Do they fit? Those mouse ears? Do they feel all warm and fuzzy, or are they already starting to tighten their grip on your noggin like some medieval vise?
Robert Iger, you took over as CEO of Disney
Then 1994 rolled around. Wells died. Katzenberg left the company after being passed over for the promotion that he had earned. Instead, Eisner turned to his friend Michael Ovitz. It was a disastrous hiring move. It ended with a costly golden parachute and a wave of executive defections that cost Disney dearly. Today, former Disney executives can be found running prolific companies like eBay
The irony, though, lies in the company that you are inheriting, Bob.
Eisner has often been painted as a control freak, but where was the Disney quality coming from in his final years? Disney's best animated films were being rendered by Pixar
The $19 billion acquisition of Capital Cities/ABC appears brilliant these days, with ESPN humming along and ABC back on top, but there were also some iffy buyouts like Infoseek and the $3 billion Fox Family purchase.
That's why Eisner narrowly escaped being voted off the company's board last year. He was still demoted to pacify Disney shareholders. After all, the majority of the votes that were physically cast were calling for his outright ouster. The highest of highs had cascaded into the lowest of lows. He had evolved into CEO non grata.
So let's think about this for a spell. Eisner had the benefit of pulling off a spectacular corporate turnaround in his first dozen years, and Wall Street's patience still wore thin. You shouldn't expect a kinder crowd. You have to start strong and stay there.
It won't be easy. In fact, your task is the equivalent of sorting out a Rubik's Cube. In the dark. Underwater. Disney watchers are a pretty demanding lot. One camp sees Disney as the benchmark of family entertainment and views any straying as heretical. Another camp feels that today's audiences have waning attention spans and require a shock to the moral system to keep them entertained. One camp sees Disney's theme parks as the upper echelon of theme park excellence and demands endearing, innovative attractions at no cost. Another camp sees the merit in cost-cutting measures to prop up margins throughout the company.
The kicker? It's going to floor you, Bob. You need to please all of the camps, all of the time. Despite a set of expectations that seem mutually exclusive, you have to satisfy them all. It's your second day in office and that burnt smell that's flaring up your nostrils is the stench of Iger effigy dolls burning in your Burbank parking lot.
That leaves you with three options:
- Resign. Now.
- Shine brilliantly early and quit while you're still on top.
- Be perfect in perpetuity.
It doesn't seem fair? No one said it would be. However, early indications are that you're off to a good start by delegating authority. Willing to share the load isn't just a great indicator that your ego is in check. It's also a great way to make sure that your best talent sticks around, knowing that the public accolades will be there at the end of a successful day.
Keep it going, now. Repairing some of the relationships that Eisner has frayed has to be a top priority, but you must be realistic. The Weinsteins aren't coming back. Pixar, with its coffers brimming and pedigree proven, is never going to sign another deal that will give a studio a piece of the action. However, the illusion of continuity is important, if it furthers Disney's association with golden brands.
There is nothing wrong with continuing to work with Pixar come 2007, even if it's only for a thin cut as a distributor. There is also no harm in swigging pride out of a shot glass and bending to some of the Weinstein demands, even if that means bidding handsomely on one of their future projects.
It wouldn't be too bad to jot down the name of every disgruntled former executive that is doing great things elsewhere and forging new alliances. Expand on Disney's relationship with eBay in a very public way. Talk to Gap about a clothing line that would work at its concepts geared toward younger shoppers. Offer up an exclusive programming channel to Comcast
Ultimately, you need to recognize that Eisner's ascent was guided by a rebirth in the company's animation studio and at its theme parks. True, it was all Disney had at the time. Disney has evolved into a more diverse company over the years, thanks to its success with everything from broadcasting to cruise ships, but your path to winning over the skeptics starts with mastering the original basics.
Even if easing up on the purse strings seems blasphemous, spend the money to build out Animal Kingdom in Florida and California Adventure in Anaheim. Go for the jugular, if only to feel your hands vibrate with every "wow" evoked.
Make that same commitment to theatrical animation. The same animation and imagineering divisions that have been decimated over the past few years need to be rebuilt, stronger than before.
You can do it. Take the cash flow improvement in broadcasting and plough it back into animation and imagineering. Those are the two areas that, if successful, will trickle down to fuel the entire company further -- and higher.
Make it happen and the next time you smell something burning it will be those Burbank campfires, with historians telling anyone within earshot of a master magician by the name of Robert Iger --who took on the impossible and hogtied it in five seconds flat.
He was perfect. In perpetuity.
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Longtime Fool contributor Rick Munarriz is a huge fan of Disney and is willing to give Iger the benefit of the doubt. He owns shares of Disney and Pixar. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.