CULTURE: HOW BOB IGER REMADE THE HOUSE 

THAT WALT DISNEY BUILT

(Part 1 out of 4)

by J. P. Donlon

Even iconic brands need fixing from time to time. But instead of the easy fixes, Bob Iger played the long game by addressing Disney’s cultural issues head-on with a three-pronged strategy, making it a stronger, more profitable company with greater depth in its overall brand. The takeaway for CEOs is that, yes, culture—and persistence—matter

Few people appreciate that when Walt Disney died in 1966, he left a company that was very different from the one he started in 1923. Even Mickey Mouse had changed numerous times over the years. Today, Bob Iger presides over The Walt Disney Company, only the sixth CEO in its history, a very different company from the one Walt knew; but in important ways, it is very much the same. The technology and delivery may be different; but at its core, Disney remains an entertainment company that’s all about memorable characters and storytelling.

When he became CEO in October 2005, Iger faced a time of extended turmoil. The preceding five years had been marked by a hostile takeover attempt, a shareholder revolt, a board in conflict and years when performance fizzled. The once leading animation department hadn’t had a hit in years. The brand had become somewhat tarnished and employees no longer believed in Disney’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.

Once this undertaking was behind him, Iger set about transforming Disney, surprising friend and foe alike, since transformative change was not expected from an insider. Having earned a degree in Television and Radio at Ithaca College, the Long Island native began his career as a weatherman in Ithaca, New York and moved up the ranks of network TV to become chairman at ABC. After Disney bought the network in 1996, he became Eisner’s heir apparent. As he outlines in the following interview at Disney’s Burbank studios, Iger quietly started to implement a different vision.

What Disney lacked, Iger sought to acquire. In 2006, the company bought Pixar Animation Studios in a $7.4 billion deal he personally negotiated with Steve Jobs. In 2009, he negotiated a similar deal for Marvel Entertainment for $4 billion. In 2012, he hit the jackpot by convincing George Lucas to have Disney take over Lucasfilm and the rights to Star Wars. (Star Wars VII is now in production). In each case, Iger’s hands-off policy has allowed the individual units to continue being creative. Certainly, the recent blockbuster Frozen, based on a Hans Christian Andersen tale, which topped $1 billion at the box office worldwide, suggest that Disney is on a tear.

The $45 billion company with 175,000 employees has grown too large to be run from the top down. It now comprises four divisions and five key brands, Disney, ESPN, ABC, Marvel and Pixar. It also consists of cruises and theme parks around the world. The most ambitious is Shanghai Disney, now under construction and due to open in 2015. Observers reckon it will be Iger’s capstone achievement (his current contract expires in June 2016).

The payoff has been dramatic. During Iger’s tenure through the end of the 2013 fiscal year, Walt Disney’s total shareholder return was 202 percent. In other words, if you invested $100 at the beginning of his tenure, your investment would have been worth $302 at the end of 2013. In addition, the company’s share price recently hit an all-time closing high of $79.23 in February. The stock was just $23.81 when Iger became CEO. What’s more, the company’s market cap reached $130 billion for the first time ever.

Other recent milestones from last year include:

• Revenues and profits reached new highs for three years running.
• Film releases generated the best box office results in Disney history.
• Record attendance at company theme parks in California, Florida, Tokyo and Hong Kong.
• Consumer products divisions posted its first $1 billion profit year—without fully benefiting from the Star Wars bonanza following the acquisition of Lucasfilm.
• In addition to Disney’s animation app for iPad, six of the 10 most popular downloads on Amazon Kindle were Disney apps. ESPN’s user traffic on mobile devices exceeded that on desktops.

Always admired, Disney topped last year’s ranking by the Reputation Institute, a private firm that measures consumer’s perceptions. In 2012, it ranked 17. It ranks ninth overall in Fortune’s list of the most admired and second on Barron’s 100 most respected companies.

With the possibility of Iger’s stepping down less than two years off, the contest over who will replace him looms. The departure of Disney Media Networks co-chairman Anne Sweeney, one of the company’s two top television executives—along with ESPN head John Skipper—focuses the spotlight more intensely on two candidates: resorts chairman Thomas Staggs and CFO Jay Rasulo. In 2010, Iger had the two switch jobs, a move that gave Staggs his first operational experience and Rasulo involvement in financial decision-making.

Fuente: Chief Executive

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