Disney Studios and the Online Streaming Wars
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Disney was at its best when it was not just Eisner but rather the triumvirate of Eisner, Wells and Katzenberg. The three complemented one another well, but individually and on their own they could not recreate the same magic. Thus, strategy formulation and implementation has to start with the question of who is calling the shots and making the decisions at Disney? Who is bringing the vision? What is the vision? This has to be clearly defined and it has to be directional. Once the direction is defined, the parenting strategy has to be defined: this is the “manner in which management coordinates activities, transfers resources, and cultivates capabilities among product lines and business units” (Wheelan, Hunger, Hoffman & Bamford, 2010, p. 5). The strategy has to focus on what the company is doing with its human capital. Intangible assets are human capital—i.e., knowledge, know how, motivation, and ability to deliver products and services at a high quality level.

Intangible assets are incomparably valuable to an organization for they cannot be replaced easily but require time, training, investment, searching for the right talent, developing talent, and attracting talent—none of which can be accomplished with the flick of a switch. Thus, intangible assets are often more valuable than tangible assets if the company’s leaders are worth their salt. An organization that fails to adequately value its intangible assets is an organization that is asking for trouble down the road. This is the risk that Disney is currently running by not restoring the triumvirate at least in spirit that allowed Disney to flourish in the late 1980s and early 1990s.

Intangible assets relate to training and development in the sense that training and development are required for human capital to reach its fullest potential while at the same time, human capital is required in order for training and development to be most effective. Therefore, to some extent the issue is like the question of the chicken and the egg—which came first? Does an organization first need substantial human, intellectual and social capital (i.e., intangible assets) before it can have the right kind of training and development team? On the one hand, yes; on the other hand, no—because the training and development is what allows for the intangible assets to reach their fullest potential. What matters is having great leaders who can project the vision and ideals needed for the organization to achieve its objectives.

Human capital influences the changing role of training from skill and knowledge acquisition to creating and sharing knowledge by enabling workers to instruct one another and benefit from the knowledge that each person brings in a diverse workplace environment. Instead of relying on training room courses, workers can interact with mentors in the workplace who bring their experience and insight to the workplace environment and thus serve as encyclopedias of knowledge for younger workers and who can offer social and emotional support along the way as well. This helps to boost other workers’ confidence and get them going in the right direction towards becoming self-actualized and performing at a high quality, motivated level. The more that an organization can invest in human capital and enable workers to interact in ways where experienced and inexperienced workers come together, the less reliant the organization has to be on skills and knowledge training in a formal setting. In order for Disney to have a successful strategy and a successful implementation of that strategy it first needs to invest in the right human capital, which means replacing Wells and Katzenberg with two heads of similar traits.

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Expanding into international markets requires understanding what those markets are about. It requires cultural understanding of the people there and what they want. In France, for instance, the people wanted wine at their Disney Park and the firm compromised to satisfy. That is the kind of approach that is needed, but there is also the fact that not every Disney product is going to appeal to every culture. This was shown by Mattel when it tried to sell Barbie in China—it was a cultural mismatch. If Disney wants to expand into international markets it has to be in a way that makes sense for the culture and for the company.

The expansion should be an organic one—i.e., one that conforms with the company’s activities. Thus, it would not make sense for Disney to expand in an area outside of its activities. Yet, with the dissolution of the triumvirate, Disney has expanded in a way that was inorganic with the purchase of ABC and that has led to challenges and culture conflicts throughout the company.

Disney should manage a strategy for expansion by looking at its own value chain. Value chain analysis is a systematic way of looking at the company’s functional activities and seeing how well they lead to the creation of customer value. For years, Disney succeeded at doing just that. It revitalized its film industry by developing great scripts into films people wanted to see and creating customer value in terms of entertainment. However, the company moved to expand too hard and too fast in a direction that was better taken in moderation. At the international level the company needs to look to see how it can create customer value for consumers around the world. Since each culture is going to be different, the company cannot make generalizations in this regard. At the same time it cannot make big investments in expansion projects unless it is certain that the investment will see a suitable return. Eisner is looking for a 20% ROI for investors, so the investment into expansion in different cultures should be consistent with measures that will allow it to achieve that ROI. The company thus needs to conduct internal analysis to see how well its resources are being inbounded, how well operations are performing in processing resources into goods or services, how well those processes can be accomplished internationally, how effective distribution...…a new normal has been put into place and people are scared of getting germs. Disney needs to leverage its library of content completely and give audiences as much access to its vaults as possible. Disney will be able to lock up subscriptions for years to come based just on its existing catalogue of content already available. Whereas Netflix has to keep producing original content to stay relevant, Disney can rely upon its library of content.

However, Disney will also need to return to form with great films and shows that people will want to watch at home. This is where leadership is needed at Disney to provide the vision and sense of what people want. There has already been terrible backlash at the way Disney handled the rollout of the new Star Wars films after acquiring the brand. Disney needs to do a better job of monitoring performance in this regard and one way to measure its performance is to assess the fallout on social media, where fans are voicing their opinions of Disney’s take on Star Wars in no uncertain terms. Disney has attempted to rectify the situation by bringing a well-liked Marvel director on board to helm its Disney original series The Mandalorian. Fans have responded favorably to this move, and it shows that Disney is paying attention to the performance of Marvel’s track record. Yet, there is also the problem of how Disney is promoting a secular politically correct “agenda” in the new Marvel films and fans are already stating that they will not be following the next way of Marvel films produced under the Disney banner because of the perception that Disney is not going to stay true to the formula and keep the politically correct dogmas out of the scripts.

Disney should be reassessing its approach to producing new content and should stick with formulas that work. The Mandalorian has worked so far because Disney allowed the Marvel creative team to helm the project, just as it let the Pixar team do with its films. Disney’s executives should recognize the talent and vision that others bring and not attempt to control their environment. Netflix is very hands off in this way and it should be the same with Disney.

The more latitude Disney gives to its creative teams who have a proven track record, the better it will be for Disney. Fans pay to see the products of these beloved creative teams. They do not pay for the kind of social indoctrination that Disney executives think the company should be promoting through its films. Going that way is a recipe for disaster and the company will see it if it just monitors the reaction from fans on social media. That is where customer satisfaction is best read and understood. Output controls, behavior controls and input controls all need to be adjusted in reaction to the customer feedback posted on social media. This is the area the Disney executive team needs to focus on going forward.…