Spirited News & Observations II -- NGE/Baxter

[WDW1974]

I was talking BOS and Disney back in 2011!
http://miceage.micechat.com/kevinyee/ky082311a.htm

My position then was that Disney wasn't being blue ENOUGH and had stayed 'red'... trying to compete toe to toe with Uni and 'reacting' rather than leading.

I think in the end Spirit and I are saying the same thing, though oddly we are using the same metaphor in opposite directions to say that same thing.

Interesting, Kevin. I do recall that column now.

For me, there is no shading here. It could not be clearer. Blue Ocean Strategy is an academic rewrite of overtly simple business practices that is not novel nor legitimate. As you read about it, note how many of its proponents -- its supporters -- use words like trick or magic and phrases like smoke and mirrors to describe BOS in practice. It is a fraud, and it is scary-close to being a cult.

(Depending on how much research you want to do, the more you read of it, the clearer this troubling aspect becomes. As do the similarities to virtually every aspect of Disney's NEXT GEN experience.)

Not sure why, but I really enjoyed the following comment on an HBR article by the professors behind/authors of Blue Ocean Strategy. Poster 'Emelie H.' wrote:

"A person does not come to 'know' BOS, rather, a person manifests as a BOS incarnate! BOS is a movement not a static place where one arrives at then absorbs through studying it and learning it. It is the space of non-creation which is exactly why not many can see it and discover it's force field. BOS is nothing but a label to describe a non-space within a space. Post-Industrial Business is to Newton's Physics the way BOS is to Quantum Physics."

While I agree with much of what you wrote in that column from 2011, it is also noteworthy that Kevin writes from/lives in something of an academic aerie. The real world is often radically different and lacking in the predictability of a college campus and the all-too-structured lectures given there. Odd that we arrive at a similar conclusion while going down decidedly different paths ... or, perhaps, it is just a reflection that, again, there is nothing new or 'real' to BOS. The interpretation of the so-called methodology is open, the result remains the same when it is taken to its natural conclusion.

It is trickery, magic ... smoke and mirrors. As a strategy, that is. And I strongly suspect The Weatherman knows this. It is a short-term, defined-lifecycle explanation for -- metaphorically -- milking the cow until the udders go dry knowing you have some prime burger meat hanging on the bones.

Now, tell me please, why does no one think it is a VERY troubling sign that Bob Iger is the first CEO in the history of TWDC to sell just about every share of Disney stock he can as soon as he can? I mean, he is not a poor man, he does not need the money. Why sell shares in the company you helm, the company whose trajectory is dictated by your decisions? ... Unless there is something else at play ...

Ah, to me, when the top guy at the company sells, that is a telling thing. And, no, I have not forgotten how well DIS has done under his stewardship. I think it is called "pump-and-dump" ... No?

 

[Pixiedustmaker]

Sounds right.
Back then, there was still some fight in the mouse. Some desire to do everything bigger and better than anyone else. Better rides, nicer hotels, better entertainment districts and other activities.

That's long gone.

Now, rather than trying to compete, Disney has just decided to play a whole different game. A game in which they are making up the rules to try and guarantee success. It's a risk, and one I hope falls flat.

I am guessing that this sad conclusion is for the Orlando parks given Carsland is astonishing/new, and some great new attractions are being added to Hong Kong (Mystic Manor, Grizzly Gulch), and whatever is being put into Shanghai . . . . 7DMT isn't a Mystic Manor, or even a Grizzly Gulch or Kitchen Calamity, but at least it is something. I think the real question for east coasters is why has WDW stagnated when great things have happened at DLR, Hong Kong Disneyland, and with new attractions going into Disneyland Paris and Shanghai.

 

[HMF]

Interesting, Kevin. I do recall that column now.

For me, there is no shading here. It could not be clearer. Blue Ocean Strategy is an academic rewrite of overtly simple business practices that is not novel nor legitimate. As you read about it, note how many of its proponents -- its supporters -- use words like trick or magic and phrases like smoke and mirrors to describe BOS in practice. It is a fraud, and it is scary-close to being a cult.

(Depending on how much research you want to do, the more you read of it, the clearer this troubling aspect becomes. As do the similarities to virtually every aspect of Disney's NEXT GEN experience.)

Not sure why, but I really enjoyed the following comment on an HBR article by the professors behind/authors of Blue Ocean Strategy. Poster 'Emelie H.' wrote:

"A person does not come to 'know' BOS, rather, a person manifests as a BOS incarnate! BOS is a movement not a static place where one arrives at then absorbs through studying it and learning it. It is the space of non-creation which is exactly why not many can see it and discover it's force field. BOS is nothing but a label to describe a non-space within a space. Post-Industrial Business is to Newton's Physics the way BOS is to Quantum Physics."

While I agree with much of what you wrote in that column from 2011, it is also noteworthy that Kevin writes from/lives in something of an academic aerie. The real world is often radically different and lacking in the predictability of a college campus and the all-too-structured lectures given there. Odd that we arrive at a similar conclusion while going down decidedly different paths ... or, perhaps, it is just a reflection that, again, there is nothing new or 'real' to BOS. The interpretation of the so-called methodology is open, the result remains the same when it is taken to its natural conclusion.

It is trickery, magic ... smoke and mirrors. As a strategy, that is. And I strongly suspect The Weatherman knows this. It is a short-term, defined-lifecycle explanation for -- metaphorically -- milking the cow until the udders go dry knowing you have some prime burger meat hanging on the bones.

Now, tell me please, why does no one think it is a VERY troubling sign that Bob Iger is the first CEO in the history of TWDC to sell just about every share of Disney stock he can as soon as he can? I mean, he is not a poor man, he does not need the money. Why sell shares in the company you helm, the company whose trajectory is dictated by your decisions? ... Unless there is something else at play ...

Ah, to me, when the top guy at the company sells, that is a telling thing. And, no, I have not forgotten how well DIS has done under his stewardship. I think it is called "pump-and-dump" ... No?

The real question is why isn't there a sizable shareholder resistance against Iger like there was against Eisner. Even with Roy gone, there must be somebody who cares and can sway things.

 

[Pixiedustmaker]

While I agree with much of what you wrote in that column from 2011, it is also noteworthy that Kevin writes from/lives in something of an academic aerie. The real world is often radically different and lacking in the predictability of a college campus and the all-too-structured lectures given there. Odd that we arrive at a similar conclusion while going down decidedly different paths ... or, perhaps, it is just a reflection that, again, there is nothing new or 'real' to BOS. The interpretation of the so-called methodology is open, the result remains the same when it is taken to its natural conclusion.

It is trickery, magic ... smoke and mirrors. As a strategy, that is. And I strongly suspect The Weatherman knows this. It is a short-term, defined-lifecycle explanation for -- metaphorically -- milking the cow until the udders go dry knowing you have some prime burger meat hanging on the bones.

What you are are saying doesn't jiv with what Wiki has to say about Blue Ocean Strategy:

"Blue oceans, in contrast, denote all the industries not in existence today – the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. Blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored."

Blue ocean is about creating a market for something, a service, an entertainment, which didn't exist before. If nobody wants the service because it is crappy then you failed to create a blue ocean, if it is great (like when MP3 players, smartphones, television) was invented, then you can rush into the market without much competition. Just a new name for being unconventional and inventing a product that people didn't know they needed.

Penny pinching and lowering quality to raise profits is also nothing new, companies with good brands do this and hurt their brand. Disney did this with DCA 1.0 and paid the price, hopefully lesson learned, as Iger has explicitly said before.

 

[Rasvar]

Ok please anyone correct me if I am wrong... but this recollection goes back to conversations had 10 years ago now.

10 years ago when I was working for the Mouse, I was was told by some people in positions of power at the time, that there were plans to develop the entire resort.

One of the reasons (please correct me if I am wrong here @WDW1974 or @Lee) that WDW bought the 8,500 acres in the mid 1990's was so that they could get around 1/3rd rule for development at the property. (A rule now I am sure no one actually care about)

With the plan being to develop the current WDW property as much as possible.

The big hiccups were:
1. Celebration not panning out and not turning into the much larger development they wanted it to
2. Large scale development moving away from the western side of the property leaving the entire western beltway barren of the large resort developments that the various municipalities, counties and Disney were counting on when it was built.

However we have continued to see Disney selling off land with
1. Golden Oaks
2. 4 Seasons

And Disney turning over as many operations to 3rd party participants
1. Valet
2. Golf Courses
3. 3rd Shift Cleaning Crews

And then Disney had the 3rd Party participant plan that went wrong aka Pleasure Island clubs.

So tying back to Pal Mickey this has been a long time coming, and we are finally seeing that the point of no return looks like.

That 8500 acres was wetlands mitigation. That was the primary purpose of the Disney Wilderness Preserve. The 3rd party plan at PI sure did not help it. Don't forget the DVC as selling off too, even if Disney owns the land. It is essentially the same as developing for sale.

My understanding on Celebration and the western properties was mainly to placate complaints from Osceola county. It's funny that I saw the "There's enough land here to hold all the ideas and plans we can possibly imagine" message on one of the refurb signs. It seems like they did run out of ideas and decided to sell the land.

 

[Pixiedustmaker]

The real question is why isn't there a sizable shareholder resistance against Iger like there was against Eisner. Even with Roy gone, there must be somebody who cares and can sway things.

Why? Disney stock is up. Carsland is awesome, great rides going to Hong Kong Disneyland, Disneyland Paris (which Disney may buyout), and Shanghai is being built, which means more long term profits . . . plus Disney has a cash cow named Star Wars. Can't see how shareholders would be upset, save for huge amounts of capital being spent.

 

[WDW1974]

Something else to chew on ... On the previous Spirited thread, @BlueSkyDriveBy wrote:

"It's more about treating me to psychological smoke and mirrors by pretending to be my friend with interactive queues and name recognition in an effort to con me into liking them and trusting them and giving them my money.

It's not sincere, it's not genuine, and it's not ethical.

No wonder Iger was rude to Congress. He's peddling disingenuous marketing practices and got busted for it.

There's nothing magical about Mickey Mouse running a shell game on Main Street USA."

What if, literally, that is what Disney is now doing? What if Disney saw what the folks on Wall Street were doing ... what they have been able to get away with and said, 'we can get away with that too'?

... We are Disney, after all. Everyone trusts us. Everyone. ... Right?

Just look at WDW. For decades now, WDW's profits have been shipped by the boatload to Burbank to prop other divisions up and infuse the coffers with some welcome $$$. Now, look at the product Disney has on display in O-Town.

Even the most Pixie Dusted among us agrees the place needs a lot of TLC. And more than that. Walt Disney World is a medium sized city with many of the problems of such a municipality (and then some given the transient nature of it) minus one pretty essential element -- a tax base. ... Oh, and some much needed oversight.

TWDC has even, of late, resorted to asking (demanding?) for corporate welfare by looking for taxpayer money to assist in rebuilding much of its long neglected infrastructure. From streets to bridges and drainage to ... well, if there's a way for the Mouse to snatch the cheese from the taxpayers, it is obvious Disney's lobbyists are intent on getting as much as they possibly can.

The biggest problem, public perception aside, is the extent of WDW's troubles. A city the size of Manhattan times two at 47 square miles with decaying infrastructure all over. A pretty expensive problem to fix, no? A rather substantial liability, no?

And, yeah, to the folks on Wall Street who bother to look -- or are forced to, one helluva dent to the real value of that stock ... WDW is a 40+-year-old product, and the maximum life of a good portion of that product has expired or is expiring while all we get from Burbank are MagicBands.

Again, as BlueSky put it, "It's not sincere, it's not genuine, and it's not ethical...There's nothing magical about Mickey Mouse running a shell game on Main Street USA."

 

[Darth Sidious]

Now, tell me please, why does no one think it is a VERY troubling sign that Bob Iger is the first CEO in the history of TWDC to sell just about every share of Disney stock he can as soon as he can? I mean, he is not a poor man, he does not need the money. Why sell shares in the company you helm, the company whose trajectory is dictated by your decisions? ... Unless there is something else at play ...

Ah, to me, when the top guy at the company sells, that is a telling thing. And, no, I have not forgotten how well DIS has done under his stewardship. I think it is called "pump-and-dump" ... No?

In this case it sure is eye brow raising to see Iger sell his shares off. I am not big believer in technical trading analysis but knowing the company pretty well this info is more relevant. Warren Buffet never sells... because he believes in his investments and he also typically manages them very successfully.

 

[Rasvar]

The real question is why isn't there a sizable shareholder resistance against Iger like there was against Eisner. Even with Roy gone, there must be somebody who cares and can sway things.

It was never the parks that forced them to push Eisner out. It was the flounder film and television. As far as the stockholders are concerned, as long as Disney can increase the profit margins at the parks, they will be happy. The financial crash was able to hide a lot of things. That is why Next Gen is so big. It's main purpose is to extend and grow those margins. If it does what it was sold to do (something that is up for debate), it will be great for the stockholders. Plus, it also can improve the ability of the company to divest itself of the parks in the future. There are not any stockholders of significance that are interested in fighting for investment in the parks.

 

[Pixiedustmaker]

Something else to chew on ... On the previous Spirited thread, @BlueSkyDriveBy wrote:

"It's more about treating me to psychological smoke and mirrors by pretending to be my friend with interactive queues and name recognition in an effort to con me into liking them and trusting them and giving them my money.

It's not sincere, it's not genuine, and it's not ethical.
No wonder Iger was rude to Congress. He's peddling disingenuous marketing practices and got busted for it.

What!? Nobody believes that Mickey et al is pretend to be your friend with interactive queues, they were put into place just so guests don't get bored in lines . . . which is something that was revealed in surveys and is common knowledge as being the worst part of a trip to WDW.

Name recognition, person recognition, could be well used by CMs who are paid to interact with guests irregardless of the presence of RFID or not. Nobody believes otherwise, and it isn't "dishonest", anymore than a castmember who is smiling to a guest when he/she doesn't feel like it deep down is being dishonest.

Sorry to break it to you, but castmembers never are your "friends" in the first place. So, no, Iger didn't do anything disingenuous . . . this thread has a lot of anger and paranoia, on a theatrical scale so I can tell if it is real or not.

 

[Pixiedustmaker]

In this case it sure is eye brow raising to see Iger sell his shares off. I am not big believer in technical trading analysis but knowing the company pretty well this info is more relevant. Warren Buffet never sells... because he believes in his investments and he also typically manages them very successfully.

Iger has said that he has thought about running for political office. Maybe his planning for such a move.

Plus, if the majority of his pay is in stocks, then he would be well advised to diversify his portfolio and move it around into different sectors. Buffet is different because Berkshire Hathaway *is* a holding company which owns, sells, buys, stocks in many other companies, and hence already is diversified. Keeping everything in Disney is kinda nuts.

 

[Pixiedustmaker]

It was never the parks that forced them to push Eisner out. It was the flounder film and television. As far as the stockholders are concerned, as long as Disney can increase the profit margins at the parks, they will be happy. The financial crash was able to hide a lot of things. That is why Next Gen is so big. It's main purpose is to extend and grow those margins. If it does what it was sold to do (something that is up for debate), it will be great for the stockholders. Plus, it also can improve the ability of the company to divest itself of the parks in the future. There are not any stockholders of significance that are interested in fighting for investment in the parks.

I think that the stockholders of significance are the institutional players, and they look at everything. Certainly the strength of the park side of the biz is important as it props up other divisions at times. Some analysts have noted that they believe that Disney should invest more in the parks given how amazingly aggressive Comcast has been with their parks. Also, I think most if not all institutional players get the synergy angle with the parks and hotels, and other aspects of the business.

 

[HMF]

It was never the parks that forced them to push Eisner out. It was the flounder film and television. As far as the stockholders are concerned, as long as Disney can increase the profit margins at the parks, they will be happy. The financial crash was able to hide a lot of things. That is why Next Gen is so big. It's main purpose is to extend and grow those margins. If it does what it was sold to do (something that is up for debate), it will be great for the stockholders. Plus, it also can improve the ability of the company to divest itself of the parks in the future. There are not any stockholders of significance that are interested in fighting for investment in the parks.

One thing that has become quite clear under Iger's tenure is that while Eisner was definitely part of the problem, He sure wasn't the source.

 

[Darth Sidious]

Iger has said that he has thought about running for political office. Maybe his planning for such a move.

Plus, if the majority of his pay is in stocks, then he would be well advised to diversify his portfolio and move it around into different sectors. Buffet is different because Berkshire Hathaway *is* a holding company which owns, sells, buys, stocks in many other companies, and hence already is diversified. Keeping everything in Disney is kinda nuts.

Right but that isn't my point. Buffett isn't the best example because his investing is something that every member of these forums put together couldn't do. My point is he would hold onto the stock if he was confident in what the future would bring. Iger running for politics has little bearing on his holdings, unless he was trying to distance himself. Either way as I said I typically don't subscribe to technical trade analysis which insider movements is. Some of the reasons you pointed out validate my position on that. However in this particular case I think it is a little concerning. He took huge risk that led to short term gains on optimism but if those risky moves go sour the stock will tank. He seems to be positioning himself in case they do. As a fan it concerns me, as an investor I would do the same thing.

 

[Rasvar]

What!? Nobody believes that Mickey et al is pretend to be your friend with interactive queues, they were put into place just so guests don't get bored in lines . . . which is something that was revealed in surveys and is common knowledge as being the worst part of a trip to WDW.

Name recognition, person recognition, could be well used by CMs who are paid to interact with guests irregardless of the presence of RFID or not. Nobody believes otherwise, and it isn't "dishonest", anymore than a castmember who is smiling to a guest when he/she doesn't feel like it deep down is being dishonest.

Sorry to break it to you, but castmembers never are your "friends" in the first place. So, no, Iger didn't do anything disingenuous . . . this thread has a lot of anger and paranoia, on a theatrical scale so I can tell if it is real or not.

I'll say this, Iger's response to Congress struck me a lot like Mark McGwire. Strike back with indignity to make it look like you are the one being persecuted. It did come off as disingenuous in the manner that Iger did nothing to address the question other than to say "how dare you question us?" I am pretty sure he managed to assure deeper entanglements with Congress in that style of response. Politicians will wrap themselves in kids every day of the week. Even if Iger was not disingenuous, he was downright stupid to respond with the tone he used. He is obviously more use to have the politicians in his pocket based on that response. He has essentially cost the company another few million of dollars in dealing with hearings and fighting new privacy legislation with the way he handled it.

As far as the survey's go, there are two ways to address the issue: you can either increase capacity or distract from the problem. Distracting from the problem is cheaper. I will lay this bet down now, the interactive queues will have only a minor effect in reducing the complaint about the lines in the surveys. Look at everything Disney has tried to make the lines more interesting through the years. Not much has had a long term effect on reducing that complaint. Even FP never did a whole lot to reduce that complaint. In many ways, I think it increased it. I know it did for me. It's kind of like dealing with a railroad crossing. You could have the most interesting train in the world passing you but people will still complain unless you build an overpass. I see the interactive queues as just making the train more interesting.

 

[Pixiedustmaker]

Right but that isn't my point. Buffett isn't the best example because his investing is something that every member of these forums put together couldn't do. My point is he would hold onto the stock if he was confident in what the future would bring. Iger running for politics has little bearing on his holdings, unless he was trying to distance himself. Either way as I said I typically don't subscribe to technical trade analysis which insider movements is. Some of the reasons you pointed out validate my position on that. However in this particular case I think it is a little concerning. He took huge risk that led to short term gains on optimism but if those risky moves go sour the stock will tank. He seems to be positioning himself in case they do. As a fan it concerns me, as an investor I would do the same thing.

What's the price of Berkshire class B today? It is public stock, we all could invest in it, and some of us could buy a class A stock too, no doubt.

Iger might want to fund his own campaign like those with hundreds of millions in the bank often do.

Irregardless, *any* investor shouldn't leave their cash in one stock, even CEOs who get paid in stock will divest a large portion as to do otherwise isn't being well informed. Iger will be gone, makes sense to start diversifying at some point, don't see why now is particularly ominous.

 

[Pixiedustmaker]

He has essentially cost the company another few million of dollars in dealing with hearings and fighting new privacy legislation with the way he handled it.

As far as the survey's go, there are two ways to address the issue: you can either increase capacity or distract from the problem. Distracting from the problem is cheaper. I will lay this bet down now, the interactive queues will have only a minor effect in reducing the complaint about the lines in the surveys. Look at everything Disney has tried to make the lines more interesting through the years. Not much has had a long term effect on reducing that complaint. Even FP never did a whole lot to reduce that complaint. In many ways, I think it increased it. I know it did for me. It's kind of like dealing with a railroad crossing. You could have the most interesting train in the world passing you but people will still complain unless you build an overpass. I see the interactive queues as just making the train more interesting.

Interestingly analogy, but I think parents will like it that their kids have something to do in line, some have had positive remarks about Mermaid's interactive queue.

I doubt Iger costed the company anything, one single politician received a blunt response against what seems like a witch hunt, I think Iger appropriately expressed his dismay regarding Markey's overly aggressive tone. Congress can't fine Disney millions . . . and I doubt they will pass a law against NextGen. Regulations would only protect Disney as the lawyers could point to how they are following this and that law to the letter.

 

[Rasvar]

Iger has said that he has thought about running for political office. Maybe his planning for such a move.

Plus, if the majority of his pay is in stocks, then he would be well advised to diversify his portfolio and move it around into different sectors. Buffet is different because Berkshire Hathaway *is* a holding company which owns, sells, buys, stocks in many other companies, and hence already is diversified. Keeping everything in Disney is kinda nuts.

I put Iger in the same category of Carly Fiorina in the political spectrum. Will have a lot of money to spend but completely lacking the ability to to get elected. He doesn't have the charisma. The only big difference is he doesn't have a corporate fiasco like Fiorina had. I actually see their business careers as very much alike. Having dealt in the political realm a good bit, I can't seem him running for the House and being on the wrong end of fighting for kids privacy will get your butt killed in a Senate race. So if he is planning on making a political run, he is already duffing it. But, yeah, divesting of shares would be a smart political move. The blind trust is not really selling anyone these days. Enough of the politics, though. I get enough of that in what I do everyday. Nothing like spending a month in the snake pit of Washington, DC next month as it is.

 

[HMF]

I'll say this, Iger's response to Congress struck me a lot like Mark McGwire. Strike back with indignity to make it look like you are the one being persecuted. It did come off as disingenuous in the manner that Iger did nothing to address the question other than to say "how dare you question us?" I am pretty sure he managed to assure deeper entanglements with Congress in that style of response. Politicians will wrap themselves in kids every day of the week. Even if Iger was not disingenuous, he was downright stupid to respond with the tone he used. He is obviously more use to have the politicians in his pocket based on that response. He has essentially cost the company another few million of dollars in dealing with hearings and fighting new privacy legislation with the way he handled it. .

Personally, I am hoping for a major congressional hearing on this, then Iger will have to come clean on what the "Master Plan" for Nextgen is assuming he is not stupid enough to commit perjury.

 

[Darth Sidious]

What's the price of Berkshire class B today? It is public stock, we all could invest in it, and some of us could buy a class A stock too, no doubt.

Iger might want to fund his own campaign like those with hundreds of millions in the bank often do.

Irregardless, *any* investor shouldn't leave their cash in one stock, even CEOs who get paid in stock will divest a large portion as to do otherwise isn't being well informed. Iger will be gone, makes sense to start diversifying at some point, don't see why now is particularly ominous.

You seem to be missing my point and I won't try again. However my reference to Buffett is in the transaction in which Berkshire Hathaway purchases entire corporations. We don't have the billions of dollars to just broker a better than market price deal. Obviously you can buy shares of Berkshire Hathaway, I don't doubt that, we all could do so individually.