Strategic Direction

Emerald Article: From beast to beauty: The culture makeover at Walt Disney

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To cite this document: (2007),"From beast to beauty: The culture makeover at Walt Disney", Strategic Direction, Vol. 23 Iss: 9 pp. 5 - 8 Permanent link to this document: Downloaded on: 30-05-2012 References: This document contains references to 3 other documents To copy this document: This document has been downloaded 4112 times since 2007. *

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Q Emerald Group Publishing Limited. At the company itself. No longer shackled by central control. 9 2007. And the reason for this? The prohibitive culture that soured boardroom relations. Trivial gestures to some. but time has not dulled the significance of the former Canadian prime minister’s Disney’s world of conflict and harmony Just ask the folks at Walt Disney. But perhaps Iger’s most significant attribute is the trust he places in his people to get the job done. 5-8. John Abbott said that ‘‘every man’s ability may be strengthened or increased by culture’’. Talk about pressing the self-destruct button. too. Achieving this involved transforming the culture almost beyond recognition. Fortunately. Mere mention of the entertainment giant’s name invariably conjures up memories of lovable characters and unparalleled fun for the young and not so young alike. shows faith in his subordinates. key players in the organization now enjoy greater freedom to call the shots. And while Eisner overtly pooh-poohed any ideas he did not like. Consequently. With Hollywood awash with massive egos jostling unashamedly for wealth and power. during weekly meetings the dialogue no longer flows just one way.From beast to beauty The culture makeover at Walt Disney B words. Iger values and encourages the contributions of others. however. pp. control rather than collaboration was the norm and unit heads became afraid or unable to make decisions. 23 NO. Under autocratic former CEO Michael Eisner. Iger provides a breath of fresh air. and is more willing to keep a low profile and let others take the plaudits. Eisner cramped the style of others by insisting on being involved in anything and everything. but the effect on morale can be priceless. and has made his office a warmer and more welcoming place. fun seemed no longer part of the equation. No wonder Disney had gained a reputation for being slow to react. The CEO.1108/02580540710779681 VOL. Well over a century may have passed since then. for example: B B visits the rank and file to show them that their efforts are appreciated. ISSN 0258-0543 j STRATEGIC DIRECTION j PAGE 5 . In contrast. DOI 10. new chief executive Bob Iger is a completely different animal to Eisner and immediately set out to restore harmony. Iger: B B B rules by consensus. Unlike his predecessor. And then there are the little things that often make all the difference. ack in the late 1800s. With Disney vying for a share of the digital market. the timing of the upheaval could hardly have been worse. His executives probably think so.

Since his elevation to the hot seat. and the Pixar animation team almost a free rein. But the all or nothing approach initially worked wonders and investors flocked to get in on the act. Then the dot. the fund house adopted a gung-ho mentality towards investing and placed few financial restrictions when chasing what it believed was the next big growth stock. Janus was also guilty of putting too many eggs in too few baskets. let alone how to exercise it. But thanks to mentor Thomas Murphy such actions are second nature to the former TV weatherman. Assets and reputation were both left in tatters. Marketing opportunities are likewise affected by Pixar’s reluctance to develop sequels. When something is feasible. The stock price plunged accordingly – from $54 in 2000 to just $9 two years later. With activities largely centering on telecommunications and crash arrived and Janus paid a hefty price for its rashness. Iger sanctions risk taking and believes that people can learn valuable lessons when things go pear shaped. 23 NO. then the ethos at Janus functioned like the proverbial time-bomb. Given that the unit makes around a third of studio profits. the CEO has unified the organization. Iger credits his predecessor for putting many of the foundations in place while refusing to blame him for the discord. however. From boasting a 47 percent total return in 1999. for instance. And if all that was not bad enough. boosted income and seen the stock price soar. the organization endured three years of substantial loss and ranked among the worst equity performers over a six-year period. 9 2007 j j . however. The unit seems hell bent on enjoying its newfound freedom even if it means making decisions that would ordinarily not be approved. Coaxing more from Pixar is therefore one of the challenges facing Iger as he strives to continue Disney’s forward momentum. During the 1990s. even though a toy promotion had been arranged to coincide with the original release. In typically modest fashion. Iger’s back seat style of leadership has allowed: B B B scriptwriters more freedom. fun seemed no longer part of the equation. the studio chief greater decision-making power. Iger first encountered Murphy and his belief in encouraging talented youngsters to experiment when he joined ABC sports in 1974. Iger tells his people to go for it and he will often only get involved when it is absolutely necessary. The animations team prides itself on quality. PAGE 6 STRATEGIC DIRECTION VOL. Others may be less charitable. This comes in addition to completing a revamp of the Paris and Hong Kong theme parks and sustaining ABC’s revival. This influence has barely diminished since. Janus: the cost of recklessness If Disney’s culture had the power to disrupt. Relaxing control invariably has its drawbacks and this is apparent at Disney. It seems that no one knew the definition of restraint.‘‘ At the company itself. A prime illustration of this philosophy occurred when an ESPN branded phone relaying sports content and results proved a costly flop. Who did the CEO rebuke for this disaster? No one. One example occurred when the launch of a DVD was delayed. Take Pixar. ’’ Not any more. the company had to pay out $225 million for indulging in some dodgy business practices. Iger’s decision to remain in the wings is even more remarkable. But being perfectionist comes at a price because output is usually restricted to one movie per year.

while similarly reducing its holdings in individual companies. According to Kleinfeld. Results have been steady rather than spectacular and the stock has recovered slightly as a result. Unfortunately. significantly increased the amount of stocks covered and the number in the non-US category. The culture transformation has halted the decline at Janus. Consequently. too. The Siemens CEO is scheduled to meet demanding internal targets just a couple of years after taking the helm at the giant electronics and engineering company. ’’ VOL. Why Siemens resists change But it’s difficult to please everyone. things have now changed. Most of the old guard has fled the nest and the cavalier approach has disappeared along with them. Janus people now grill customers and suppliers of any target organization and sometimes even try out the products themselves. Research is part of company tradition and the CEO has often demonstrated his own prowess in this area. Thanks largely to new CEO Gary Black. Spreading the investment clearly makes sense. as Klaus Kleinfeld will surely testify. All Black has to do now is convince investors that the foundations are in place for a more sustained recovery. Since then the culture at Janus has altered dramatically. The company has: B introduced comprehensive risk management policies that were virtually non-existent before (choices are now scrutinized closely and managers have to justify any suspect decisions).Fortunately. With stocks up 26 percent. Black insists that the company does its homework before making a move. 9 2007 STRATEGIC DIRECTION PAGE 7 j j . Sales and profit growth is higher than at General Electric (GE). almost doubled its number of analysts. it is little wonder that many investors are delighted. It goes without saying that any investment has to be at the right price. while demanding that most new recruits have previous experience. those within the Munich-based organization fail to share the excitement and have instead expressed their discontent as the CEO has repositioned Siemens as global leader in the provision of power plants. Black became chief investment officer in 2004 and landed the top job two years later. So why the disapproval? Because the German workforce opposes globalization and their chief’s adoption of what they see as uncaring US-style management practices he witnessed ‘‘ When something is feasible. this has also left the company perfectly situated to exploit opportunities arising from a global shift that will see developing nations becoming wealthier. Iger tells his people to go for it and he will often only get involved when it is absolutely necessary. 23 NO. and started to sell funds through brokers and financial advisors to provide a valuable link between the company and its clients. a welcome sobriety has taken its place. medical equipments and infrastructures. B B B B Janus now diffuses its funds across a diverse range of sectors. while the organization is also making a bigger splash than its US rival within developing markets like India. refined its remuneration schemes (the company now measures performance over a longer term). not least because the risk is spread.

2. ‘‘Janus sobers up’’. pp. 74-9. The final article reveals how the prevailing culture contributed to the reckless approach that once typified Janus. Business Week. Keywords: Organizational culture. being technologically brilliant does not compensate for the inadequacies elsewhere that have learned the company a reputation for sluggishness and restricted overall profit margins. The first piece details how the Siemens CEO is striving to reshape the culture at the German organization. 179 No. 4019. pp. Another valuable piece that provides significant insight for any practitioner. Some shareholders have even taken the unprecedented step of tabling a motion to withhold approval of the company’s management board. ‘‘How Bob Iger unchained Disney’’. 23 NO. The organization is caught up in a bribes scandal and Kleinfeld has attracted criticism for his handling of the matter. Once again. Grover. (2007). R. However. despite the fact he is not personally implicated. 9 2007 j j .at first hand during a three year stint fronting Siemens’ operations in the Or visit our web site for further details: www. To purchase reprints of this article please e-mail: PAGE 8 STRATEGIC DIRECTION VOL. the resistance to change is hardly surprising. Leadership. Maiello. Such practices have led to him demanding: B B B speedier decisions. This informative article contains many important implications. But the CEO has shown himself willing to make harsh decisions even at the cost of being labeled impatient and demanding. The CEO models himself on Jack Welch. implementing change is not easy within a sprawling company whose major business units have separate boards and unique cultures. J. Business Week. and sold off communications businesses even though the work was part of company heritage. particularly when change leads to a conflict with tradition. greater accountability. In Kleinfeld’s eyes. Kleinfeld leads by example and regularly demonstrates levels of energy and commitment characteristic of the legendary GE leader. In a country strong on unions and worker solidarity. 42-6. Comment The review is based upon: ‘‘Siemens’ culture clash’’ by Jack Ewing. No. and that the company delivers on its promises. The author describes the changes imposed and how this has helped improve performance.emeraldinsight. But this is not the CEO’s only concern. He also points out the level of workforce opposition and the unease that has ensued. Grover provides an account of the culture change that has occurred since Bob Iger became chief executive at the Disney organization. Forbes. 81-4. (2007). Management styles References Ewing. the article perfectly illustrates the relationship between corporate culture and performance. No. Maiello details the company’s rise and fall and how the new CEO has reshaped the culture to bring stability to the organization. January 29. (2007). He: B broke up one unprofitable division within a matter of weeks. B There is clearly little room for sentiment where Kleinfeld is concerned. ‘‘Siemens’ culture clash’’. February 5. M. The author compares the CEO with his predecessor and details how subordinates now enjoy greater decision-making power. 4020. so upping the stakes comes naturally. pp. Vol. transferring some parts and shedding others. ‘‘How Bob Iger unchained Disney’’ by Ronald Grover and ‘‘Janus sobers up’’ by Michael Maiello.