The Disney Touch

In the early days of talking pictures, a creative dreamer named Walt Disney developed a little cartoon mouse that caught the public’s fancy and grew up to be an industry. Today that industry is a global powerhouse encompassing not only film and video but books, CDs, theme parks, retail stores, magazines and a separate media empire. In an exclusive Selling Power article based on a speech before the Chicago Executives Club in April of this year, Disney CEO Michael Eisner shares his thoughts on the continuing mission of creativity at Disney.

I’d like to talk about a subject that occupies a great deal of my conscious thought … and that is how to manage a rapidly growing creative company in a time of accelerating change.

When I joined Disney almost 12 years ago, the company had 35,000 full-time employees. With the completion of our recent acquisition of Capital Cities/ABC we have nearly 117,000. We had about 120,000 stockholders then. We have about 1.3 million today.

I mention these statistics not to prove how majestic we are, but to show how fast we have grown. The great danger that arises out of such fast growth is that a company can sometimes lose its focus, forget its mission, take its eye off of its core competency. Not only is rapid growth a problem, but success, unless properly handled, can be toxic, too. I have watched other big corporations and have seen what can frequently happen after a long and triumphant run. The mighty stumble and fall.

Some may rise again, Phoenix-like, but others just fade to shadows of their former selves. Too many tend to become self-satisfied or overconfident or arrogant or lazy or restless or, in the worst case, all of the above.

How do you continue to grow and yet avoid these pitfalls? How do you manage a company like Disney, whose principal asset is creativity, and make sure it remains young and vibrant without losing its upward trajectory or its sense of great adventure…so that it doesn’t become so heavy with bureaucracy and rules that it crashes to the ground?

We at Disney do not have all the answers, but I would like to share with you today some of the things we think are necessary.

A response Babe Ruth once gave to a reporter sticks in my mind. “How is it,” he was asked, “that you always come through in the clutch? How is it that you can come up to bat in the bottom of the ninth, in a key game with the score tied, with thousands of fans screaming in the stadium, with millions listening on the radio, the entire game on the line and deliver the game-winning hit?”

His answer: “I don’t know. I just keep my eye on the ball.” Keeping one’s eye on the ball is, for me, a metaphor for what we must do as a creative company.

At Disney, because of the nature of our business, everything we do is dependent on a steady stream of ideas that can be successfully transformed into film and television and radio and stage and theme park offerings. All of you have read about bold and innovative companies like 3m and Rubbermaid and Johnson & Johnson, which are famous for their ability to create a substantial percentage of new product offerings every year, thus transforming themselves every five or six years.

We, at Disney, face the same kind of challenge with the subtle but significant difference that their raw materials are of the tangible kind while ours are of the mind. They create products that people need; we create products that people cannot know they want until they have bought a ticket or tuned in.

The percentage of new products they introduce each year is in the 20 to 30 percent range; ours are closer to 80 to 90 – particularly in film and television. We introduce one or more new products every week of the year. And this is why new and fresh ideas are critical to our business.

Because this is so, companies like Disney must be open to new ideas from every source, from inside and outside the company. From employees, from freelance writers, from book and talent agents, from producers and wannabes, and yes, even from our children and most especially from our wives.

But how do you know when you have found a winning idea? It isn’t always obvious…and believe it or not, audience research does not help. In fact, it often misleads. In my distant past, I remember research people telling me with great certainty that Happy Days, All in the Family and Roots would all be failures on television. And just last year, there was a lot of rumbling that we were wasting too much time on Toy Story, the first computer-generated animated feature in history. It wouldn’t work. The characters were not lifelike. People would hate it. It certainly wouldn’t be worth all the effort that we were putting into it.

I’m happy to report, contrary to the naysayers and other prognosticators, Toy Story is a full-blown hit, the highest-grossing domestic film of 1995 with more than $185 million and on a track to do as much as 150 percent of those grosses overseas.

So, as you see, I am not a disciple of research…unless of course, it agrees with me. Otherwise, it is useless. Film critic Roger Ebert of the Chicago Sun-Times has this to say about research: “When you’re trying to decide what canned peas to buy, a focus group might be able to tell you. But movies work by surprising and amazing us.”

At Disney, we also feel that the only way to succeed creatively is to fail. A company like ours must create an atmosphere in which people feel safe to fail. This means forming an organization where failure is not only tolerated, but fear of criticism for submitting a foolish idea is abolished. If not, people become too cautious. They hunker down – afraid to speak up, afraid to rock the boat, afraid of being ridiculed. Potentially brilliant ideas are never uttered and therefore never heard.

Wayne Gretzky, the great hockey player, knows about this. Said Gretzky: “You miss 100 percent of the shots you never take.” Failing is good as long as it doesn’t become a habit.

Not long after I came to Disney a bunch of us would get together with our creative executives for what we called “The Gong Show.” We would meet and toss ideas around – mostly ideas for television shows and movies. Anyone who wanted to could present an idea for a movie or a TV show. Rank had no privileges. Kinder, gentler versions of that particular activity live on.

For example, our flagship Disney Feature Animation, which has had a string of blockbusters, has its own Gong Show three times a year. Anybody who wants to, and I mean anybody, gets a chance to pitch an idea for an animated film to a small group of executives, which includes, among others, me and Roy Disney, our vice chairman, and Peter Schneider, head of Feature Animation. There usually are about 40 presenters.

For this to work, you must have an environment where people feel safe about giving their ideas. And, while we do not pull our punches when people present their ideas, we create an atmosphere in which each idea can receive full and serious consideration.

Yes, we gong people if we think an idea won’t work. But we tell them why and we tell them how it might be improved. And, of course, we tell them when we think an idea has promise – and we pursue that promise.

This doesn’t mean that the executives are always right, or that we consider ourselves infallible. Believe me, nobody is always right in the film business.

But if you take the time to listen and be honest in your reactions, if you create a setting that recognizes that ideas come in all shapes and sizes and are willing to follow the creative mind wherever it goes – something you can never predict – people begin to understand a basic fact: If you have an idea you believe in and can express it, it will be considered.

Let me assure you that this is more – much more – than just an exercise in employee relations. The fact is that several of our better animated features have come out of The Gong Show and some of our other major winners out of similar kinds of programs in other parts of the company. I love going to our gong shows. I can be the emcee, the judge and the jury. Being part of the creative process is the best part of my job.

In addition to having valuable ideas, you must have an organization that can follow through and execute that good idea. A lot of people have good ideas, but not that many do anything about them. At Disney, we do.

I am so convinced that all of us can find within ourselves hidden depths and new wellsprings of creativity that a few years ago I organized a retreat for top Disney management at the Aspen Institute, which was more accustomed to hosting retreats devoted to world political issues than to the Freudian unconscious.

The first presentation at that retreat was given by a husband-wife team who teach at the Harvard Medical School. They focused first on what it means for people to connect with their emotional depths. Being in connection with these depths, they suggested, is critical to releasing our most powerful and creative forces. Denying this deeper level – whether in one’s life or in relationship to others – leads to something called “disconnection.” In effect, people lose touch with fundamental aspects of who they are.

The result, we were told, tends to be vulnerability, fear and denial, as well as superficiality, falseness and a mistrust of intuition – all of which can get in the way of deep, creative expression. I was especially struck by the point that fear of criticism and lack of acceptance is a primary reason that people so often censor their feelings and intuitions and shut down their depths.

It explains a lot about the difference between those who are truly creative and those who are somehow blocked, or limited or superficial. Put another way, going deeper has a very practical creative value. Artists produce their best and most creative work when they aren’t afraid to take risks, to endure criticism or embarrassment or even failure.

To me, such risk taking is the primary challenge not just for an artist, but for any truly creative executive. Trusting one’s deepest intuitions and instincts may mean overriding contrary research, peer pressure, conventional wisdom or intimidation.

Nothing matters more to me than thinking and talking about new ideas. The difference is that I cannot focus solely on movies and television.

I spend a lot of my time brainstorming with people in all our divisions about potential new rides and attractions for our parks, new forms of entertainment, new expansion possibilities for The Disney Stores and our Consumer Products Division, the next great video game or magazine or book or CD-ROM or record or theatrical production or cable network or sports team or maybe even an ESPN program.

We also spend a lot of time thinking and talking about how most creatively to market and sell all of these Disney products around the world. All of us live in an age of overcommunication in which people everywhere are bombarded endlessly with thousands of pieces of information and advertising messages. As this bombardment continues to grow, people more and more tend to turn to the brands they know and trust.

The name Disney has become one of the single most powerful brands around the globe and we work mightily to strengthen and maintain the high level of quality with which the name has become synonymous.

And that brings me to a subject which I hesitate to even mention because it centers around the most reviled and ridiculed word in the business lexicon. It is the word most often used when companies announce a merger or acquisition; it is the justification most executives use when grilled on why the merger of two companies makes sense; it is the dreaded “S word”: synergy. At Disney, it is our conviction that synergy can be the single most important contributor to profit and growth in a creatively driven company.

Having used the dreaded word, let me describe the concept more specifically. It is simply this:

When you embrace a new idea, a new business, a new product, a new film or TV show, whatever, you have to make sure that everyone throughout the company knows about it early enough so that every segment of the business can promote or exploit its potential in every other possible market, product or context.

Most of you are aware, I am sure, that there is a natural synergy in the normal product cycle of a successful film. If it does well in its initial domestic run, it almost ensures later success in international distribution, domestic and international home video, network and foreign television, pay-per-view TV and cable.

In many entertainment companies, that is where the synergy and the story ends. At Disney, as a matter of course, a well-received film will also provide profitable opportunities in our theme parks – new rides, new characters, new parades, new attractions – and in consumer products – for Disney stores, for Sears and others – toys, clothes, dolls, books, games – even children’s television shows for our affiliates and owned television stations, like WLS – programming ideas for our ABC radio networks and even the Warner Brothers network which is played on Tribune stations like WGN, and others around the country.

And at Disney, we also focus on additional uses of the creative product. The successful film can also give rise to direct-to-video sequels and TV series. Our first made-for-video sequel was a highly profitable Aladdin takeoff called The Return of Jafar, in fact so profitable we’ll release a second made-for-video Aladdin sequel this year called Aladdin and the King of Thieves.

And we go beyond that: The 1991 animated feature Beauty and the Beast has become the stage musical of the same name now playing to packed audiences in its third year on Broadway, its second year in Los Angeles and approaching its first anniversaries in Melbourne, Toronto, Tokyo, Osaka, and Vienna with more stops to come.

This is an entirely new business for us – a giant business all by itself – emanating from one successful movie. We will be doing more stage musicals drawn from other successful movies in the years ahead. In fact, we plan to launch one new Broadway show each year beginning in 1997.

And now we are converting the hit animated feature 101 Dalmatians into a live-action film starring Glenn Close as Cruella Deville. At the very least, this has earned us the affection of dog trainers throughout California. We think that Walt Disney Pictures live-action event films such as this will be every bit as successful as our animated features.

The term synergy may be the object of ridicule throughout the world, but not in Burbank, California. This concept of cross-promotion and transformation of popular products into new media is an engine that helps drive our company. Whether working with Ameritech on a new video service or McDonald’s to enhance both of our brands, synergy, for us, goes with creativity…which rhymes with selectivity…which means keeping one’s eye on the ball.

Another key to growth and survival is rejuvenation. How? By moving your brightest executives frequently to new responsibilities, new businesses, new contexts. A few years back, our late president Frank Wells and I looked around and decided it was “seven-year itch” time at Disney.

No, we were not thinking about the personal lives of our executives. We were concerned about the continued growth of the company. We believed – and I, obviously, still do – that a creatively driven company such as ours has to constantly renew itself, or its ideas will dry up and its competitive edge disappear.

So we started moving our most promising executives around, exposing them to other parts of the business, increasing their responsibilities and bringing new eyes and new ideas to their new operations. All these folks – young and younger, old and older – are the people who make the company work, but it is top management’s job to make sure they are excited about that work, constantly renewed in spirit.

It is top management’s job to reinvigorate them and the areas they go into.

There is an old proverb that says: “If you are planting for one year, plant rice. If you are planting for 10 years, plant trees. If you are planting for 100 years, plant people.” And to that I would add plant them, but don’t forget to move them around every seven to 10 years. New eyes give rise to new ideas and opportunities.