Eisner on CNN tonight @ 6pm et

[raidermatt]

Until, someone can move this idea from theory to implementation, well, it just remains a theory...

Scoop, what part of implementation is still fuzzy to you?

Make guest satisfaction the number one priority?

Before cutting hours and entertainment, analyze the impact on guest satsfaction THOROUGHLY, not a year later when attendance is in the toilet?

Use movie making talent to assist in the design of new attractions to ensure that the "SHOW" is maintained and enhanced?

Don't skimp on maintenance and upkeep? (Besides the show, it costs more in the long run).

Let the marketing folks take advantage of the creations, but keep 'em out of the room during the creative process..

Seriously, what isn't getting through?



Scoop, your "nobody else does it" logic is extremely flawed. If it were true that if the old Disney philosophy worked somebody would copy it, why didn't everyone copy it when it was absolutely PROVEN to be working at that time? Why weren't others building Disneylands, and making animated films to match Disney?

Oh, a few implemented pieces of it, like theme parks, but NOBODY embraced the entire philosophy. They didn't set out to exceed expectations. They thought it too risky and left it to Walt. Just like they are doing today.

It is a risky philosophy, because it will cost a lot to get it going, and to make the public believe in you. It took Walt nearly his entire life to build it for his company. That's why nobody else does it. Because you can make money without doing it.

But you'll never become what Disney has become. You'll never achieve what Disney has achieved. Why do you think Eisner can continue talking about the "Brand"? Where did that valuable "Brand" come from?

The current Disney doesn't have to build that loyalty and recognition. They HAVE it. But they won't have it forever unless they maintain the philosophies and principles that built it.

 

[raidermatt]

AV has touched on something else that we have kicked around before.

Does the old Disney way work with EVERYTHING? We know it worked for theme parks and a movie studio. But does it work for a network and retail stores?

Clearly, emphasizing the "SHOW" isn't going to work in everything. If you run a shoelace company, "SHOW" probably isn't that important. Quality certainly would play a part, but even then, most shoelace users probably don't have much of a discerning eye when it comes to shoelaces.

So when I say the Disney way works with theme parks and films, its because its been proven to work.

Will it work with a network and retail stores? To me, that's a different debate (not necessarily with a different answer).

But when it comes to parks and films, which is the bulk of what we discuss around here, the answer is as clear as day.

 

[PKS44]

Matt and AV have outlined the issue very well...it is about risk and return...to follow the philosophy that quality will work you have to INVEST in making quality...this is expensive, requires harder work and risky IF it does not work...people are always reluctant to take risks and work harder ...in addition there is the issue of diminishing returns....in the past Disney could work hard and create a magical vacation destination and WOW people and it would really WOW them so they could reap HUGE profits because it was so much beyond the average that people were willing to pay for it...now even if they put in the same effort -with the rest of the world copying them to some extent- museums have tried to Disney-fy themselves, Vegas, etc...their effort can still be above average BUT the difference above average is less, the average has moved up...(Read Stephen Jay Gould's Full House for a more thorough discussion of this phenomenon-in it he explains why there are no more 0.400 hitters in baseball as the quality of players in baseball have actually improved)...with improving averages it becomes harder to WOW people to the level needed to generate the demand/profit to make the effort worthwhile...BUT--this is the kicker---the alternative- if you do not try to exceed the average you do not get even average results...it gets you less than average and you will fail. This is Disney's current problem-I understand the fear and reluctance to embrace risk and hard work when the rewards are less than they used to be..BUT less profit is better than no profit-and by destroying brand identity with garbge-no profit is the direction they are heading with their current approach.

Paul

 

[DisneyKidds]

In the end, for Disney to fully implement Walt's original philosophy, it will need to become stricly a niche company rather than a widespread, diverse media company.

Probably true Scoop. However, this just gives all the more reason to lament the bad decisions by Disney management over the years (ABC, go.com, etc. etc., etc., etc.) Without some of these things would we not have that niche company - only movies and theme parks?

So, Disney today can't follow the Walt philosophy because they are too large, but they are too large because they didn't follow the Walt philosohy.................. Where does it end ? Calgon, take me away.....................

 

[Captain Crook]

Don't forget too, that the lions share of the growth took place during that period of time when Disney either consumed or would have been consumed. Those times aren't with us any longer but one forgets management's (including the boards) preference to keep independent. Had Eisner not followed this track (which is certainly the cause of the current status) we most likely would've seen AOL buy Disney instead of Time-Warner or perhaps Yahoo at their height. Does anyone think we're worse off now than the possibility that could have been during the dot.com craziness?

It's easy to speak of downsizing in theory but the ramifications of not being the big dog is a whole 'nother story...

 

[raidermatt]

Matt, nothing if flawed on this issue besides the fact that you cannot point to one single implemented example of a non-niche company which has successfully adopted Walt's philsophy.

Yes, Scoop it is, and you still haven't even responded to those flaws.

AGAIN, if your logic is sound, companies would have copied the philosophy as long as it was PROVEN to work, i.e., when Disney was still doing it 100%.

But they didn't.

The only stitch of proof you offer that the philosophy doesn't work is that nobody else is doing it on a Disney scale. You maybe right when it comes to a broadcast network and retail chain, and I'll grant that is a possibility. But we are talking parks and film studios here.

Your "proof" is non-existent. Even if you were right, the fact would remain that nobody did it before Disney, along with Disney, or after Disney. So that means it shouldn't have worked for Disney.

But it did.

Disney theme parks are a niche in the industry of resorts and vacation destinations. Focusing only on Disney's position in the narrow theme park industry is a huge mistake. Disney competes with Hawaii and New York just as much (if not more), than it competes with Six Flags. When you consider that, Disney IS operating in a niche of the vacation/resort industry.

A film, TV and Theme park entertainment company today cannot be operated with the same focus on quality - at the expense of quantity - that was present 50 years ago. Market forces today require that a company produce more 'things' of lesser expense per 'thing', and generate a higher return per invested dollar than in the past.

There are only three or four companies who come close to fitting this profile. What is it that has led you to believe that the fact that they do not use the old Disney philosophy means it won't work?

But lets look at the parks, since that is really what most of us care about.

What happened to make you believe that Disney's new philosophy will result in greater returns over the long haul than the old philosophy?

Really, I want to know what happened to make Disney believe that the Six Flags/Universal (of 5 years ago)/Paramount way of running parks was better a better long term decision for Disney?

Its not that nobody else was doing it, as Scoop says. That had always been the case. Is it the stellar performance of the parks of those other companies? Six Flags is finding itself in more trouble with its parks than Disney. Universal liked the non-Disney way so much, they decided to take a more "old-Disney" philosophy.

So, again, with respect to the parks, WHY?

 

[raidermatt]

Had Eisner not followed this track (which is certainly the cause of the current status) we most likely would've seen AOL buy Disney instead of Time-Warner or perhaps Yahoo at their height.

Nobody is arguing that Eisner should have allowed Disney's under-utilized assets to remain under-utilized (at least I'm not).

Somebody was going to utilize them.

But how does that translate into decisions to scale back service, entertainment and hours?

Sure, do those things and tomorrow's profit will be greater. But what about next year's? In 5 years?

Disney has a loyal following like no other company. To make a decision to run them like other less succesful companies is ludicrous. You will eventually lose that advantage that took so long to build.

It is possible to take advantage of that loyalty, and still build on it.

Now, if the Disney philosophy does not fit certain acquisitions, there's a problem. But just because it might not completely work with ABC, how does that mean that it no longer works at Disneyland?

Companies have a choice when it comes to philosophy. Either only make acquisitions that allow you to successfully implement their philosophy, or apply different philosophies to different divisions.

You say that the old-Disney philosophy doesn't work for a multi-media company like Disney. But what about the individual businesses? Should Disney be looking at them individually, or should they simply abandon the old philosophy because they don't believe it works with the new businesses?

 

[Another Voice]

Well, Pixar is a public company.

The simple fact is that giant media companies don’t work. The inherent risks involved in entertainment aren’t compatible with corporate thinking. Make-or-break projects do not produce steady cash flows. Brands are only marketing tools and not a guarantor of quality. There is no set of standards to create measurable “value”. Attempts to minimize risks through tactics such as choosing “pre-sold” concepts like sequels and remaking TV shows, packing the movie with “proven” box office stars and spending more millions on carpet-bombing marketing only guarantees they you have just produced an expensive flop rather than just a flop.

The Big Media business model is just as flawed (and just as stupid) as the “New Economy” Internet model was. You can not dupe investors into continually pour money into bad businesses, you can not dupe the public into buying overpriced dog food through their computers, and you can not dupe the audience to pay money to see talent-free movies.

Eisner’s continued insistence that things will simply get better on their own and the laughable notion that weakness today “proves” there will strong demand tomorrow shows how much his greed has overcome the limited business skills he had in the beginning. He and his associates created these problems to begin with, they either need to admit to their mistakes or step aside and allow others to do it for them.


P.S. - All this talk without a bit of walk...”. Perhaps, Mr. Scoop, when your livelihood depends on making movies we can talk.

P.S.S. - Eisner didn't buy ANYTHING in the early years. All he did was return the existing business and (for the most part) implement plans that we're in the works to begin with. Eisner's only real expansion was GO.com and ABC (and we've seen how well THOSE have turned out). There is absolutely no reason to beleive that Disney would have been a target during the media consolidations since that was drvien by the grab for cable systems. Since Disney had none, AOL or Viacom or the others simply were not interested.

Besides, it was Eisner that tried to sell Disney off to Yahoo! and not the other way around.

 

[scooby-the-doo]

Originally posted by Another Voice
“ As Mr. Scoop points out, all the people making $100 million mass-marketed movies these days are struggling because economics of mass production do not work when applied to entertainment. EVERY attempt to do so has failed miserably.

This is wrong. $100 million mass-marketed (I don't believe there is a $100 million film that is not) are prelivent and do indeed work.

The year is 2002 and I give you:

Scooby-Doo
XXX
Men in Black II
Star Wars
Spider-Man

All are $100 million plus films, and each have grossed over $150 million domestic. Of course, there are failures in this bracket but you said all.

 

[DVC-Landbaron]

Sitting on the sidelines for a change! And loving it!!!

Besides, it was Eisner that tried to sell Disney off to Yahoo! and not the other way around.

I believe it's your turn Scoop!!

 

[hopemax]

Since AV, brought up Internet economies...but first, Scoop, I think the primary reason that no one throws out example of successful businesses run under the Walt philosophy, is that we don't know enough about other companies to know enough to make those judgements. If I devoted as much time to researching other companies as I have Disney, I'm sure I'd find them. And I'm not going to start spending hours researching companies I don't care about just so Scoop can have "precedence." So since I don't have the knowledge, I don't say anything. Doesn't mean they don't exist.

Anyway, internet, Amazon.com, stock market darling, followed by a spectacular fall, is the #1 performer on the NASDAQ this year. Bill Miller, scooped up 18% of the stock because, "it is well on its way toward creating an entirely new and better business model for retailers--the customer service of a Nordstrom with the pricing power of Wal-Mart." That's a Walt-esq business strategy. And Jeff Bezos has shown some Walt-type saavy in talking people into giving him large influxes of cash when logic deems otherwise.

In Time's 1999 Person of the Year, Bezos talked about his heros.

If you ask him today who his heroes were, he names two: Thomas Edison and Walt Disney. The former was a brilliant innovator and a horrid businessman, the latter a good innovator and a great businessman. It wasn't Disney's movies that impressed Bezos but his theme parks. He went to Disney World six times. "The thing that always amazed me was how powerful his vision was," Bezos says. "He knew exactly what he wanted to build and teamed up with a bunch of really smart people and built it. Everyone thought it wouldn't work, and he had to persuade the banks to lend him $400 million. But he did it."

Now, I'm not going to say that Amazon is a success, but I think it is a company that needs to be watched. But by the time Amazon proves or disproves itself, it will be far too late for Disney.

 

[Another Voice]

Actually 'Scooby-Doo', 'XXX', 'Men in Black II' and 'Star Wars' are all considered box office disappointments. When a movie costs close to $100 million to make it has to gross over $250 million to be considered profitable enough to help the studio that put out the movie. By the time everyone takes their cut of the moive and all the other costs are paid off, Big Time Blockbusters are very very expensive gambles.

And the moive with the highest rate of return this year is 'My Big Fat Greek Wedding'. That movie will bring in 35 times what it cost to produce and has already taken in more than 'Scooby', 'X' and 'MiB2' - and it's still going strong. It was released last April and was #4 last weekend.

It's all how you gamble. In order to make "safe" movie, the Media Companies have been forced in placing just a few huge bets at big odds in hopes of getting a big payback (Sony won with 'Spider-man' and has lost on all the others). The studios have traditionally played the other way, placing lots of smaller bets with much better odds.

 

[airlarry!]

Great.

If Pixar suddenly went private...I just wasted a lot of money on some crappy paper that has Pixar and stock certificate all over it.

If I could reel off a dozen names (like Pixar) that all eschew the model of create it, market it, sell it and don't care about quality:

a. I wouldn't be here on this board, I'd be on "Moneyline"

b. I just don't feel that would convince anybody anyway. The fact that another company is successful will not stop Ei$ners Army from saying that the present shape of the parks, Disney Stores, and Media Entertainment isn't Ei$ner's fault.

Seriously. If Pixar isn't enough for you, what company example would? Here's a company, staffed with ex-Disney fanatics, who shout STORY IS KING from the rafters, and have had four HUGE hits in animation. Ask John Lassiter. He'll tell you.

Ask his employees. They'll tell you. You don't need to look for a Walt. You have a John Lassiter amongst you.

Let me edit this post.
What I mean is that the argument that Pixar is JUST a niche company using Walt's philosophy, and can't be applied to the real world doesn't hold it with me.

If Pixar is just a niche, then think of Disney in the same way. Each division of Disney is like a little bigger Pixar. Movies. Theme Parks. Cruise Lines. ABC. Cable channels. Disney Stores. Whatever else I forget. Each of these can and should be run with care and with the goal of 'story' or 'quality' or 'value' for the consumer. To get them to come back...because they trust the brand. The vicious little circle/cycle.

Each of these aren't steel-producers or widget makers. Each of these are entertainment producers. AV's right...The Scooby Doos of the world may make some money here and there, but the real money is made in the long run with quality. If not now, maybe later. Snow White (made in the 30s) makes a fortune for this company every time it is re-issued. Anybody care to bet whether or not Scooby Doo will be re-issued in 2070?

 

[lrodk]

He knew exactly what he wanted to build and teamed up with a bunch of really smart people and built it.

Interesting quote Hopemax. It kind of reminds me of Eisner's tenure, but with a bit of a twist. Here's how I would rephrase it to sum up his current situation:

"He knew exactly what he wanted to build and teamed up with a bunch of really smart people and built it. He then lost his right hand man and proceeded to alienate just about everyone else who helped him execute his plan in the first place."

Now that's gratitude for you.

 

[raidermatt]

Scoop, as Larry and I have pointed out, Disney can only use a single strategy with each division if each division is suited for that strategy.

Other than saying there isn't another multi-media entertainment congolmerate operating with a quality first strategy, you haven't provided a SHRED of evidence that it no longer works in the individual divisions where it has been proven to work.

This notion that the parks, or the studios, or whatever, can't be run with a quality, long-term guest satisfaction strategy is baseless.

There is nothing to back it up. Nil, nada, zero, zilch.

When did Disney's old strategy fail?

Answer: It didn't. All it did was build a following loyal to company not seen anywhere else. And profits rolled in. Yes, they under-utilized assets, but in utilizing them, there was no need to alter strategies.

Ahhh, but somebody with a spreadsheet started to realize that short-term profits could be boosted by cutting costs. So they started making little changes, and have continued making those changes, each with the goal of increasing that quarter's profits.

And it works in the short term. But no regard is given to whether it works in the long term. They extract more profit from guests while on property, without regard to whether that will result in that guest returning less often, or not at all. Not until it smacks them in the face, like with EE.

Somewhere along the line, Disney deviated from its core philosophy, and has convinced you that because they no longer do it, it doesn't work.

Its like having a car, but not driving it, then saying the car doesn't work because its not going anywhere. Of course its not going anywhere, because you stopped driving it.

Likewise Disney's philosophies of a few years back are not producing results, but only because they are sitting un-used in the driveway. They're ready to go, keys in the ignition, engine ready to hum. They just need somebody to turn the key and hit the gas...

 

[PKS44]

Chad-

Just so we can talk about the same companies here: Please name the companies that you feel are run consistently and successfully without attention to quality and customer and employee satisfaction. is there such a company?

Or just list those successful companies which you feel are NOT niche market companies.

Do you contend that only small companies can succeed? Is that your point...because as Matt pointed out, there is no reason a large company cannot run its subsidiaries like small companies. The key with Disney and it's strategy is that if they think that it is a big deal to have a brand identity- yet they have not been careful about what they put out with that brand slapped on it. Identity can change for the better or worse. Made in Japan used to be synonymous with poorly made...but that identity is long gone...Made in the USA used to be synonymous with well made. Which car makers now enjoy a better brand identity, USA or Japan?

I don't know if any of these companies would meet your criteria for non-niche success stories but they all are examples of successes dedicated to happy employees and customers satisfied by attention to quality:

Toyota
Honda
Harley Davidson
Hyatt

 

[DVC-Landbaron]

Scoop: A one-act play for you!

Caveman #1: Ugh! Hey!! I’ve got it!! Ugh! Loan me a chisel and a hammer, I’ve got an idea! Ugh!

Caveman #2: Ugh! Why? Ugh! What idea? Ugh!

Caveman #1: Ugh! I’m going to round off the corners of this stone and make a wheel! Ugh!

Caveman #2: Ugh! Now that’s stupid!! If that idea was any good at all, someone else would have already tried it!!! Ugh!

THE END




OK! Class discussion time.

1- What lesson can be learned from this?

2- What parallels can be drawn from the story?

3- If we were to cast this play with 20th Century people which caveman would Walt play and which caveman would Ei$ner (or Scoop) play?

EXTRA CREDIT: Which caveman was right?

 

[hopemax]

Not enough information,

Is caveman #2 the CEO of a multi-market, multi-segment quantative conglomerate?

 

[DVC-Landbaron]

Originally posted by hopemax
Not enough information,

Is caveman #2 the CEO of a multi-market, multi-segment quantative conglomerate?

Yes! Or a lawyer!

 

[raidermatt]

If I may, Baron, I think we need to extend your story by an act or two, in order to complete the parallel...

Caveman #1 ignores Caveman #2 and creates his wheel, using it, making new and improved wheels, and profiting by letting others use it (for a fee of course).

Some years later, Caveman #1 is felled by inhaling too much Volcano smoke. Eventually Caveman #3 takes over. Caveman #3 finds that he can produce his wheels faster and cheaper by not rounding off the corners and leaving them square, leaving him with more money that month to buy the new "Sabre-toothed-Tiger-skin seat covers" for his son's Corvette.

Alas, some months later, the following conversation is overheard:

Caveman #3: Ugh! Wheel don't work so good anymore. Ugh! People starting to not buy my, ugh, wheels anymore. Ugh!

Caveman #4: Ugh! You know, ugh, you used to round the corners off. Ugh. It cost more, but cavemen bought them. Made more money. Ugh!

Caveman #3: Ugh! That no work anymore, ugh. I know, ugh, because nobody else does it! Ugh!