This article is part of my Masterclass Review Series.
The class was more about leadership than it was about strategy. Iger is an incredible leader—you can tell simply from the way he talks about business—and gives valuable advice through the class.
However, he also gets bogged down in generic business advice (it's generic for a reason). The class has a couple interesting case studies, and Iger really shines while getting into the weeds of running a creative business. He offers valuable insights on disruption, but is self-aggrandizing at times in a way that detracts from the course.
The parts about brands were obviously where Iger shines, and they changed how I thought about brands as a business, as well as gave me an insight into why Disney is so aggressive about protecting theirs. Iger could have given more detail into the process for his acquisitions—what was it like trying to build a Netflix competitor? How did they evaluate 21st Century Fox's assets? Those kinds of questions he tended to answer with generic business advice.
The "Tenets for Success" section was similarly boring. It was the kind of advice you could get from any business book. "Foster curiosity"... come on.
This Masterclass is worth watching, and Iger is a good teacher, but it sometimes comes up short on actionable advice, instead relying on opaque statements. It does offer valuable insights into the weirdness of a business that runs on creativity, on which there are few people more qualified than Iger. The class also gave you a sense of how a good leader communicates his ideas—simply and clearly. I felt I learned not just from the content, but also from just watching him explain ideas.
- Disney's company values are tied to the stories it tells.
- Creative businesses are different, and less stable. Success is great, but failure can always happen, have to be able to deal with that. "Nothing is a given."
2: Using Your Time Effectively
Iger's Daily Routine
- 4:15 a.m. — Wake up, works out alone in the dark listening to music. Serves as a kind of meditation to him. He doesn't look at email before working out.
- 6:30 a.m. — Arrives at the office. He tries to be the first one there, turns the lights on and makes coffee. This lets him easy into the day, but also be prepared. Preparation is an underlying theme throughout the course.
- 8 a.m. to 4 p.m. — Meetings
- 4:30 p.m. — When he's in town, he heads home early, which he is able to do because he gets in so early. Makes sure he can sit down for dinner with his family.
- 8 - 10 p.m. — After dinner, he gets some more work done, and then tries to get some pleasure reading in or catch up on a TV show.
He evaluates his days simply—did he get things done?
3: Focus, Strategy, & Priorities
- It's important to make sure that both personal and organizational priorities are in line with your long term goals.
The process of becoming CEO of Disney (2005)
- The process of being chosen by the board was a lot like a political campaign. To be effective and come across clearly you need a FEW main priorities.
- His priorities during the time:
- Invest in creativity (high quality branded content)
- Embrace technology
- Grow globally and deepen reach into more markets.
- Clarity is at the core of good leadership. Make clear what you expect from people. Need an internal communications plan for internal politics.
- Explain WHY priorities are important, HOW they will be executed, and make a value proposition... "If we do this, such and such will happen"
- Leaders have to take a lot of input, but also interact (face to face preferred) with their people. Keep articulating and adjusting priorities, then take feedback and listen to their priorities. Be accessible, but also honest. Don't worry about being truthful, your direct reports shouldn't be either.
4: Taking Giant Swings: Pixar acquisition case study
- When you look back, things can look like part of a grand plan. However, during the process you don't always have the end in mind, and the final result is the product of smaller steps and goals.
- When he became CEO in 2005, animation was struggling. First priority had to be turning animation around. The way to do this was to have talented people and talented leadership. He felt best leaders and talent were @ Pixar. There had been an existing partnership, but it was starting to degrade. Steve Jobs had decided to go different ways. Iger saw mending this relationship as his job.
- Iger felt iTunes could do the same for TV that it had done with music. He told Jobs about this, Jobs thought it wasn't a terrible idea. Showed Iger the video iPod, Iger said he would be happy to provide content for that.
- First board meeting as CEO: told them what he wanted to do first (animation), and why. Their first reaction was negative, because they thought he was being pessimistic, it had also sort of happened under their watch. Better to move on, the past is the past.
- Buying Pixar: some people felt it would be massively expensive because it was publicly traded and would have to pay a premium. Also, Jobs would become largest shareholder because paid in Disney stock, which scared some. He felt that Jobs would be good for Disney, and that turning animation along would be very valuable to the company.
Step 1: Convincing Jobs to sell
- Called Jobs up, said he had a crazy idea: what if Disney bought Pixar. Jobs said it wasn't the craziest idea, they met a few days later. Started listing pros and cons, cons seemed to outweigh pros. Jobs felt actually pros outweighed cons. The pros were that it would be mutually beneficial, both would grow. Cons: Disney would destroy Pixar culture. Disney too process oriented. Too conservative, wouldn't be able to take risks telling stories.
Step 2: Talking to Lasseter and Catmull
- John Lasseter and Ed Catmull were high ranking Pixar employees who he had to convince as well as Jobs. They were initially "horrified" by the idea of selling to Disney, and didn't want to become part of another company. Jobs was able to keep their minds open, they set up a visit.
Step 3: Visiting Pixar
- He went alone to meet with a bunch of Pixar people, was shown pitches about Cars and Wall-E. He was really excited by all this amazing creativity, but the technology was also incredible, images looked great. Good symbiosis between the technology and creative people.
Step 4: Merging cultures
- Buying a company isn't just about the business—the people too. The culture can be very specific and important to the company being acquired. Assimilation is usually done really fast to get bottom line results, but it has to be done in a way that the culture of company can thrive. This was a big concern of Pixar's. Iger feels his first-hand knowledge of working in various businesses that were acquired in his career helped him with this process.
- Pixar's culture was unique and important. Iger felt that trying to change the culture would hurt the films and the business, and didn't try to change it.
Step 5: The Payoff
- Pixar acquisition was a risk ($7 billion acquisition), but was never a risk not worth taking. He acknowledges it's easier to say that in hindsight.
5: The Art of Negotiation
- A lot is written about this, but no two people have the same style. He prefers to get things done quickly, so he tries to put everything on the table directly and quickly, even if it gives away a little bit of an advantage. A negotiation has to be two way—both parties have to feel like they won. Winner takes all approaches take much longer.
- There's usually a controlling individual on the other side of each deal, it's important to forge a personal relationship with that person. Enter the negotiation knowing what you want to get done, and it's okay to share that. Playing games can be negative. Don't put it around your ego, instead, communicate and make sure both sides know what each other want to get out of it.
6: Creating Brand Value
- Ask yourself the question: if you say that brand name, or put it on a product, what does it convey? What does the consumer think about? If you put your name on a container of ice cream, they should already know something about it just from that.
- Brands help consumers decide. They have lots of options, and a brand assures them they will get value from the option.
- Brands are also feelings. If someone says Disney, you get a visceral response—same is true for Nike or Apple. Evergreen content, like Cinderella or Snow White, allows the feelings to span generations.
- When trying to keep a brand relevant, there is a temptation to get away from the core brand values. Disney could have become "edgier," with more violence and sex, as culture went that direction. Would, in fact, have been a big mistake.
- A challenge when trying to work with a brand is working with tradition. People felt that Disney's history was something to be revered, and shouldn't change anything. Iger wanted to respect it, but didn't want to put it in a museum case—instead, bringing values to the modern day.
- An interesting aspect of running the Walt Disney was modernizing the Disney princesses. They are a underlying theme in a lot of Disney's content, and they wanted to bring that into a modern world. Showing young women who were empowered, had a purpose beyond Prince Charming, independent. Best example of this is Frozen, saved by love of sister, not a man.
- A great thing about the Disney brand is that it allowed value in one area to be mined across various fields, which is a competitive advantage. They can tell a great story like Frozen, and then that moves into costume sales, characters in parks, can become a ride, etc. Creates value from a consumer perspective outside of just the story where they met the character.
- Theme parks are a big part of Disney's business!
- Disney is a very wide collection of brands, ranging from ESPN to Marvel to A&E Television Networks.
- Brands are a relationship between a product and a consumer. It's important to value with that.
- The most important thing in managing a brand is to deeply understand the essence of the brand, and then adhere to those attributes. Make sure it aligns with everything you use it for.
- Don't let an eagerness to be new and relevant allow you to get away from the brand. Never lose brand value for short term profitability. Brands are sometimes put at risk, losing long term value for short term.
7: Expanding Your Brand: Marvel acquisition case study
- When Disney acquires a company, it thinks about whether the brand they acquire will enhance or detract from Disney's brand. They are very careful about acquisitions for this reason.
- When the idea of Disney buying Marvel was proposed, some people felt that it might damage the Disney brand, their stories were a little more violent etc. Iger felt that Marvel's storytelling was actually much like Disney's, and where they strayed it wasn't particularly damaging to Disney. Decided that as long as they were kept separate, it would be all right.
- They considered "sanitizing" it, but Iger felt this would destroy Marvel brand value and not make it worth what they paid for it. They didn't apply brand attributes to each other. Keeping them separate can be important—not "Marvel-Disney", instead Marvel and Disney.
- Large and very intense fan base that loved the content. Fanatics. Appreciated the value of real fans, that is a good foundation, better than starting something from scratch.
- Strong brand, but the brand was licensed out—unlike Disney. Various aspects went to various companies. When Disney bought, they planned to bring that in-house, and that's they best way to protect and create brand value.
8: Anticipating What Consumers Want
- The stories you tell are more popular when they reflect the audience you want to reach. Disney has an intentionally universal storytelling technique, and because of their large reach, it's important stories relevant to everyone who consumes them.
- Marvel had 1000s of characters, which gave them the options to explore more diversity with Marvel characters. Initial considerations were black and female lead characters.
- Some reacted saying female-lead and black characters wouldn't do as well, wouldn't be a good global appeal. He felt this was just because they were worse films, and that they would do well because they were good stories.
- Some felt that Disney shouldn't invest so much in these films because they might not do as well, Iger felt it was not only the right thing to do, but more investment would lead to better results. See Captain Marvel and Black Panther, both did great.
- An interesting feature of the creative business is you are giving people stories they didn't know they want or didn't express a desire for. Largely based on instinct, can be risky. Understanding marketplace is important, but data can be a "waste of time". Won't tell you how people will react. Base decision on gut instinct and confidence on entity telling the story. When you have a creative product, research doesn't help. Data needs to be in correlation with experience. Doesn't give all the insights.
- Iger prefers experience: traveling, interacting with consumers. "If you don't go, you can't grow." Easy to sit in your office in L.A. and study a market, but will learn much more by visiting.
- Everything operates in a marketplace—just might have a different scale than Disney's. Immerse yourself in the marketplace.
9: The Importance of Risk-Taking
- World is very dynamic and moves fast. Status quo is a losing strategy. If you are going to move away from status quo, there is a risk, but this is necessary—risky to stay with the status quo too. Iger feels he personally has an appetite for risk.
- Example: "Cop Rock" when Iger was at ABC. Felt TV was getting boring, was pitched idea of a musical TV show. Liked it because it was new—there was nothing like it. It was a complete failure, Iger doesn't regret taking a big risk on it. You can fail greatly and still feel good about it.
- Next idea was first R-rated TV show "NYPD Blues." Broke new ground in television standards, though ended up not R-rated. Changed the tone of TV shows, lasting effects, big success. Demonstrated to Iger that the worst thing you can do after failing after a big risk is not taking any more risks. That sets you up for more failure. Important to get back up and try again. Requires guts, patience, resilience.
The worst thing you can do after failing with a big risk is not taking any more risks.
- Iger likes taking risks, feels it's the way to success in a dynamic world, but not at any cost—you have to be responsible about it. Study it and understand it: do your homework. If there are stakes involved, you have to do the work and have the knowledge.
10: Navigating Complex Deals: 21st Century Fox Case Study
- Iger had a long-running relationship with Rupert Murdoch. In 2017, he got a call from Murdoch to chat, as they sometimes did. Iger felt Murdoch was signaling that Disney should buy (parts of) 21st Century Fox, and Murdoch was open to it.
- Iger had wanted Disney to go into the D2C space, and felt the assets would fit into Disney's larger strategy. Fox offered brands, lots of great content, and production capabilities. Fox also owned international assets that would be valuable to Disney growing globally.
Analyzing a deal
- Understand how it's performing today
- Understand how it will perform in 5 years
- Understand how in distant future, acquisition will increase success of new strategies‚ not just current ones.
- Comcast then outbid Disney for Fox's assets, and the question was how to outbid Comcast in a way that Comcast wouldn't then increase their bid. Iger wanted to bid significantly higher so Comcast would fold, instead of both going up in small increments, costing them more. Instead of going from 35/share to 35.5, went to 38 to pressure them out. This was combined with trying to fast-track approval of acquisition, which would be an advantage over Comcast. Comcast didn't try to top Disney's offer and Disney got the assets.
- The battle for the Fox assets was very intense, and Disney was invested in getting the assets. It was very high-stakes for Disney. Having competition made it a lot more stressful.
- Once Disney announced the deal, the question was how to integrate them into Disney. Iger went in front of a whiteboard, wrote down all of the Disney companies assets and all of the ones they were buying, thinking about how they would fit together. This gave Iger a sense of the scale, and he started to organize them structurally—what structure would make sense in a world that wouldn't look anything like the current one. Instead, he broke Disney into 3 units:
1. Content creation (TV, sports, motion pictures)
2. Parks and resorts, cruises, and products
- This breakdown led to the restructuring of Disney before deal even closed. That structure would then allow the new assets to slide right in.
11: Managing Industry Disruption: Disney+ Case Study
- Anyone in a business needs to have a foot in the present and a foot in the future. Focus on day-to-day operations, but also long term prospects—look ahead, understand where the business is going and what conditions will look like. Decisions you make today should enable success in those conditions.
- The best way to embrace disruption is to admit that it's happening. It's not just a speed bump. Change is inevitable, and always on the horizon. You have to accept that.
- Technology has transformed the media business in every sense... ESPN has been one of Disney's most profitable businesses, but technology changed its growth prospects—people were changing how they consumed TV and bought channels. Instead of letting disruption hurt the business, Iger chose to embrace the disruption, which meant acquiring the necessary technology and modernizing. This led to investment in "BAMTech," which delivered sports direct to consumers. After deciding to bring ESPN direct to consumers, decided to do this with the rest of Disney. This led to the launch of Disney+, which would allow direct delivery of all of Disney's content to consumers.
- Iger's outlook on media: the television business will be disrupted, Consumer data will be used more to personalize and contextualize content for consumer (looking at past consumption habits etc), and consumers will have more customization and flexibility.
12: Tenets for Success
1. Foster curiosity
- If you're not curious, you never innovate. Innovation is key for any business. Encourage people to be curious, hire curious people.
2. Be authentic
- Don't fake anything, don't say anything you don't mean, be honest. When he was hired to run prime-time TV had to be honest he didn't know everything about it. People read through inauthenticity really easily.
3. Operate with integrity
- Set high standards, and meet those standards yourself. Warren Buffet was influential on him, integrity super important.
4. Set out to achieve perfection
- Everyone should work as hard as possible to get as close to perfection as possible. It's important to succeed. Don't accept mediocrity if you can make it better. This can cause friction, but always worth it to overcome that friction.
5. Be fair and own your mistakes
- Be accessible, let people state their case. Be empathetic, and give people second chances for honest mistakes—though not in every situation. Own your mistakes, let people feel safe to take risks.
6. Be decisive
- Organizations need decisiveness, people like to know what they are expected to do and when. Don't second guess decisions, do your best to make good ones. The world moves so fast that market conditions can make decisions before you do.
7. Practice candor
- His direct reports understand what he expects from them. He wants to hear both the good and the bad news, encourages people to tell them bad news, and be accountable. Create a safe environment.
8. Project optimism
- People don't like to follow pessimists. Optimism inspires people, energizes them. You don't have to be an idealist, but be optimistic.