Strength, Weakness, Opportunity, and Threats: The strength of the company lies in the diversity of its businesses, size of operations, and the loyalty of its brand. Disney has been able to diversify its business to incorporate all different elements of family entertainment; including theme parks, television programs, movies, and consumer products. The mere size of the operations has given strength to the organization. The longevity of the organization has created a brand loyalty that keeps generations returning to Disney. Weaknesses in the company are failing reliance of the business partner relationships and with the declining sales and revenues in theme parks. Much of this decline has been centered on the lack of advertisement. The seasonal fluctuations in park attendance and resort occupancy have caused natural operating difficulties. Disney has experienced an increased weakness of being a diseased culture that has been encouraged by fear. There are several opportunities for the company in the international market through the potential of theme parks and brand awareness. This creates future opportunities to capitalize on the extremely high awareness and marketability of the Disney brand, and the creation of a digital product market. There are many threats to the company from foreign business risks and its vulnerability to outside factors. Disney has a strong competition in many industries due to its diverse businesses. Broadcasting services compete with other television networks, cable television, and satellite television; while the home video market competes with VHS and DVD sales. A soft economy has the potential to weaken Disney profits, since the majority of their business is focused on customer enjoyment verses needs. Recent bad publicity has many stockholders holding their breath to see what happens next, leading to a threat in investor confidence that will need to be addressed.
The Issues Statement
Issues: Iger faces several issues to help bring the Walt Disney Company back to its shining era. The first element deals with creating attractive content, along with executing the vision of expanding Disney internationally and leading the company into a digital future. The company needs to envision what Disney and its component businesses will look like in 2015. Empowerment needs to be given to businesses so that they can have a say in their own strategy. Disney needs to focus on adapting its company content toward the digital future. The second element is to reduce the corporate turmoil by fending off dissident shareholders. This should be addressed by mending fences with Miramax, working on a new contract with Pixar, and ending the feud with Roy Disney and Stanley Gold. The third issue, which is probably the most important, is to understand the leadership roles that Iger must face in changing the company culture. Disney needs a leadership style that requires someone who is modest, patient, has good judgment, grace under fire, and diligence.
Issue Statement: How can Iger improve the company culture while allowing for freedom of creativity to aid in the expansion of brands into international markets and create a break through in new product develop?
Leadership Analysis
Leadership mind and heart: In today’s organizational environment it is difficult for leaders to keep employees grounded, focused, and motivated toward accomplishing positive goals. This has certainly been a major issue for the recent turmoil at the Walt Disney Company. Eisner ruled Disney with an iron fist; details of every business element had to be run through him for a decision to be made. While this old organization paradigm worked in the past to create a strong organization; it is not fending well to take the organization into the 21st century. Organizations of the 21st century are looking for leaders that support change, promote employee empowerment, enhance collaboration, relish diversity, and expect leaders to have a higher purpose, while also being humble about their role. Iger has a large job ahead to prove to the organization that he can and will be all of these things to them. Iger is going to need to provide a direction for the organization to travel; create an alignment of all the top management through a clear communication of the vision; create relationships based on personal influence; and above all, to have a genuine passion for the work and a genuine concern for the people of the organization.
Iger’s capacity for mind and heart will be the ultimate key to expanding and growing the organization to reach the desired vision. The key issues are to give people a sense of meaning and purpose; make employees feel valued and respected; while keeping morale and motivation high in the face of change. Emotional intelligence is a persons ability to perceive, identify, understand, and successfully manage emotions in ones self and in others. Good leaders can harness and direct the power of emotions to improve follower satisfaction, morale, and motivation, as well as enhance the overall organizational effectiveness. There are four fundamental categories to emotional intelligence; self-awareness, self-management, social awareness, and relationship management. Self-awareness is the ability to recognize and understand your own emotions and how they affect you. Self-management is the ability to control your own emotions. Social awareness is the ability to understand others emotions. This requires viewing and interacting from different points of view to effectively interact with divergent people and groups. Relationship management is the ability to connect with others and build relationships. Effective leaders are able to perform high in all four categories. Eisner was so focused on himself that he was unable to be open to different points of view; without this area of accomplishment he would have never been able to build relationships with other people in the organization. Iger has already begun to show his ability to perform and create these relationships by attempting to mend the fences Eisner had torn down. Eisner created an environment that was distrustful and lacked respect for creative ideas. These elements created fear within the organization that prevented employees from doing their best, being willing to take risks, and from challenging the status quo. This bureaucratic style is what tended to anger Pixar, Miramax, Roy Disney, and Stanley Gold. Disney was built on creativity, Iger needs to bring that trust and creativity back to the organization in order for productivity to gain strength. Disney will need the creativity of the employees to help the organization develop a new market for the digital consumers.
Moral leadership: Eisner was not concerned with his top management’s abilities to be leaders to their employees. He wanted employees to follow his decisions and report all information to him in order for him to make a decision. This left the employees with little empowerment. In order for Iger to encourage change he needs to be able to develop leaders out of his management team; ones that will be encouraged to develop their potential rather than control or limit them. Thus Iger will transcend to serve the needs of others, help others grow and develop, and provide opportunity for others to gain materially and emotionally. Leadership involves being able to move followers toward a realization of the organizations vision. The proper direction and high standards should be inherent in the leader; they need to walk the talk. If the leaders’ actions and behaviors are inconsistent, they will lose the trust and respect from their followers; failing to attain the organizational vision. This callous neglect compromises the moral values of the organization and creates an atmosphere of moral cynicism. Morally good acts have three key elements; the objective act itself; the subjective motive of the actor, and the situation in which the act is done. Organizational leaders can only be truly effective if they are motivated by the concern for others. Thus it is important for a leader, especially Iger, to have altruistic values. These values will enable the followers of Iger to clearly perceive that he is trustworthy and has the expertise and capacity to persevere in the effort needed to realize the vision. Eisner broke the trust of not only the employees within the organization; but also the relationship between the organization and its strategic business partners. Once a trust is broken it is difficult for that trust to be rebuilt. Iger has a lot of construction to perform in order to create a cohesive house for the Disney vision to grow.
Motivation and empowerment: Part of a leader’s job is to channel followers’ motivation toward the accomplishment of the organizations vision and goals. Leaders that rely on motivation theories; such as the Spiritual Leadership Theory, help to satisfy their followers needs and simultaneously encourage high work performance. Disney, under Eisner’s influence, has been stuck in the “Carrot-and-Stick” mode of follower motivation. They have prided themselves on using monetary rewards as motivators for work productivity. This reward system creates diminishing intrinsic rewards and destroys the organizations motivation to work as a group. Employees need to feel good about the work they are performing. The most significant way to reach this goal is to create empowerment, shifting the power down from the top and sharing it amongst all the employees. Iger needs to focus on an environment that encourages people to find value, importance, and meaning in their work; creating intrinsic rewards. Employees that feel they are part of something become highly motivated and committed to the success of the organization. These elements lead to spiritual leadership; by incorporating calling and membership as key elements to a followers need for spiritual survival within the organization (Fry, 2003).
Leadership power and influence: Iger understands the importance of communication and building relationships; these elements help bridge the organization towards a unified vision. In order for Iger to accomplish this bridge he must take the role of CEO beyond the political leadership reference of Eisner. Eisner had the mind-set that the organization was a jungle and in order to navigate through it you had to emphasize coalition building and resource allocations. The danger out of this creates power plays for mere self-interest. Board members and top management were used to create coalitions to sway Eisner over to their side of the situation. Iger will need to move beyond this leadership style towards one focused on a symbolic frame. Through the symbolic frame, Iger should see the organization as having spiritual meaning to the employees; he should emphasize the organizational vision, culture, and values; while being a model of inspiration. A clear part of the organization vision was creativity; over the years many employees feel they have been forced to squash their creativity. Iger needs to focus on harnessing the desires and dreams of the employees for the benefit of the entire organization. The only way for this to be accomplished is for Iger to emulate a referent power. Referent power comes from the leaders’ personality characteristics that command followers’ identification, respect, and admiration so they will be inclined to emulate the values of their leader.
Strategic leadership, vision, culture, and values: One issue that has made Eisner weak in terms of a leader has been the inability to provide a vision for the future. Good leaders are constantly looking forward, setting a course for the future of the organization to move in the same direction. Strategic leadership is the ability to anticipate and envision the future, maintain flexibility, think strategically, and work with others to initiate change that will create a competitive advantage for the organization. Eisner has not been willing to step outside of his box to be open to other ideas. An organizational vision gives employees a view of the future and something to believe in, that can realistically be achieved. Iger needs to create a compelling enough vision that it will provide a link to the future while motivating employees, providing meaning to their work, and setting a standard of excellence and integrity within the organization. The vision has the ability to encourage hope and faith within the employees. Hope and faith allow the employee to believe that they can be effective, there is a better future, and they can use their own commitment and actions to achieve that desired future.
Under Eisner’s influence there was little cohesiveness or agreement on the way to accomplish things; this had an overall weakening effect on the organization. Culture within the organization serves to integrate its members so they can relate to one another, while also helping the organization to adapt to the external environment. Through Eisner’s weak culture there was a lack of teamwork, collaboration, and mutual trust. Without these elements it is increasingly difficult for employees to share innovation or creativity. With the lack of defined goals and values for the organization, Disney has been unable to meet the increasing threats from competitors as well as being able to work cohesively with strategic business partners. Disney has been stuck in the realm of a bureaucratic culture. Therefore, Iger needs to help the organization transcend to an adaptability culture. Through the adaptability culture employees have autonomy to make decisions; where leaders encourage and reward creativity, experimentation, and risk-taking. Changing culture within an organization takes time and dedication. Iger will need to embrace a strong vision to help lead Disney toward a healthier organizational culture.
Identification and Evaluation of Alternatives
Keep the status quo, change nothing. There are several choices for Iger when identifying and evaluating alternatives. The first is to make no changes, keep the status quo. Keeping the status quo is one option that Iger can consider. This would mean Disney would remain operating in a bureaucratic culture with a lack of shared vision, communication issues, and unempowered employees. Even though this is an option for Iger, it is not a recommended solution for Disney. The company needs changes, including a shared vision and integration, in order to be competitive and a leader in family entertainment.
Create empowered business divisions, through the development of a learning organization built on spiritual leadership. Another option that Iger needs to evaluate is how to create motivation and creativity within the employees. He needs to find a way to channel the employees’ motivation toward the accomplishment of the organization’s vision and goals. To do this, Iger needs to rely on the Spiritual Leadership Theory, creating a new reward system with intrinsic rewards by creating empowerment for the employees. Moving towards a learning environment means replacing the centralized, standardized, and formalized fear-led bureaucracy. This is accomplished by creating an organization that is flat, team-based, flexible, and diversified. Learning organization require the empowerment of the employees in order for them to be effective. Empowering the employees will intrinsically create a sense of responsibility that will inspire motivation and creativity both within and among them. While creating the intrinsic reward system, Iger must also remember to address the extrinsic rewards, so as to have a continuum and no break in the rewards system. This will help him to not lose employees commitment in the shift from extrinsic to intrinsically based rewards.
Change the bureaucratic culture to one focused on adaptability. Changing the culture of Disney is an important alternative for Iger’s consideration. Disney, under Eisner, maintained a non-cohesive, unempowered, bureaucratic culture. Iger needs to consider shifting the culture. Transcending from a bureaucratic to an adaptability culture can be the key element to the success of both Iger and Disney. In shifting the culture, Iger must take time in order to keep a focus on the goals and vision of the company, and maintaining control of communication and creativity. Iger needs to imitate a symbolic frame by being a model of inspiration. He also needs to emulate referent power to create a sense of empowerment and cohesiveness within the Disney culture. Focusing on these aspects, transcending to the adaptable culture could be a smooth transition, thus keeping motivation and intrinsic rewards of the employees high. Allowing the employees empowerment within the organization will facilitate the changing culture, providing Disney with an integrated, adaptable community.
Expand the Disney brand to new markets to increase visibility. Iger should also evaluate the possibilities of expanding the Disney brand to new markets, increasing visibility. This would mean focusing not only on expansion of operations and growth, but also the need for new products and animation. The benefits involved in expanding include increased profits and market share. It would mean relying on Iger’s leadership power and influence to bring in new business partners and agreements with foreign companies and countries. The problems with expanding are that the organization is already having trouble with increased competitor market share through the company’s lack of creativity and innovation. However, with the company’s vast resources, Iger should be able to use intrinsic rewards to influence employee motivation for creativity and innovation of new products. He also has the financial benefits of being able to quickly expand into new markets ahead of his competitors.
Recommended Alternative
Change the culture, while adapting to the strategic leadership creating empowerment and employee commitment, needed to expand brands and increase visibility. In selecting an alternative, Iger would do best in choosing to change the culture at Disney. By transcending the organization from a bureaucratic to an adaptability culture, Iger will be able to create a learning organization, moving away from a vertical structure to a flat horizontal structure. During this process, he will be able to address the issues of empowering the employees and creating an integrated, collaborative strategy, which will aid in creating motivation and creativity among the employees. There are several elements of empowerment that must be achieved for employees to experience this fulfillment. Empowered teams need to receive information about organizational performance. Employees must receive knowledge and skills to contribute to organizational goals. Employees need to have the power to make substantive decisions. Employees should understand the meaning and impact of their job. Employees are rewarded based upon organizational performance. Empowerment allows Iger to use spiritual leadership abilities to channel the employees’ motivation towards the accomplishments of the organization’s goals and vision, and to create a performance-based reward system.
In changing the culture, Iger will be able to incorporate the benefits of all the alternatives. Otherwise, if he were to opt to focus on just one of the alternatives; keeping the status quo, creating motivation and creativity, or expanding the brand to new markets, he would not be able to address all of the issues of the organization, especially the most important, a unified vision within an adaptable culture. By addressing a change in culture, each of the other alternatives is addressed and will contribute to the main goal of creating a shared vision and adaptable culture.
Implementation and Conclusion
Implementing the alternative will take time and a good strategic plan. First, Iger will need to create a sense of urgency for change with the board of directors and top executives, which should take one to two months. Once they realize the need for a changed culture and shared vision, Iger must focus on commitment to the change. He will need to take 3 to 4 months to guide employees by using teamwork to create the shared commitment, starting with top management and the directors. He will need their support and involvement to be successful in the ongoing changes. The next step for Iger will be to develop a compelling vision and strategy. The employees will rely on Iger to guide them through the changes he envisions for the organization. They will need him to create “a picture of a highly desirable future” to motivate them to change (Thomson 638). This development should take 6 months but will be ongoing throughout the changes.
Once the vision and strategy are developed, they will need to be widely communicated to the employees. Iger and the top executives should set an example for employees by being role models of the new culture. They should constantly communicate the changes they are envisioning for the company in order for the transformation to be successful. This communication should take a year, while remaining ongoing throughout the transformation.
Empowering the employees to act on the vision will be the next key element in staging the cultural change. This will include providing them with the resources, knowledge, and discretion to make changes toward achieving the vision while removing obstacles to change. These elements will enable the employees with empowerment, leading to motivation and creative improvements. It will also enable short-term accomplishments which will create momentum towards changing the vision and facilitating the intrinsic rewards system. This process towards short-term accomplishments should be given 1 to 2 years to achieve, before being able to move on to the next step of tackling bigger issues and greater change, which should occur between years 3 and 4 of the process. This step will enable the organizational changes to remain in place, thus completing the permanent change in Disney’s culture at year 5 to 6 of the process. Therefore, the organization, under Iger’s direction and leadership, should complete the change from a bureaucratic to an adaptability culture in the timeframe of 7 to 8 years at a minimum.
References Cited
Datamonitor. (2004, Oct). The Walt Disney company profile. (Online), 2005, Oct 1. Datamonitor.
Economist. (2005, July 15). Restoring magic. Economist, Vol. 376 Issue 8435, p59-59, 1/2p.
Fry, L.W. (2003). Toward a theory of spiritual leadership. The Leadership Quarterly. 14, 694-727.
Gentile, Gary. (2005, Sept 28). Robert Iger takes reins at Disney. (Online), 2005, Oct 1. Business Week Online.
Grover, Ronald. (2003, Dec 05). The nicest guy in Disney’s jungle. (Online), 2005, Sept 26. Business Week Online.
Grover, Ronald. (2004, Feb 09). 2004’s Other election battle: at Disney. (Online), 2005, Sept 26. Business Week Online.
Grover, Ronald. (2004, Feb 26). Disney’s new thriller: Eisner on ice? (Online), 2005, Sept 26. Business Week Online.
Grover, Ronald. (2005, Jan 19). Disney: top bet for no. 1? No. 2. (Online), 2005, Sept 26. Business Week Online.
Grover, Ronald. (2005, May 12). Don’t spoil Disney’s ride. (Online), 2005, Sept 26. Business Week Online.
Grover, Ronald. (2005, Oct 03). Calming the crowd after Eisner’s thrill ride. (Online), 2005, Oct 1. Business Week Online.
Grover, Ronald & Lowry, Tom. (2005, Mar 14). Disney crowns a familiar head. (Online), 2005, Sept 26. Business Week Online.
Gunther, Marc. (2005, Mar 4). Is Bob Iger ready for his close-up? (Online), 2005, Sept 26. Fortune.
O’Connell, Patricia. (2003, Dec 04). Eisner’s “very repressive regime”. (Online), 2005, Sept 26. Business Week Online.
Serwer, Andy & Hajim, Corey. (2005, July 25). What if Eisner had listened to Ovitz? Fortune. 152(2), 55-56.
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Situation Analysis
Vision (Journey): The Walt Disney Company is to be the preeminent leader in the field of family entertainment.
Purpose (Why): Commitment to producing unparalleled entertainment experiences based on its rich legacy of quality creative content and exceptional storytelling.
Mission (Who/What): The Walt Disney Company is to be one of the world’s leading producers and providers of entertainment and information, which excels in being a diversified, international, family entertainment and media company.
Values:
- Innovation – follow a strong tradition of innovation
- Quality – strive to follow a high standard of excellence; maintain high-quality standards across all product categories
- Community – create positive and inclusive ideas about families; provide entertainment experiences for all generations to share
- Storytelling – every product tells a story; timeless and engaging stories delight and inspire
- Optimism – entertainment is about hope, aspiration and positive resolutions
- Decency – honor and respect the trust people place in us; fun is about laughing at our experiences and ourselves
Goals:
- Attract and sustain a work force that reflects our guests and customers, business partners, shareholders, labor markets and communities in which we do business
- Maintain a workplace that reflects open opportunity, where everyone is advantaged by the potential.
(LH) Business Partners
- Fair dealings
- Synergy
- Free exchange of information
- Negotiating ability
(LH) Communities
- Quality products / services
- Environment protection
- Compliance with laws
- Involvement / support
Stakeholder Analysis:
(HH) Board of Directors / Shareholders
- Return of shareholder value
- Growth in dividend payments
- Consistent dividend payments
- Growth in net asset value
- Involvement in decisions
Bob Iger
(HH) Major Business Segments (Studio Entertainment, Consumer Products, Parks and Resorts, and Media Networks)
- Creativity license
- Free innovation
- Independence
(LH) Employees
- Empowerment
- Creativity
- Dignity & respect
- Professional Development
- Safe work environment
(LH) Customer / Guests
- Quality products and services
- Value prices
- Innovative products
- Knowledgeable service
- Safety / Security
Organizational Effectiveness:
Internal Efficiency
- Suffers from advertising woes
+ Sales increase by 21.8% to $1.92 billion
Resource Acquisition
Employee Motivation
- Employee moral / over internal disputes
- Lack of empowerment
- Lack of free innovation / creativity
Customer / Client Satisfaction
- Under appreciated brands
- Reduction in share price by 15% over five years
+ Shed underperforming assets
+ Rise in stock shares from $15 to $22 in 2005
+ $698 million to $7.8 billion increase in revenues
- New market development
Strengths
- Size of operations
- Brand loyalty
- Diverse businesses
Opportunities
Weaknesses
- Reliance on relationships
- Seasonal fluctuations
- Diseased culture
- Lack of advertisement
Threats
- Vulnerability to outside factors
- Foreign business risks
- Increasing competitive pressures
- Soft economy
- Investor confidence / bad publicity
- International development
- Brand extensions
- Create a digital market of products
S.W.O.T.:
Issue Statement
Timeline:
by
dolphinix (student)
