How Disney Did It

Four essential lessons from Disney CEO including micromanaging can be a good thing

Written by Kim Shiffman

During his 21-year tenure at Disney, Michael Eisner grew the company from US$7 billion to US$20 billion in in revenue. Eisner recently spoke to a group of Toronto businesspeople and revealed how he did it.

DISNEY LESSON #1: Creativity and fiscal responsibility can go hand in hand

Eisner says Disney was successful because of a philosophy he championed called “creativity in a box.” Meaning: when you develop a new initiative, you’re creating a box that should include both creativity and financial discipline. (Decide the size of the box, says Eisner, by analyzing your likely ROI.)

Eisner recommends challenging your staff to come up with creative solutions to keep costs down. He tells the story of the 1987 movie Outrageous Fortune, starring Shelley Long and Bette Midler. The script included a scene in which Long’s character was to visit her parents’ apartment to beg them for money. Disney wanted to cut the scene to save money, but the filmmakers argued it was essential. Eisner challenged the filmmakers to find a solution. Though the filmmakers were frustrated at first—they even called Disney “cheap” in an interview—they eventually found a solution that turned out to be one of the funnier scenes in the movie: Long reaches the lobby of her parents’ apartment building and presses the buzzer, but Mom won’t let her in, knowing she’s probably there seeking cash. The entire scene takes place in the lobby, with her parents unseen (their voices coming through the intercom), thus saving Disney from paying the actors and building a set. (In the end, Daddy drops US$5,000 out the window.)

DISNEY LESSON #2: Reject even the most lucrative opportunities if they aren’t good for the brand

When Eisner developed his Disney cruise ships, research indicated that offering gambling would be crucial to success. However, Eisner felt that gambling was not appropriate for the Disney brand. The Disney cruises have still managed to be a profitable part of the company. “This proves the limited value of research,” says Eisner, who calls a strong brand “the gift that keeps on giving,” and says it is greater than the sum of its parts.

DISNEY LESSON #3: Micro-managing isn’t necessarily a bad thing

“[Micro-managing] is not a pejorative!” insists Eisner, who is a manager obsessed with details and isn’t afraid to express his opinion, even on things considered small or minor—or outside his “job duties.”

For example, he once noticed that the type on the shampoo and body lotion bottles in the guest rooms at his hotels was so small that it could be hard to read without glasses, so he insisted upon (and personally oversaw) the type being enlarged.

DISNEY LESSON #4: Encourage failure

“Failure is not a corporate death sentence,” he says, “and punishing failure leads to mediocrity. If people are afraid to take risks, you risk being bland and mediocre.” Eisner encouraged failure at Disney headquarters with an event called The Gong Show (named after the popular 1970s game show). Employees were given an opportunity to pitch ideas, and if they were turned down, they’d be “gonged.” It was all in good fun, and employees enjoyed the experience, lining up to be part of it and bragging later to co-workers. This sensibility, opines Eisner, led to Disney’s success.

The Pirates of the Caribbean is an example of Disney’s willingness to take risks. Many thought it was doomed failure. It was extremely expensive to produce; it was based on a theme park ride; many pirate films before it had failed miserably; and the film’s star, Johnny Depp, was known to be not particularly endearing at movie openings. “Without a tolerance for failure,” says Disney, “the movie would not have been made.”  Pirates has grossed an estimated US$653 million worldwide; it’s the 22nd highest-grossing movie in the United States, and it went on to receive five Academy Award nominations.

Originally appeared on PROFITguide.com