It was Monday evening, October 3rd, 2005. Bob Iger, who had recently become the CEO of Disney, was going to give his first presentation to the board. Ten years ago, Disney bought ABC. Iger, who was the Vice President at ABC, was made the COO of Disney. These ten years hadn’t been easy either for him or the company. The board has seen through many crises. The first was the attempt of a hostile takeover by Comcast. Then the acrimonious fight with Walt Disney’s nephew Roy Disney. And finally, the not-so-smooth exit of Michael Eisner, the previous CEO who had been CEO for 20 years. Even the succession process through which Bob Iger had become the CEO had been under scrutiny both internally and externally. In fact, Iger knew that sitting on that board were at least two or three people who had voted against his succession. He just didn’t know which two or three. And so, it wasn’t a very conducive meeting that he was addressing. The ten board members sat around a long conference table in the Disney boardroom. After an initial congratulatory speech by one of the board members, in which he reminded Iger of the momentous occasion, he yielded the floor to Iger. Iger cut across all the pleasantries and straight dived in, saying, “Gentlemen, Disney Animation is in a mess.” This wasn’t new news for the board. They knew that it was in a mess, but they didn’t know how big that mess was. Over the last few weeks, Iger had got his team to do several financial analyses to do forecasts. He had also asked his team to go and meet mothers of children below 12 to understand the current image of the Disney brand in their heads. The news he was carrying in the presentation was really ugly. But he knew that if he were to approach the collective rational brain of these ten people on the board, he wouldn’t be able to sell the great explosive idea he had come up with. So, he decided to start by narrating an experience. He said, “Just a few weeks ago, a few of you and I were in Hong Kong for the inauguration of Hong Kong Disneyland. And as I stood, in the searing heat of 95° Fahrenheit, watching the opening parade come down Main Street, I saw float after float go by. The initial floats contained characters from the Disney films, which were the mega-hits of the Walt Disney era: Snow White, Cinderella, and Peter Pan. Then came the floats with the hits from Michael Eisner’s early years. These were Aladdin, Lion King, and Beauty and the Beast. Finally came the characters from the Pixar films which Disney had the right to distribute: Toy Story. Monsters, Inc. and Finding Nemo. But there was something that I found missing. There was no new Disney character in the last ten years.” Iger told the board, “As animation goes, so goes the company. Disney animation was really the brand. It powered and fuelled the rest of the businesses. The movie merchandise, the theme parks, the consumer products on which the characters went, and without any new characters, the business had really suffered.” Iger then went on to lay down possible options for how to revive the business, and he showed that most of the ones that were being discussed earlier had little chance. And that’s when he proposed the explosive third, “We could buy Pixar”. The initial reaction of the board was explosive. But after a lengthy discussion through the evening about whether that was the right idea or what was the right price to pay, the Board gave Iger the yellow light. Permission to go and start negotiations with Steve Jobs, who owned 50% of Pixar. Disney went on to buy Pixar for $7.4 billion. While the Pixar unit was kept isolated and separate from Disney, the influence of Pixar leaders like Ed Catmull and John Lasseter started showing very quickly. In 2009, the Disney Animation movie Bolt was nominated for an Oscar. In 2013, Frozen hit the screens. It not only got the Oscar, but the movie merchandise sales were far more than the movie itself. While the film grossed $1.2 billion worldwide, the movie merchandise garnered $5 billion. Clearly, Bob Iger’s identification of what was the central lever of success for Disney was held true. Business Points (Tags) #CentralLever #core #leverage #powerofstories #risk #courage Source: ‘The Ride of A Lifetime’ by Bob Iger,
