The Walt Disney Company Leader

Michael Eisner

 Recruited by Walt Disney from Paramount

Pictures. CEO and Chairman from 1984-2005

 Helped Disney out of financial slump in the

80’s.

 Helped revamp Disney’s theme parks.

 Rejuvenated movie studio.

 Helped make Disney into a television

powerhouse, climaxing those efforts with the
takeover of Capital Cities.
 Macro Environment 1984

 Summer Olympics in Los

Angeles.
 Ronald Reagan administration.

 Inflation 4.3%

 Movie tickets at $2.50

 Micro Environment 1984

 Sony Corp. of America vs. Universal City Studios, Inc.

 Many acquisition by Japanese companies.

 The PG-13 rating is introduced.

Disney 1984

 Turmoil at Disney.

 Plagued by many
takeover attempts mainly
by Saul Steinberg and
Roy Disney.
 What is Leadership?

 Definition: special case of interpersonal influence that gets an

individual or group to do what the leader or manager wants
done.
 Leadership and management - two different business concepts.
 Management - implementation of the four functions of
management.
 Leadership - the ability to influence the behavior of others in an
organizational setting.
 Anybody within an organization can possess leadership
abilities. When employees work in team settings they are able
to develop their leadership skills.
 Style of leadership

 Autocratic

 Transactional

 Pseudo - transformational
Autocratic:

Leaders have absolute power on their workers and team.

Most authority and control in decision making.

Retain responsibility rather than utilize complete delegation.

Consultation with other colleagues in minimal and decision making

becomes a solitary process.
Transactional:

People are motivated by reward and punishment.

Social systems work best with a clear chain of command.

When people have agreed to do a job, a part of the deal is that

they cede all authority to their manager.

The prime purpose of a subordinate is to do what their manager

tells them to do.
Transformational:

People will follow a person who inspires them.

A person with vision and passion can achieve great things.

The way to get things done is by injecting enthusiasm and energy.

Pseudo-Transformational:

Transformational style of leadership that uses deceit, manipulation, self-

aggrandizement and power abuse for self-fulfillment.
 Micromanagement

Micromanagement is generally defined as exercising excessive control over a project or

group of people.

 Michael Eisner is to have been “one of the most autocratic, and the best-
paid, chief executives in America, a man who has had little patience for
anyone questioning his leadership of Walt Disney” (Economist, 2004).

 Disney structure: bureaucracy style.

 “consistent micro-management of everyone around him with the resulting

loss of morale throughout the company”

 Cut back on creative talent.

Cultural Web
 Strategic Change

 Directly tied executive compensation to both own

division performance and company performance.
 Casual forum – discuss ways to enhance businesses.
 “Disney Dimensions”: 9-day training course for
executives.
 Set up assistant to promote synergy.
 Set up Disney brand manager
 Content

Objective: to pull Disney out of it’s financial slump

 Disney was revitalized under Michael Eisner:

 Movies: Little Mermaid (grossed over $200 million dollars

worldwide), Who Framed Roger Rabbit? ($ 300 million worldwide),
Beauty and the Beast, Aladdin, Lion King.

 TV Animation Division

 Theme Parks
 Process

“As many as 60-percent of all acquisitions destroy rather than enhance shareholder value. Even
when acquisitions make strategic sense, the first and most common mistake is overpaying. Often, the
acquired company is overpriced relative to its real value. At Disney, we had spent more than a decade
resisting major acquisitions for precisely these reasons. ABC was the first one that made sense to us.
In our view, we paid a fair price for a great company that represented an ideal strategic fit.”-
Michael Eisner (Work in Progress, 2008)

 1995: Disney Acquires ABC/Capital for $19 Billion.

 Picture division: Touchstone Pictures and Hollywood Pictures.

 Eisner and Wells = “Dream Team” – worked extremely well together.

Type of Change
 Organizational Recap McKinsey
7S
 Strategy: competitive advantage
 Structure: bureaucratically
 Systems: Procedures and daily
activities
 Shared values: earn a fast return
 Style: autocratic
 Staff: strong executives
 Skills: reliability of employees
 Ruling the Magic Kingdom With an Iron Fist

 Leadership behavior.

 Corporate culture: hierarchical, centralized and slow.

 Clogged decision – making process.

 Difficult to arrange meetings, use of informal trade tips on

how to cope.

"If there's an area where I think I can add value, I dive in. I
heard from a friend that the cast members at Disneyland
Paris weren't as helpful as those at Walt Disney World; he
recommended better training. Is that meddling or is that
insisting on a high standard of excellence? Yes, at certain
times I paralyze people. I'm never satisfied. It gets people
crazy, I know that. But I leave my best executives alone.
There's no brain drain. We have unbelievably strong
management"
 Did not value other people and ousted anyone who gained too much power.

 Strong executives left Disney fold of their own volition.

 Accused of undermining the company’s creativity.

 Manipulation over a board constantly reshuffled.

 Walt Disney founder nephew Roy, resigned due displeasure with Eisner.

“Perception that the company is rapacious, soulless, and always looking for a quick buck rather
than creating long-term value, which is leading to a loss of public trust”
The Mouse That Roared
 Boiling point – March 2004 – shareholder meeting in Philadelphia.

 “I love this company”

 43% voted against his reelection.

 Eisner vowed to stay on Disney until his contract ended in 2006, not
being forced out.

 Stock values and profits were rebounding.

 Disney diehards believed Eisner sacrificed: Company Soul for synergies

and profit.

 Cut costs – Street sweepers.

 Newsweek shareholder Roxann Grzetich: “The deterioration in the

appearance of the parks is awful”
Case Study – Euro Disney
 Tokyo case – success.

 Chairman Eisner and President Wells – overconfidence – judgment infallible.

 France – strategic approach?

 Management perceptions - “Americana”

 Managerial errors - over-ambitious forecasts and real-estate investments.

 Ethnocentrism – French product? Selling proposition!

 Cross-cultural marketing failure.

 Environmental aspects – “Transatlantic Airfare wars”

 Disney’s management decision is to pursue a market skimming policy to earn a fast return.
 Conclusion

 Eisner was successful in attaining

financially positive goals for the
Walt Disney Company, but he did it
at the expense of losing quality
employees, business relationships,
as well as tarnishing the company’s
image and reputation.
 The Walt Disney
Company
 Revenues 1984: $1.65 billion
1997: $22.0 billion
 Net Income 1984: $98 million
1997: $2.0 billion
 Employees 1984: 29,000 1997:
110,000
 Market Valuation 1984: $2.0
billion 1997: $75.0 billion
Thank you for your time!

Feel free to ask questions.