The Ride of a Lifetime - Chapter 12 ( IF YOU DON'T INNOVATE, YOU DIE)

CHAPTER 12: IF YOU DON’T INNOVATE, YOU DIE

Bob Iger explicitly emphasises that Disney became committed to start delivering their content in new and innovative ways and they needed to get rid of the middlemen in the process and provide it through their own inhouse technologies. 

The CEO, subsequently, provided a valuable comment when he pointed out that “as a general rule, I don’t like to lay out problems without offering a plan for addressing them. (This is something I exhort my team to do, too—it’s okay to come to me with problems, but also offer possible solutions.)” 

Due to this disruption to their business model and their commitment to innovation, Disney would incur substantial short-term losses.  “(As one example, pulling all of our TV shows and movies—including Pixar and Marvel and Star Wars —from Netflix’s platform and consolidating them all under our own subscription service would mean sacrificing hundreds of millions of dollars in licensing fees.)” Nevertheless, Iger knew that eventually in the long-term it would all be worth it. 

The next section could not be summarised any better than the words of the author: “The decision to disrupt businesses that are fundamentally working but whose future is in question—intentionally taking on short-term losses in the hope of generating long-term growth—requires no small amount of courage. Routines and priorities get disrupted, jobs change, responsibility is reallocated. People can easily become unsettled as their traditional way of doing business begins to erode and a new model emerges. It’s a lot to manage, from a personnel perspective, and the need to be present for your people—which is a vital leadership quality under any circumstances—is heightened even more. It’s easy for leaders to send a signal that their schedules are too full, their time too valuable, to be dealing with individual problems and concerns. But being present for your people—and making sure they know that you’re available to them—is so important for the morale and effectiveness of a company. With a company the size of Disney, this can mean traveling around the world and holding regular town hall–style meetings with our various business units, communicating my thinking and responding to concerns, but it also means responding in a timely way and being thoughtful about any issues brought to me by my direct reports—returning phone calls and replying to emails, making the time to talk through specific problems, being sensitive to the pressures people are feeling. All of this became an even more significant part of the job as we embarked on this new, uncertain path.”

The innovative technology that Disney decided to adopt was: ESPN+ and Disney+.

“When you innovate, everything needs to change, not just the way you make or deliver a product. Many of the practices and structures within the company need to adapt, too, including, in this case, how the board rewards our executives.”

The CEO then asserted that it is wrong that even established companies play it safe and remain complacent, instead of investing capital to bring long-term growth or adapt to the disruptive innovations that are changing industries, societies and the world. As Warren Buffett made clear: “Complacency is the enemy of all businesses.”

The Walt Disney Company also had their sights on further acquisitions. This time they were looking at FOX. Assets included: “the movie studio, including Fox Searchlight Pictures; their stake in Hulu, which would give us a majority stake in that platform; the FX Networks; the regional Fox Sports Networks (which we would later have to divest); a controlling stake in National Geographic; a sprawling and varied set of international operations, particularly in India; and a 39 percent stake in Sky, Europe’s largest and most successful satellite platform.” The financial and strategic analysis of these assets was also predicated on not only current value, but also forecasting the long-term return on investment of these assets. 

After the financial and strategic analysis, 3 things were clear about those assets: 

1. High Quality content.

2. Technology. 

3. Global reach. 

Even better, adopting these assets into the brand new strategy of Disney, would be fundamental to the company’s future growth to steer it to the direction it wanted to go. 

P.S. any comments that are made by the author of this blog are outlined in Italics.