Countless corporate giants have crashed and burned... Sears Roebuck & Co., U.S. Steel, Eastman Kodak and Pan Am, to name a few.
But some big companies have “turned it around” – gone from stagnation to innovation.
This blog is the first in a series about how those rising giants did it and what we can learn.
If you’re a startup entrepreneur, read this blog from the perspective of how you, your company or your technology can help a dying giant revitalize.
ft you’re a big company executive, remember that every company must eventually disrupt itself or face stagnation and death.
Let’s begin with Disney.
Disney in Crisis
When Bob Iger became CEO in October 2005, Disney was in disarray.
The preceding five years had been marked by a hostile takeover attempt, a shareholder revolt, a board in conflict and stagnant stock price.
Disney’s animation department hadn’t had a hit in years, their brand had become somewhat tarnished and employees no longer believed in the company’s greatness.
One of Iger’s first tasks was to make peace with dissident shareholders Roy Disney and Stanley Gold and to convince them to drop their lawsuit challenging the choice of Eisner’s successor.
In the midst of this chaos, Iger set about transforming Disney, ultimately claiming back the culture of innovation it once had and driving a 320% increase in market cap over a 12-year period.
So how did he do it?
Significant change in a large organization needs to happen from the top down.
The CEO and the Board need to be in sync, be tolerant of risk and remain agile.
The CEO needs to take risks and the board needs to give the CEO top-cover.
Iger was able to turn Disney around because he set the tone... Here is his 3-part playbook for transforming “The Mouse”:
1. Create a Clear, Simple Vision (Your Corporate MTP)
When you look at Disney’s business, it seems very complicated.
They have multiple business lines: movie studios, TV brands, consumer goods (toys, clothing, accessories), retail stores and theme parks.
They also have a multitude of brands, including Disney itself, Pixar, Marvel, Star Wars and ESPN.
That’s why it’s important for Disney to have a simple, clear and powerful vision that ties everything together – what I would call their Massively Transformative Purpose (MTP).
For Iger, the MTP was clear -- be the best storyteller, and then leverage those stories across all of Disney’s lines of business.
Telling stories is where Disney should be distinctive, and should be No. 1. Storytelling was core to Disney’s success since its founding in the 1920s.
From the stories, Disney creates iconic characters. Disney can then leverage the content and the characters across multiple lines of business, from consumer stores to theme parks.
2. Make long-term bets.
Iger believes in the value of persistence and thinking long-term. His favorite long-term bet example is Disneyland Shanghai, which opened in 2016 after a 17-year process. Seventeen years!
It is a $6 billion project that employs over 10,000 workers and has involved long, hard negotiations with the Chinese government.
There have been numerous setbacks along the way — every change in Chinese leadership over the past 17 years has meant new parties to the negotiation, and new demands.
There have been setbacks with the local population at the Disneyland Shanghai site; with local construction companies (manufacturing quality and materials), and with the local media. But Iger and Disney have remained incredibly persistent despite the adversity.
Iger explains that he and his team have been willing to be patient and persistent because they believe in the value of what they’re creating with Disneyland Shanghai for the Chinese people, and for Disney’s business.
3. Make fearless acquisitions on the edge.
Turning a large company around is hard, and it takes risky moves that can involve betting the company.
Iger knew he needed to reignite Disney’s magic, and set out on a fast track to acquire as many memorable characters and stories that could be integrated into the vast distribution platform that Disney had built.
This turned into three iconic acquisitions – Pixar, Marvel and Lucasfilms– the three of which are a big reason Disney’s stock price has more than quadrupled during Iger’s tenure as CEO.
When Bob Iger purchased Pixar for $7.4 billion, some in the industry thought he was crazy.
But with the Disney distribution platform, when Toy Story 3 hit the market in 2010, it raked in more than $1 billion at the box office worldwide, which is comfortably more than the previous two films in the animated series combined.
A few years later, Iger made another risky bet by purchasing Marvel Entertainment for $4 billion.
Iger then used the Pixar and Marvel purchases to convince George Lucas to sell them Lucasfilm (for about $4 billion) in 2012. That deal brought the Stars Wars and the Indiana Jones franchises within Disney’s fold.
Disney’s first foray into the Star Wars universe was The Force Awakens, which has exceeded $2 billion in box office revenue since its release. This is on top of an astounding $5+ billion in Star Wars merchandise sales within the first 12 months of the acquisition alone.
All of this looks brilliant in retrospect, but there is little doubt that it was all very risky up front.
By all measures, Iger is fearless. “I just was built with an innate ability to not let fear guide me in how I run my life,” he said in a recent interview.
In speaking about the risky acquisitions he made, Iger acknowledges, “Yes, you’re putting risk on a company. But from a reputational perspective, no one is taking more risk than the CEO. And it’s a risk that is personal and firmly tethered to a CEO.”
And regarding the Disney Board, Iger remarked: “To the credit of the board, they did not throw me out of the room.”
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