Notes for Media Management October 23, 2012 Tonight we’ll finish up with a few points regarding leadership by connecting leadership to organizational culture and corporate communication. Then we’ll spend some time on beginning our midterm review. (Yes, there will be a midterm on November 06. ) One quick point regarding the midterm (and why we’re doing two weeks of review rather than just one): as part of your preparation I highly recommend that you write up a mock midterm and write out the answers. Why? Because this turns out to be an effective study method.
Note: I will probably use some of the better test questions on the actual midterm. – As we mentioned briefly, organizational culture tends to emanate from the leadership of an organization or a group within that organization. Probably the best example to start with is one of the most identifiable: Disney. Note how Disney’s organizational culture has, from the very beginning, worked hand-in-glove with its management goals and how this, in turn, directs its corporate strategy. Walt Disney started off by doing work for other firms, but once he launched his own company, he focused on making animated films. Does anyone know the name of the first film he made and the year he made it? ) He built on this interest and expertise. He eventually struck upon a previously unheard-of innovation: to create a feature-length all-animation film. Sleeping Beauty premiered in 1931 to both critical and popular acclaim. Disney built on this with similar films. He created a production system based on specialized skills and projects. Disney put himself at the heads of a team of animators that developed new ways of working. This group, The Nine Old Men, continue to be revered by practitioners in the field.
Disney also brought in family members to work on the business side of the company, especially his brother Roy. Note the importance of control and trust here; Roy and other executives understood that their work centered on supporting and nurturing Walt’s vision. While animated films formed the core of this vision, Disney soon figured out that the films served a family market. By targeting this niche, he could supply other forms of entertainment beyond the films. While a fulltime amusement park seems like a rather pedestrian business in 2012, in 1950, it seemed like a suspect idea.
Disney had a very hard time finding financing for Disneyland. The project languished until the Bank of Italy – later to be renamed The Bank of America – stepped forward with the seed capital. You probably don’t know this, but in 1950 another fulltime amusement had been successful. It’s a place called Coney Island, which is in New York City. Coney Island offers the standard carnival fare: animals, curiosities, food (especially hot dogs), and thrill rides. Disneyland differed in that it presented “themes” born out of various fantasies and stories. Some of these stories connected to Disney films and characters.
This allowed Disneyland to draw audiences based on the familiarity and success of Disney films and characters, while at the same time allowing those who attended the park to have a different kind of relationship to the films and the characters and to bring this back into the Disney experience. At about the same time, Disney observed a new form of family entertainment emerging in the United States: watching television together. As a result, he wanted to get into the TV business. However, he didn’t have the resources or expertise to by a station or to run a network.
So he used his company’s expertise in creating content, curating content (choosing and displaying content in a way that showed it most effectively and forcefully for a given target audience), and from this, branding content, to package a program for a network. This program was The Wonderful World of Disney. Through this process he learned something else: that unlike most films released in the market, that had a very limited shelf life, some Disney content appealed to successive waves of young viewers. Bringing a movie back every five or ten years allowed it to tap into a new audience.
This vastly expanded the value of a given movie release. This, in essence, was the Disney business model until Walt died in 1965. Note how a culture of control and an emphasis on quality created an organization producing highly targeted content that competitors found hard to imitate. Because competitors couldn’t readily imitate the content, Disney faced relatively weak competition. Because of this, the firm became very profitable. The culture centered on a family focus; an idealized version of the American family of the mid-20th century.
Back in those days Disney itself was a small, but well-known, family business. However, since there’s no such thing as a free lunch, let’s look at the downside of this model. The tightly controlled culture based on supporting and following Walt’s vision meant that when that vision disappeared, the firm had to find a new direction and a new way of organizing its work processes. It built on its success in producing family entertainment, but it wanted to get into the potentially more lucrative market of live-action films.
The organizational culture had to adapt to this change by becoming more “corporate” and less of a family. Maintaining high quality is harder in live-action movies than in animated movies. For instance, “the stars” are much harder to manage; their actions are harder to predict and control. Rather than producing a string of hits, Disney produced a string of hits and many misses. While this is expected of larger studios, for a boutique house like Disney, this puts considerable stress on its finances. The financial stress put additional pressure on what could be produced and he quality of output. This caused tensions in leadership. The organizational culture frayed badly during the 1970s. Few Disney successes mark the decade. The firm continued to be recognizable, but did little to revitalize its culture or its market position. After being offered for sale in 1983 to various buyers – and no takers – the board brought in two new executives to revitalize the firm. Michael Eisner and Jeffery Katzenberg rebuilt Disney on its core values, areas of expertise, and the competitive advantages arising from these values and areas of expertise.
That is, they went back to producing high quality animated films for the family market. Keep in mind that Disney’s earlier successes enjoyed great critical acclaim and appealed to parents as well as their children. Katzenberg emphasized this point to create films that appealed to all members of the family. This produced huge revenues from a string of hits: The Little Mermaid, Aladdin, Beauty and The Beast, and The Lion King, among others. Note that after this, Disney repeats another earlier move: it got into TV. However, flush with hundred of millions of dollars, it could finally buy its way into the TV industry.
In 1985 it bought ABC/Capital Cities. It spun off most of the Capital Cities assets, which were concentrated in publishing, and held on to the television assets. Note that Eisner and Katzenberg stayed together through the run of successful animated films, but Katzenberg left soon thereafter. A shift in culture took place, putting more of the power in Eisner’s hands. Eisner ran with this until his ouster. Note that in the Eisner period, Disney continued to become more “corporate. ” The firm did not grow organically; it expanded through mergers and acquisitions.
M&A activity centered on good numbers as much as Disney’s core culture and related competitive advantages. As accounting took precedence over culture, tensions rose, especially among board members. Finally, board members, lead by Roy Disney, Jr. , pushed to oust Eisner. Joe Roth, Eisner’s replacement, has moved back toward Disney’s core values. This is reflected in many ways, not least is the purchase of Marvel Entertainment, a firm with vast troves of content, with proven track record of effectively reaching a specific target niche – young males – and the potential of reaching family audiences.
Note how a superhero team like The Avengers, which remained firmly in the province of nerds and fanboys has become a worldwide phenomenon by appealing more broadly to adults and women. (Exit polls of filmgoers show exceptionally strong impact among females for a superhero movie. ) – Let’s look at some of the cultures represented in your class projects. I will give you about five minutes to discuss this point with your groupmates and then I will call on each group to say something about what the culture is in your firm, how culture developed in your firm, and the various impacts culture has on management goals and strategies. —