Iger's challenge: how to reanimate Disney
The new test for media firms, increasingly, is balancing creativity and bottom lines.
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Like other visionaries-turned-businessmen, such as Ted Turner (CNN) and Steve Jobs (Apple and Pixar), Roy Disney, the last remaining family shareholder, charges that the company has lost its soul by emphasizing profits over innovation. But that charge overlooks one important distinction, say other observers. These are publicly owned companies. And in the words of the incoming Iger, "shareholder value is of utmost importance."Skip to next paragraph
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"I don't think the issues are particular to Disney," says Chris Lanier, president of the Motion Picture Intelligencer, a consulting firm. "Everyone is in the same boat. Hollywood has been looking to other strategies for making money, rather than focusing on the core product of figuring out what audiences really want and giving it to them."
All the above leads to the $64,000 question facing much of Hollywood, say industry observers. Is it possible for a profit motivation to coexist with innovation? The trick may be to balance the profit drive with the cultivation of risk-taking and individuality in each division.
Disney is now a mature titan in a marketplace saturated with choices, says Joel Goldhar, professor at Illinois Institute of Technology. "We now have lots of ways to be entertained," he says, making a distinct identity more important than ever, he says.
The management style the company adopts, now that the twin issues of Eisner's departure (this fall) and his successor have been resolved, will determine its future, says George Geis of the UCLA Anderson School of Management. "Iger's particular form of creativity is more as a creative executive," says Geis. "Whether that will translate into Disney creativity, is in question."
Industry watchers suggest that unless Iger can come up with a plan to encourage creativity at the same time as he nurses the company's bottom line, he will suffer the same fate that bedeviled Eisner through much of his reign - the continued exodus of top talent. The list of creative executives as well as creative partnerships in trouble during the current CEO's tenure is long and well-publicized. These include relationships with the highly successful Pixar and Miramax.
Wall Street may be comfortable with Iger, who is a longtime corporate manager, but unless creativity comes first, corporate culture has a way of selling the goose that lays the golden eggs, says media analyst Thompson.
"American business has never known what to do with with the flaky, unpredictable, seat-of-the-pants kind of thought that is the essence of creativity," he says. "They can't handle it because it's irrational. Good storytelling and innovation and pushing the envelope are all things that might be the foundation of a whole new kind of programming, which is of course, just what companies most need. But," he adds with a laugh, "none of that is rational. Market research can't produce it, no matter how hard they try."
Disney is not the only company facing the same challenge of creativity vs. bottom line. "Films are designed primarily to be entertainment," says Chris Lanier of Motion Picture Intelligencer. "But the entertainment content of Hollywood films has been dropping steadily for decades. Until studio heads address that, the outlook will be grim, at Disney and everywhere else."