Monday, July 7, 2014

Extracting Algorithms on Bob Iger's Experience

Disney CEO and Chairman Bob Iger
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.
When Phil Jackson took the reins, and took reign, of the Chicago Bulls, he knew right away that his first tall task was to earn Michael Jordan's trust and respect and forge a relationship with him.  Without the superstar's approbation, there was no way (a) he could convince Jordan on the merits of his basketball approach, called The Triangle, predicated on purposeful movement and diehard teamwork.  There was no way, either (b) for the Bulls to win the championships that Jackson must've seen strong potential for in 1989.

So that's one major lesson learned from Jackson and similarly from Iger:  That is, to ask himself what was the one thing he had to do most critically first, and then to action forthrightly and expediently as if his CEO life depended on it.  Which it probably did.  The lesson to learn - which I call the algorithm to extract - was not per se: Befriend your superstar, or resolve any Board conflict.  Rather, it is to discern what you as CEO need to do most, first, before you can do anything else effectively or successfully.

This is such a common mistake among CEOs and organizations, that I will rephrase my point for emphasis:  Adopting what another CEO or organization did successfully is no guarantee that you or your own organization can pull it off.  You must go deeper into the thinking, the reasoning, the problem-solving and decision-making, which under gird that successful thing.  You may need to study more CEOs and organizations, before you can actually extract the right algorithms.  So if that's needed, then you must do that, or else any lessons learned will be superficial and incomplete at best and erroneous and disastrous at worst.
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.
Even if the mandate for change were so crystal clear and compelling, as it was for incoming JC Penney CEO Ron Johnson in 2011, you must go forward thoughtfully and carefully.  A success at Apple and Target previously, Johnson fell into the terrible pitfall of drawing on his past triumphs.  Scott MacIntosh summarized his story in "There's Only One Steve" - A Story of Innovation Failure.  The algorithm to extract from his and Iger's experience is to determine what balance of traditions to keep and traditions to change.  Iger may have had to remind himself, and his people, about the thing that has sustained itself through decades of Disney evolution, and then apparently to discern that that thing must in fact be kept moving forward above all (italicized above).  Johnson and his band of merry men apparently kept nothing of the traditions, customers and lore of JC Penney, and this was probably one fuel to the disastrous fire he instigated.
There were a lot of things. One of them was to redirect or disband, as the company had known it, its strategic planning arm. I thought the individual businesses needed to own more of their strategy, as opposed to being owned by the corporate entity. It was important for each business to take more responsibility and accountability for its own strategy.
One large conglomerate I consult for gave lip service to one-family, one-team motto.  More than one manager echoed this by saying there was a corporate desire to be more integrated.  This is a complicated two-fold effort, which was fraught with risk.  For one, what a conglomerate had to centralize depended first on its fundamental aim, purpose and challenge.  No organization ought to integrate or centralize simply for its own sake.  There has to be meaning and import for such an effort.  For another, how a conglomerate went about centralizing made a world of difference.  Doing so in an authoritarian, imposing manner on diverse businesses and wide-ranging departments is foolhardy.

Iger knew, and clarified for his lieutenants, that there were corporate frameworks, priorities and values, which everyone across the Disney enterprise had to abide by.  But beyond that he empowered, guided and advised, each business on what it had to do vis-a-vis its particular aims, market and context.  Managers in the head office must not succumb to enforcing a centralization protocol, at the expense of what their counterparts in the business needed to do to be successful.  I'm sure Iger included strategy formulation as part of responsibility and profit-loss results as part of accountability.  That's empowerment manifested in the real world of business, not empowerment abstracted in the concocted feel-good workshops.

JP Donlon does a superb interview with Iger, so be sure to read it in its entirety: How Bob Iger Remade the House That Walt Built.

Thank you for reading, and let me know what you think!

Ron Villejo, PhD

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