Our empirical analysis of a real life case represents a clear case of instrumental expertise leading to effectual process with no experience or specific expertise in entrepreneurship.

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TABLE 1. Read and Sarasvathy (2005)

Figure 1. Predictive and effectual process models (Read et al. 2009).

Figure 2. The predictive process, adapted from Read et al. (2009).

Figure 3. The effectual process, adapted from Read et al. (2009).

Figure 4. The predictive process, adapted from Read et al. (2009).