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Adam Alfi | June 16, 2021

The story of how Bob Iger kickstarted one of history’s greatest digital transformations at The Walt Disney Company

At ICONIQ Growth we spend a lot of time advising board-level leaders of Global2000 businesses on best-in-class technological, cultural, and organizational tools for digital transformation – as well as learning from their experiences. We are fortunate to count Bob Iger as a great friend of our firm, and his story as shared in his book The Ride of a Lifetime reveals invaluable lessons for CEOs and leaders on people, culture, and innovation.

In 2005, Disney’s newly appointed CEO, Bob Iger, made a decision that sent shock waves through every channel of the global media conglomerate. It also revitalized an 80-year-old company that had been in danger of losing its magic.

Iger had come to Disney a decade earlier via Disney’s messy acquisition of Cap Cities/ABC, rising through the ranks under Michael Eisner’s leadership. During that time Iger and other Disney execs had to cope with painful indignities arising from dysfunctions in the company’s culture, often involving the Strategic Planning Group, a feared corporate entity that, despite its talented and well-meaning team members, came to symbolize stifling bureaucracy and centralized control within the company.

Run by a group of brilliant but overly empowered executives, Strat Planning had increasingly come to dominate nearly all critical business decisions across the company, depriving Disney’s executives of the latitude they needed to lead their own business units. This imbalance of power began following the sudden death of longtime Disney COO Frank Wells in 1994 and the Cap Cities/ABC acquisition in ‘95, causing Eisner to rely heavily on Strat Planning, “comforted by the analytical rigor they represented”[1] in helping to manage the newly expanded media empire.

Iger clearly remembers his first call from “Strat Planning” as the highest-ranking former Cap Cities/ABC exec at the new parent company. It was to attempt to overrule his media division’s investment in a new creative venture. “[Disney was] a completely centralized, process-oriented company, and we [Cap Cities alums] instinctively bristled at the way they operated,” he says. “They had also never acquired a big company before, and they’d given very little thought as to how to do it with sensitivity and care… They acted as if, because they’d bought us, we were expected always to bend to their will.”[2]

Even after Iger had been promoted to number two at Disney in 2000, he had to stew in silence as Strat Planning disempowered Disney’s senior business leaders, sapped them of the pride they took in their work, and slowed decision-making to a crawl with its overly deliberative approach.

Iger was keenly aware of the vulnerable position that Strat Planning imposed on Disney. The company was increasingly under threat by disruptive digital technologies like online video. Next-generation rivals like Pixar were endangering Disney’s traditional business models and brand. But under Strat Planning’s control the company’s decision-making had become paralyzed and paranoid. Disney urgently needed a decentralized corporate structure that gave its departments the autonomy to experiment and take risks.

In 2005, after a bruising struggle to become CEO, Iger’s decisive actions underscored a new approach toward technology and risk-taking. While Disney’s board of directors almost passed over Iger due to concerns he was too much of an insider from company’s challenging past years to be the “change agent”[3] they wanted, Iger’s next moves demonstrated his intimate understanding of what the company truly needed.

Just days after assuming the helm, Iger dismantled Strat Planning and its grip on the company, reconstituting its remains to focus exclusively on analyzing potential acquisitions. This shakeup sent a resounding message to executives that they would henceforth be empowered and accountable to execute Disney’s strategy. A decade of pent-up frustration released in catharsis, leading one of Disney’s senior executives to remark, “If there were church bells on the steeples throughout Disney, they would be ringing.”[4]

By removing bureaucracy, guesswork, and dread from of the day-to-day lives of the people surrounding him, Iger awakened a latent sense of agency, urgency, and courage rarely activated in Fortune500 companies, and activated the organizational nimbleness [5]Disney needed to seize opportunities and stave off dangers in the years ahead.

But disbanding Strategic Planning was easy in comparison to what lay ahead. Iger next had to tackle a formidable list of action items: renew Disney’s commitment to its “North Star,” (i.e., creating & delivering the highest quality branded content), embrace disruptive technologies, attack cultural orthodoxies, galvanize Disney’s board, brilliantly execute one of the boldest series of acquisitions in history, recruit tech-savvy board members, bet the company’s future on successful transition to a streaming business model, and fundamentally overhaul legacy incentives structures as well as organizational siloes.

There are many chapters of Iger’s brilliance in leading one of history’s greatest digital transformations over the past 15+ years that many companies at all stages can learn from, but this story is particularly interesting for a few key lessons it touches on:

 

  • Start by focusing on people and culture: decisive acts of removing bureaucracy, guesswork, and dread from of the day-to-day lives of the people in your organization are a powerful way to kick-start a digital transformation.
  • Look inside for “change agents”: insiders often have a uniquely intimate understanding of what an organization needs to be more successful and how to get it done. It is a mistake to overlook them just because they didn’t have the power to do so under prior administrations. In the words of LBJ biographer Robert Caro, “power reveals.”
  • The key to successful acquisitions: M&A is a powerful tool for changing a company’s future, but insufficient sensitivity toward the people and culture you’re acquiring can destroy the value. By contrast, Iger’s visceral understanding of this lesson was core to the major M&A element of Disney’s digital transformation, starting with the reputation-defining acquisition of Pixar.

 

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For a detailed account of how Iger transformed Disney into a digital success, read his bestselling 2019 book, The Ride of a Lifetime: Lessons L

[3] A vague and meaningless phrase of corporate jargon, in Iger’s estimation

[4] Ride of a Lifetime, p. 126

[5] This concept/definition of organizational nimbleness is borrowed from the great IT strategist Peter High, as defined in his book “Getting to Nimble: How to transform your company into a digital leader”