SNIP>Let's hope Iger proves us all wrong and does Walt's legacy justice.
Analysis: Extreme Makeover—Mouse House Edition
March 29, 2005
By C. W. Oberleitner
Two weeks ago, the Walt Disney Company board of directors tapped President Bob Iger to replace Michael Eisner as CEO. Since then, things have been happening quickly at the company's Burbank headquarters. Iger has said he'd like to start talking with Pixar again, and Eisner said that, for all intents and purposes, Iger's running the show. Late Friday, the Disney Company announced what amounts to a virtual dismantling of one of its most powerful, and many say most disdained, departments: Strategic Planning.
What does this mean for the company's millions of animation, DVD, theme park, and collectibles fans?
BURBANK CA—On March 25, the Walt Disney Company released a statement to the media announcing a plan to restructure the company's Corporate Strategic Planning (SP) Division. Many of the division's activities will be incorporated into Disney's four business units: Studio Entertainment, Parks and Resorts, Consumer Products, and Media Networks. A smaller corporate group will continue to develop the corporate five-year plan and focus on acquisition opportunities.
Peter E. Murphy was removed as senior executive vice president and chief strategic officer. He will now serve as a senior adviser to newly appointed chief executive officer Robert (Bob) Iger. Murphy, according to the Disney press release, will advise the company on long-term strategic and technological trends affecting Disney and identify major growth opportunities.
CCGRGR00001356Analysts do not expect Murphy to remain with the company much longer. Last week's announcement was also seen as being in keeping with earlier statements by both current Disney CEO Michael Eisner and his successor Bob Iger.
Previously, Eisner had announced that as far as he was concerned Iger was now in charge of Disney's day-to-day operation. For his part, Iger, who does not formally become CEO until October 1, said during an analyst's conference call that he plans to rely on individual accountability among division heads, similar to the management style he employed as president of Capital Cities/ABC prior to its acquisition by Disney.
Easter Blahs
The following day, a series of headlines appeared at media outlets around the Internet and in various newspapers.
[Links to these and other stories quoted in this column will be posted at the end of the article.—Editor]
The Disney Company announcement, however, was barely a blip on the radar at the dozens of Disney fan discussion boards that populate the Internet. Perhaps it was because Disney didn't make its announcement until late Friday afternoon after the markets had closed for the three day Easter holiday weekend.
By contrast, the preceding week's Disney chat board news that author, tour guide, and webmaster Jim Hill had been asked to stop giving tours of Disneyland and leave the park was still burning up the boards. At press time, three of the most popular Disney discussion boards—LaughingPlace, MousePlanet, and MiceChat—reported 666 posts about Hill's Disneyland incident and fewer than 30 comments about the Disney Company restructuring.
It would be a fair question to ask why fans of Disney products and services would or should bother themselves about the actions of Disney Company executives. A closer look at some of the topics open for discussion on these sites indicate that Disney's fans, at least tangentially, are very much concerned about what goes on in the executive wing of the Team Disney Burbank building.
There are thousands of posts by concerned Disney customers, park guests, and individual shareholders about everything from the quality of Disney direct-to-video "cheapquels," the perceived demise of Walt Disney Feature Animation, the less than Disney-like showing and performance of the company's latest theme parks, Disney's Animal Kingdom in Florida, Disney's California Adventure in Anaheim, and Disney Studios Paris. Even the as yet to open Hong Kong Disneyland has come under brutal assault by Disney fans for the park's presumed lack of attractions and all too heavy reliance on shopping and dinning to provide the guest experience.
Despite the fact that sales of Disney videos remain brisk and attendance at the company's theme parks and resorts is climbing, these complaints indicate that Disney managers still have a way to go in convincing thousands of the company's loyal fans and customers that the magic is back at Disney. And restructuring the company to de-emphasize the role of SP (Strategic Planning) may just be the first step in that direction.
Codependent No More
Disney's SP division was originally established along standard business administration guidelines to facilitate decision making within the company. Disney SP was almost doomed from the start. The division became operational at almost the same time Michael Eisner began expanding his control over and melding of his identity with that of the company.
It wasn't long before Disney SP morphed from being a small little department with a few employees into a major division of the company with a reputation altogether dissimilar from the imaginative and creative one most often associated with the name Disney.
While still head of Walt Disney Pictures, Jeffery Katzenberg used to refer to the people who ran Disney's Strategic Planning division as the "strategic Gestapo" because of their unique ability, as he saw it, "to strangle creative initiatives in their cradles."
On his SaveDisney.com website, dissident, former Disney Company director Roy E. Disney credits strategic planning with the failure of Disney's California Adventure to attract enough paying guests to stand on its own saying,
Strat Planning, in effect, "designed" Disney's California Adventure, by (1) setting a profit goal, (2) calculating how many people would attend, at what admission price, level of food consumption, and merchandise purchased, and then (3) capping the expenditure for the "show" at a figure which was almost guaranteed to produce a sub-standard park experience. The "real world" falls entirely outside of all these calculations, questions like "will I like this place?" or "Would I go there repeatedly?' simply are immaterial.
The current head of Walt Disney Feature Animation, and the man most responsible for shrinking that department to a fraction of its former size, David Stainton, rose through the ranks to his present position not from the animation departments ranks as an artist, animator, or director but from within the strategic planning division.
According to DisneyWar author James B. Stewart, Disney SP also had a hand in supporting Michael Eisner's decision to build the Go.com Internet portal on the cheap from within the company, an initiative that ultimately cost the company $1 billion.
In his book, Stewart also contends it was the head of SP, Peter Murphy, who squashed an effort to save Disney nearly $400 million in taxes because it would mean divulging that company executives, including Murphy, over valued and over paid for the FOX Family channel (now ABC Family channel) by roughly $1.8 billion.
His participation in ABC Family's rocky history notwithstanding, Murphy, who holds an MBA from the Wharton Graduate School of Business, has an impressive string of achievements from his 17 years at the Mouse House. He led the acquisition of Capital Cities/ABC, Inc. and was appointed that division's CFO before taking up his current position. In addition, he played an instrumental role in several other Disney acquisitions, including Miramax Film Corporation, Disney's stakes in E! Entertainment Television and US Weekly Magazine, Baby Einstein Corporation, and the Muppets franchise.
It was, however, actions like the one taken to stop the initiative to recoup some of the losses on FOX Family channel deal that earned Murphy a reputation among Mouse managers as Eisner's own personal version of comedian David Spade's Just Say No guy. And under his leadership, SP continued to be seen as the antileadership force within the company.
Roy Disney has said presentations of new ideas at the company were often met with comments like, "we don't want to be the first into any new business... we'd rather be second or third, after the concept is proven."
All of which makes last week's announcement by Disney, that it is effectively dismantling the strategic planning division and transferring its functions to the company's various business units, music to the ears of dozens of Mouse House managers.
Some analysts, however, remain skeptical. "But if anything," said one film industry financial analyst, "Disney business unit leaders have learned _not_ to create new, differentiated and compelling entertainment experiences. Whether you succeed or fail, you are generally shown the door. Politics dictate that you do not stick out your neck at this company."
As for The Mouse's legions of fans, most appear to be adopting a “wait and see” attitude before taking to their keyboards. Of those few thoughts posted regarding the restructuring announcement, here's what several of the Disney faithful had to say:
This is a seriously good sign. I must admit, I'm encouraged. Let's hope Iger proves us all wrong and does Walt's legacy justice.
Dare we dream that there's a light at the end of this nightmarishly long tunnel? —SilentBob66 from MiceChat.com
Definitely intrigued to see this happen. The CEO has had far too much influence over everything. The chance for individual departments to churn out their own products is a wonderful opportunity.—mrfantasmic from MiceChat.com
From what I've read online and elsewhere, we can thank this unit for most of the cutbacks in new attractions and shows in the parks… If this is true, I'm all for its demise in favor of more distributed management throughout the Disney business units. Give 'em a budget and let 'em handle their own biz.—d.young from LaughingPlace.com
Too little, too late for many. Disney lost a lot of great talent that moved on to other companies and have since proved their talents elsewhere, because that Department never even let their ideas or projects get to 1st base.—Opus1guy from MousePlanet.com
OK, I now continue to have higher hopes about Iger. We seem to be moving in a positive direction here.—Mark Goldhaber from MousePlanet.com
As for Peter Murphy, he had this to say,
I believe in the job I did and expect the company will continue to benefit from it.
Referenced Sites
Disney Intends to Overhaul Planning Unit—The New York Times (registration required)
Disney Largely Disbands Strategic Planning Unit—Reuters
Disney 'Enforcer' Stripped of Power—The Los Angeles Times (registration required)
Disney's Iger Acts Quickly to Spread Power—The Associated Press
Iger Makes a Strategic Decision—Variety (subscription required)
Iger Makes First Big Move at Disney—CNN
MiceChat.com
MousePad at MousePlanet.com
LaughingPlace.com Discussion Boards
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