Was this Walts secret to success?

[Bstanley]

Ok, let me take a stab at this, SoCAL.

Ranking #2 on the Forbes list of Media companies indicates that Disney, Inc. has managed it's corporate growth better than anyone other than #1 (Time-Warner) to this point.

It doesn't indicate that the company is financially sound, it doesn't even indicate that the company is particularly well managed, and most critically to me it certainly doesn't indicate whether the company is continuing to produce things that make children (of all ages) light up - like mine did when they first went to WDW or saw the Lion King...

If Disney doesn't aspire to more than basic corporate success then it is just a matter of time before the Magic of Disney becomes the Mediocre of Disney. There has to be a spark at the heart of all that Disney does that makes it into Magic.

The Secret to Walt's Success was his ability to provide that spark.

 

[mitros]

In general, not just refering to any one particular post in this thread, didn't they get rid of the debate board? Sounds like more debate then discuss here. Some folks can sure get vicious.

 

[bicker]

Nice article, manning. I think Walt's respect for the audience and park guests was definitely the key.

Or perhaps his astute understanding of how to use media to enhance his and his company's image.

While he knew that money was necessary in order to accomplish his goals, he wasn't obsessed with the "bottom line" the way the current Disney execs seem to be.

Of course not: He had his brother, Roy, to do that for him, to keep him from running the company into the ground through poor management

He cared more about creativity, innovation, and imagination than he did money; and IMHO, it showed in everything he did.

Including how, when Roy was finally gone, and the leadership was following only Walt's vision, the company almost went bankrupt.

I've got a broze statue of Walt and Mickey on my fireplace mantle. It's fun to wax poetical about a man who we've made larger-than-life. It's not real, though, and I worry about folks losing sight of how much Walt, himself, recognized how Roy, and Roy's understanding of business, was critical to the success of the Disney Company. What's more, it is scary to think what would have been if the business environment was as competitive in the 1950s as it is today -- it seems very likely that Disney would be a small footnote in entertainment history, rather than the world-class company it is today. Walt had Roy, and a lot of luck.

 

[bicker]

I abhor corporate america in general

I sure don't. It feeds my family and secures our future. It's been the foundation of advances, such as cures for diseases and treatments for cancer.

If it wasn't for corporate America, this Internet we converse on would still be a closed network, available only to academics participating in military research. To participate in The DIS is to participate in a product of what, in part, our capitalist society has achieved. Like with all things, consumers benefit from the advantages of, as well as are subject to the foibles of, capitalism.

It sure would be less complex if everything in society was biased in one's own favor, but that's impossible when we play multiple roles in that society: consumer, yes, but also investor, for example. We cannot have all the benefits of an enterprise biased in favor of our consumption, and expect to be able to have any back-end to glean savings for our retirements.

So, abhoring corporate America must imply abhoring all aspects of consumerism, including Walt Disney World, Disney animation, and even using the Internet for entertainment purposes.

 

[bicker]

It doesn't indicate that the company is financially sound, it doesn't even indicate that the company is particularly well managed,

Actually, I believe most folks who are experts in, and care most about, those specific things would say that the Forbes distinction does indicate those specific things. I can see you making idelogical arguments about Disney's cultural supremacy, but to imply that there are other companies that are more financially sound and better managed than Disney, Time Warner and the rest of that list, is nothing less than disingenuous.

and most critically to me it certainly doesn't indicate whether the company is continuing to produce things that make children (of all ages) light up - like mine did when they first went to WDW or saw the Lion King...

Okay, so now we're to your ideological argument. The problem with that argument is that a company is measured by how well it serves its owners' purposes. I see no foundation on which to assert that there are arbitrary sets of ideological criteria for evaluating a company, except, perhaps, with regard to how legal its actions are, and that's much too low of a threshold for discriminating effectively between the best and the rest.

Moreover, besides being an arbitrary criterion, it is utterly subjective on two levels: (1) Each receiver of the products and services has a subjective reaction; and (2) Each evaluator renders a subjective judgement based on their personal belief about the subjective reactions of those receivers. So, we're talking about something that is three degrees away from objectivity. That doesn't make it an invalid evaluation -- it does make it a personal one. It should be respected as such, but in full recognition that the boundaries of effect of a personal evaluation is, well, the person. It isn't reasonable to expect that the personal evaluation carries much weight beyond that. (Please don't misunderstand me: I am not saying that you were trying to assert that your evaluation was more broadly applicable.)

If Disney doesn't aspire to more than basic corporate success then it is just a matter of time before the Magic of Disney becomes the Mediocre of Disney.

I could as readily, and with more foundation, say that the more Disney focuses its energies to address your personal evaluation, the more detached it becomes from satisfying the broader market, and the closer it comes to the brink of ruin. Neither your statement nor mine has any merit. They're just assertions of impending doom, without foundation based on facts.

The fact is that Disney is among the best at understanding what the market wants Disney to be, regardless of any one person's subjective impression of how well it satisfies any arbitrary criterion, and among the the best at satisfying those wants in a manner most compatible with its inviolable responsibility to do what is best for long-term shareholder value.

The secret of Disney's success is tied up with how well it balances the realities of business in a competitive market with the realities of consumer behavior.

 

[DancingBear]

It doesn't indicate that the company is financially sound, it doesn't even indicate that the company is particularly well managed,

Actually, I believe most folks who are experts in, and care most about, those specific things would say that the Forbes distinction does indicate those specific things. I can see you making idelogical arguments about Disney's cultural supremacy, but to imply that there are other companies that are more financially sound and better managed than Disney, Time Warner and the rest of that list, is nothing less than disingenuous.

The cited Forbes list is purely a size measure. Enron was 7th on the Forbes 500 before its collapse.

Here's "America's Best Big Companies", a Forbes list you won't find Disney in, although several other media companies are included.

http://www.forbes.com/2004/12/22/05platinumland.html

 

[Bstanley]

Well Bicker - there are a plethora of lists available on Forbes' website measuring many different aspects of corporate governance and financial success - I think I'll let the people who are truly interested peruse them and decide which one of us is disenguous. Suffice it to say - when looking at ROI, Debt rating, Quality of Earnings, etc you will not find Disney in the top 10 or even the top 25. And frankly Disney's growth over the last 10 years has come from taking the truly gi-normous pile of cash they had generated in the Eighties from their creative business and leveraging* it to acquire what IMHO* is the present-day equivalent of a 1970s Steel Company - something weighty, archaic and soon to be obsolete (Cap Cities/Fox Family/etc).

Moreover, besides being an arbitrary criterion, it is utterly subjective on two levels: (1) Each receiver of the products and services has a subjective reaction; and (2) Each evaluator renders a subjective judgement based on their personal belief about the subjective reactions of those receivers. So, we're talking about something that is three degrees away from objectivity.

Abso-posi-freaking-lutely accurate! We are not discussing Toyota here, we are discussing a company that makes it's money by identifying what I, and millions of other people with way more disposable income than sense, will be sufficiently impressed with to - gratefully, joyously and frequently - hand over great greasy gobs of cash to see or experience.

Disney's business is actually more difficult than most companies I grant you -it cannot measure it's products size, materials, color, or even cost ahead of time and expect to realistically measure their potential success. And that's why Disney has to be more than simply a corporation in order to be, well - Disney.

It isn't that big of a step to morph from Disney into Time-Warner (there are some who think it's already happened) and that's the slippery slope that Disney is on.



*Leveraging = borrowing so much money that your Corporate Bonds get hammered by the rating agencies.

*IMHO = my personal opionion

 

[Peter Pirate]

bicker...I had to go back to see if it was my post "I abhor corporate America" that you were responding to. It was.

It's kind of funny because I generally agree with your posts but you took my statement too literally. Certainly I uderstand what Corporate America has done, but it doesn't mean I have to like the currently pervasive profit now mentality, whether it works or not. You can look at the small picture and be happy you're making your living from "corporate America" and that's fine. What I abhor is the direction it is taking (pop culture, I called it). If you don't care about the trend away from corporate responsibility as long as profits are shown that's your perrogative. I disagree.

As for your depiction of Walt I agree wholeheartedly. The myths surrounding who Walt was and why he did what he did is almost as phenomenal as the results he actually acheived. Just my .02, of course.

 

[bicker]

it doesn't mean I have to like the currently pervasive profit now mentality, whether it works or not

I haven't been discussing what I "like" versus what I don't "like". Rather, I've been discussing how a business should be managed.

You can look at the small picture and be happy you're making your living from "corporate America" and that's fine.

It's not a matter of "small picture" -- indeed it is quite the opposite. Objecting to the "profit now" mentality, while still relying on it for your long-term financial security, is disingenuous. "Everyone should sacrifice their profits, except for the companies that I'm invested in," isn't a defensible position.

If you don't care about the trend away from corporate responsibility

I care very much about corporate responsibility. I have no idea where you got the idea I didn't. I mentioned earlier that directors of a corporation of a fiduciary responsibility to manage companies in the manner most conducive to long-term shareholder value. That's really the core of what I've said in this thread, and so as you can see I'm all about corporate responsibility.

 

[Peter Pirate]

...to manage companies in a manner that is most conducive to long-term shareholder value.

Which means what exactly? You approve of the current quarter by quarter wind sprint? You believe that this type of corporate growth can be sustainable over the long term (by Disney or anyone else)?

Also, how is it being disingenuous to disagree with the profit now mentality? I'm not advocating no profit, I'm saying they should set realistic goals taking into account the needs of workers and mankind in general rather than just profit, profit, profit. Now to be sure I sound like an aging hippie to some, a communist to others but I prefer to think of myself an aging idealist...

 

[bicker]

Folks: I think it would be better to discuss the issue rather than casing things in terms of "if you approve xxx then..." and "if you believe xxx then...." That's unnecessarily confrontational. It's not about me, eh? Thanks!

Peter: I do believe that it is easy for folks like us to sit back and criticize business managers, without having to worry about all the real complexities of business. Regarding "realistic goals" -- Well, realistic goals must be competitive with other investment opportunities, or the capital will go elsewhere. Idealism is not a sin, of course, but it isn't a viable business model either.

Scoop: I haven't mentioned commoditizing of service offerings. It's not really part of what I've been discussing. I don't see your point though about what I've suggested, making the decisions that are most conducive to long-term shareholder value, being a "disservice" to investors. I think almost all investors expect, and have good reason to expect, that the companies they invest in are managed so as to maximize their long-term value.

 

[bicker]

That's an interesting set of assertions. Unfortunately, I don't see any compelling reason to agree with them. I not convinced that any of us has got the reliable inside information necessary to know what Disney's management's intentions have been with respect to their strategies over the past few years, nor has got the information necessary to know better which future strategies will have the best impact on long-term shareholder value. Barring any real strong evidence to the contrary, I'll believe that the professionals actually do know their jobs better than we do. But it's been nice chatting with you about it.

 

[Laurajean1014]

It makes sense - give the people what they want. Laughter through tears are the best emotions.

Unlike directors today, who only want to give you "their point of view."

 

[Bstanley]

Barring any real strong evidence to the contrary, I'll believe that the professionals actually do know their jobs better than we do.

Now that is one of the funniest things I've read in quite some time.

I imagine then that the shareholders of Enron, MCI, Global Crossings, etc are pleased with the way the professionals have managed those companies?

Or, more to the point, that the shareholders of Jones and Laughlin Steel, the Pennsylvania Railroad or Studebaker Automobiles were pleased with how the professionals managed those companies?

Disney has grown far beyond it's beginnings. But lately that growth has crushed the very creative roots that nourish the entire enterprise - even we amateurs can see that - the only question is how much damage has been sustained and is it recoverable.

 

[crusader]

Granted, you may not believe that I have reliable information. But, regardless of what you choose to believe personally, the substance of my last post came from several conversations with Disney management in the parks who are frustrated with this very thing.

I'd expect management to be frustrated within all segments of Disney as they continually fight over the utilization of the cash. Everybody always seems to have a better plan. Parks and Resorts aren't lacking for enough entitlements in capital appropriations this time around in my view, animation is, so I'm not sure what the real complaint is.

There is a fine balance between services and goods in this sector. Disney built a service platform from which goods are the byproduct.

There is no basic tangible need for this type of purchase on a consumer level - it is purely a desire driven enterprise. Fulfilling that type of "wish" is extremely complex on an individual basis, let alone having to apply it to the expectations of the entire family. It's a moving target.

 

[crusader]

The cited Forbes list is purely a size measure. Enron was 7th on the Forbes 500 before its collapse

Actually, the list I cited was by industry segment from the Forbes global 2000. Here's an explanation of the criteria.

http://www.answers.com/main/ntquery...es+Global+2000&gwp=8&curtab=2222_1&sbid=lc01a

My point was to demonstrate the Disney company leads within its' industry. The global 2000 is a great financial resource to determine where a company ranks in that respect. As you can see, Disney beats out several very similarly sized competitors by a sizable margin which is no small feat and deserves due credit.

And I agree with you, this doesn't take into account management parameters such as litigation and corporate governance which are factored into the Forbes best companies list. I'm sure the save disney campaign has indirectly worked to assist the company in maintaining a negative rating in that regard going forward - hence the recent court filings.

 

[raidermatt]

According to that list, TimeWarner leads within the industry. Further, even the criteria cited says the list is merely an interpretation of certain data points and not definitive.

But fine, we can give Disney credit for being 2nd in the industry on that particular list.

That and 35 cents will let them make a phone call to express their gratitude.


If doesn't really matter who pointed out shortcomings that have lead to the company's negative rating in corporate governance. Blaming them is a classic case of focusing on the messenger instead of the message. They can't point out what doesn't exist.

And, here's a shocker for some, I completely agree with Scoop. "They know better than anyone else because of the title on their business card" is not only a cop out, its lead to a lot of problems getting a lot worse than they had to, both in the business world and in history in general.

 

[YoHo]

I'll believe that the professionals actually do know their jobs better than we do. But it's been nice chatting with you about it.

You know, I've been here for 5 years, and in those 5 years, I don't think I've ever seen bicker make any other argument then this.

Oh, he types a lot more, but it always comes down to:

The professionals know more then you do.

Now 5 years ago, this was a ridiculous statement, as has been pointed out in this thread already, The board of directors for the New York Central, the Pennsylvania railroad, Penn Central and heck Conrail to name but 1 industry might disagree. And lets not forget the likes of GM or Ford in the 70s. Now, 5 years later after Enron and Tyco, Adelphia and AOL, the statement moves from the ridiculous to the grossly untenable.

And lets not even bring up the former Disney Employees and Industry insiders who have posted here about the woes of Disney managment.

Oh no, we should blindly trust the leaders of industry.

 

[airlarry!]

Crusader,

I am continually surprised that a person of your obvious intelligence does not seem to understand the fundamental core of Disney's success.

One could make a persuasive argument that Disney's rise over the last twenty years have been part and parcel of one move, namely the revitalization of DFA.

Is it surprising? When Disney was churning out quality animation products every eighteen months to two years, there was a build up of anticipation between releases, a familiarity with the characters, story lines that led to people wanting tangible expressions of their love of the characters within, and reminders that Disney is (or was) the king of family entertainment. DFA drove people to the theaters, yes, but also to the parks, the stores, the television advertisers, and yes to sites like Mr. Werner's home away from home.

(People actually complained way back when about Pocohontas' box office take and its story line...but now look at the negative returns from Cow People From Happy Valley!!)

You seem to say, and rather repeatedly I might add, that Disney's core is not the product but in the people who buy it. That the key lies in the brand...or really the branded buyer...not necessarily in what makes up the brand.

That's just plain backwards.

For Disney to continue to succeed, it needs to focus inward, not outward. Focus on establishing units that are encouraged to create, not necessarily on some arbitrary assembly line time frame. Get back to an 18 month time frame for releasing QUALITY animation products, and Disney will find that this will drive customers back to the parks, to the stores, to the catalogs, to the internet sites, and to Wally World to pick up the latest video.

Focus on maximizing profits from your existing catalog and properties (a statement attributable to our friend Ei$ner, by the way) instead of investing in new stories and creating new "memories", and you have a recipe for disaster.

 

[DancingBear]

Actually, the list I cited was by industry segment from the Forbes global 2000. Here's an explanation of the criteria.

http://www.answers.com/main/ntquery...es+Global+2000&gwp=8&curtab=2222_1&sbid=lc01a

My point was to demonstrate the Disney company leads within its' industry. The global 2000 is a great financial resource to determine where a company ranks in that respect. As you can see, Disney beats out several very similarly sized competitors by a sizable margin which is no small feat and deserves due credit.

The Wikipedia article you provide the link for uses the term "leading," but Forbes doesn't use that term itself. The Forbes 2000 is a ranking by size only. Forbes argues that their measures of size are better than others, but it's still about size:

How to measure the size of a business? Our rivals are enamored of single-dimension measures. Yet revenue alone is a silly way to rank companies. You wind up with a list in which the importance of retailers is not in proportion to their economic heft. Wal-Mart, first in sales, doesn't even make the Forbes Top Ten because it pockets less than 4 cents of every dollar. Citigroup, with less than half Wal-Mart's sales but 67% higher earnings, ranks first.

Would you make market value the sole metric? Microsoft would come in first, at $270 billion. But it has less than $40 billion in sales and a low asset base. It rates a mere 47th on our list.

Another mistake made by the Brand X company list: confining the rankings to the U.S. Is it possible to decree that Sony is a foreign company and News Corp. is domestic? That is so 20th century.

The titans listed here get a composite ranking from four metrics: sales, profits, assets, market value.

http://www.forbes.com/free_forbes/2005/0418/066.html