But the key thing is...if you want a company to change, stop consuming its product or service. Do that, and they will be forced to change.
To a large degree, people have stopped consuming WDW’s product. TDO has been dealing with underperforming financials for several years. Attendance is down 2 out of the last 3 years, room occupancy is down to 78%. These are ominous trends. It’s probably the major reason Burbank is unhappy with TDO; WDW is not meeting expectations.
When faced with such challenges, companies with innovation-based management try to solve the problem with innovative solutions. Companies with finance-based management try to solve the problem with financial solutions. It’s a case of “When all you have is a hammer, everything looks like a nail.”
Walt Disney was an innovator. His solutions involved creating something new, something consumers wanted, “game changers”. New animation and film technics, Mickey Mouse, Snow White and the Seven Dwarfs, Mary Poppins, and Disneyland are examples of Walt’s skills as an innovator. Walt used money as a tool to build assets. Consider Walt’s words:
I've always been bored with just making money. I've wanted to do things, I wanted to build things. Get something going. People look at me in different ways. Some of them say, 'The guy has no regard for money.' That is not true. I have had regard for money. But I'm not like some people who worship money as something you've got to have piled up in a big pile somewhere. I've only thought of money in one way, and that is to do something with it, you see? I don't think there is a thing that I own that I will ever get the benefit of, except through doing things with it.
Walt’s and Roy’s immediate successors inherited Walt’s philosophy, even if they didn’t have Walt’s talent. Later, during the Eisner/Wells years, both men new little about theme parks and generally let Walt’s minions continue to run the parks as they had learned from Walt and Roy. From a theme park perspective, Eisner’s greatest contribution in his first decade as CEO was to see WDW as a huge financial opportunity through increased prices and physical expansion. Insiders suggest Eisner wanted to be thought of as the next Walt Disney, even if he had personality flaws that ultimately lead to his (and the theme parks’) downfall. (Until recently, DLR faced many of the same issues WDW faces today, largely because of Eisner’s obsession with cutting costs that adversely impacted quality.) Love him or hate him, Eisner grew WDW and DLR.
Iger has no similar aspirations. He seems focused on growing Disney through acquisition, showing a more finance-based background. He didn’t create the Pixar, Marvel, or Lucas Films properties, he bought them. From a fan’s perspective, there was no innovation, no new product, only a change in the name of who ultimately receives the profits.
Perhaps Eisner’s greatest ‘sin’ was to replace Walt’s innovation-based minions with more finance-based minions. The problem is Disney's core business is not finance-based; it’s innovation-based. Disney's core segments include film, TV, and theme parks; industries where creativity and imagination matter more than numerical analysis. It doesn’t matter how much or little is spent to produce a movie. If it has mass appeal it’s going to be successful no matter what the budget.
In WDW’s case, TDO uses assets as tools to build money. TDO tries to leverage the existing WDW property to generate revenue. They look to squeeze pennies out of existing products rather than produce new products. They don’t focus on creating; they focus on money. It’s the complete opposite of Walt Disney’s approach.
TDO is finance-based and so their solutions are finance-based, products of the modern MBA. They tried the more traditional approach through attractions such as Soarin’, Expedition Everest, and Toy Story Mania. Although popular, all three did not meet expectations. EE helped turn DAK into WDW’s third most popular park but mostly because DHS was comparatively weak. Despite its addition, most people still treat DAK like a half-day park. Soarin’ and TSM, although well-received, had no appreciable effect on attendance.
Rather than trying to improve their product further, something I’m not sure TDO knows how to do, they’ve instead focused on finance-based solutions. That’s why WDW’s most recent “innovations” have been “free dining”, room discounts, DDP, more DVC, more restaurants, more retail, and higher ticket prices. These are finance-based solutions used to improve WDW’s numbers. Don’t buy into the hype you are going to hear emanating from Disney. NextGen is another finance-based solution to WDW’s continued underperformance.
There are those in Burbank who want TDO to adopt a more traditional innovation-based approach to WDW’s problems but, if what we hear is true, TDO is resistant. For consumers, it means TDO will continue to focus primarily on methods to squeeze more money out of its existing customer base rather than provide new experiences to expand its customer base. There’s a reason so many adults complain that WDW has been turned into a kiddie park; because it has. It was not always intended to be this way. Again, consider Walt Disney’s words:
The idea of Disneyland is a simple one. It will be a place for people to find happiness and knowledge.
It will be a place for parents and children to share pleasant times in one another's company: a place for teachers and pupils to discover greater ways of understanding and education. Here the older generation can recapture the nostalgia of days gone by, and the younger generation can savior the challenge of the future. Here will be the wonders of Nature and Man for all to see and understand.
And since I’ve quoted Walt so much, I’ll leave you with my favorite Walt quote:
The park means a lot to me. It's something that will never be finished, something I can keep developing, keep 'plussing' and adding to. It's alive. It will be a live, breathing thing that will need changes. When you wrap up a picture and turn it over to Technicolor, you're through. Snow White is a dead issue with me. I just finished up a live-action picture, wrapped it up a few weeks ago. It's gone. I can't touch it. There are things in it I don't like, but I can't do anything about it. I want something live, something that would grow. The park is that. Not only can I add things, but even the trees will keep growing. The thing will get more beautiful year after year. And it will get better as I find out what the public likes. I can't do that with a picture; it's finished and unchangeable before I find out whether the public likes it or not.
If only TDO thought like Walt.
Merry Christmas and God bless.
