The Walt Disney Company LeaderThe Walt Disney Company Leader

Michael EisnerMichael 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 Macro Environment 19841984

Summer Olympics in Los Angeles.

Ronald Reagan administration.

Inflation 4.3%

Movie tickets at $2.50

Micro Environment Micro Environment 19841984

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

Many acquisition by Japanese companies.

The PG-13 rating is introduced.

Disney 1984Disney 1984

Turmoil at Disney.

Plagued by many takeover attempts mainly by Saul Steinberg and Roy Disney.

What is Leadership?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 leadershipStyle 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.

MicromanagementMicromanagement

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 WebCultural Web

Strategic ChangeStrategic 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

ContentContent

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

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

ProcessProcess

“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 ChangeType of Change

Organizational Recap Organizational Recap McKinsey 7SMcKinsey 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 FistRuling 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 RoaredThe 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 Case Study – Euro DisneyDisney

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.

ConclusionConclusion

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 The Walt Disney Company 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.