by Robert Iger;
“Second, we have to try to salvage a relationship with Pixar and Steve Jobs.” The end of the Pixar partnership was a huge blow to Disney, from both a financial and a public-relations standpoint. Steve was one of the most respected people in the world at that point—in technology and business and culture—and his rejection and withering criticism of Disney was so public that any mending of that fence would be seen as a big early win. Plus, Pixar was now the standard-bearer in animation, and while I didn’t yet have a complete sense of just how broken Disney Animation was, I knew that any renewed partnership would be good for our business. I also knew that chances were slim that someone as headstrong as Steve would be open to something. But I had to try.
Last, I needed to begin the process of changing the way we made decisions, which meant restructuring Strat Planning, changing its size, its influence, and its mission. If the first two priorities were largely about how the public perceived us, this one was about transforming the perception of the company from within. It would take a while, and there would certainly be anger and resistance to contend with from Strat Planning, but we had to start reconfiguring the apparatus and pushing strategic responsibility back to the businesses sooner rather than later. I hoped that if we could reduce the grip that Strat Planning had over all of our divisions, we would slowly begin to restore the company’s morale.
First, though, was the rapprochement with Roy Disney. Before I could even reach out to him, however, the prospects for peace blew up. Within days after the announcement of my promotion was made, Roy and Stanley Gold sued the board for what they said was a “fraudulent succession process.” It was an absurd charge—that the fix was in and it was a foregone conclusion that I’d get the job—but it was also going to be a major distraction. I hadn’t even begun the job and I already had my first crisis: an ugly, public lawsuit over my legitimacy as CEO.
I decided to call Stanley on my own, not through a lawyer, to see if he would be willing to sit down and talk. Until he and Roy resigned in the fall of 2003, Stanley and I had served on the board together. It was obvious to me over those few years that Stanley didn’t respect me, but I thought he would at least be willing to hear me out. He was less emotional and more practical than Roy, and I suspected that I might be able to make him see that a long legal battle with Disney wasn’t in anyone’s interest. He agreed to talk, and we met at the country club to which he belonged that’s not far from the Disney lot.
I began by describing to Stanley the gauntlet I had just endured: the many interviews, the outside search firm, the numerous candidates the board had considered, the six months of incessant public scrutiny. “It was a thorough process,” I said. “They devoted a lot of time to their decision.” I wanted Stanley to fully grasp that his lawsuit was without merit and not likely to succeed.
He went over all the old ground with me, rehashing yet again the litany of his and Roy’s criticisms of Michael and the way the company had been run for the last several years. I didn’t debate him, just heard him out, and reiterated that all of that was in the past and that the board’s process had been legitimate. Late in the conversation, Stanley became less argumentative. He suggested that a lot of this animosity was because Roy was hurt, despite having preemptively resigned in protest, that Michael was invoking our mandatory board retirement age to push him off the board, which was disrespectful. Roy’s relationship with the place he thought of as home had been severed, Stanley said. Roy blamed the board for not listening to him when he’d launched the campaign to unseat Michael in the first place. They’d eventually gotten rid of him, but Roy felt that he, too, had paid an unfair price in all of this.
At the end of our conversation, Stanley said, “If you can come up with any means of bringing Roy back, we’ll drop the lawsuit.” I never expected him to say that out loud, but I left the meeting and immediately called George Mitchell. George was eager to close this chapter, too, and he implored me to figure out a way to work something out. I called Stanley back and told him I wanted to speak with Roy directly. I wasn’t hopeful, but I felt certain that the only way forward was to clear the air face-to-face.
Roy and I met at the same country club. It was a frank and not especially pleasant conversation. I told him I was well aware of his disdain for me, but I asked him to accept the reality that I’d been appointed CEO and that the process wasn’t rigged. “Roy,” I said, “if I fail, the line of people demanding my head will be a lot longer than you and Stanley.”
He made clear that he would gladly continue to wage war with the company if he didn’t think it was heading in the right direction, but he also showed a vulnerable side I’d never seen before. Being alienated from the company was painful for him, and the ongoing fight seemed to have worn him out. He’d aged considerably in the two years since he’d left the board, and he struck me as needy and frail in a way he hadn’t in the past. I wondered if all of this wasn’t a part of some larger psychic struggle. The truth was, it wasn’t just Michael who was at odds with Roy; besides Stanley, not enough people within Disney had given him the respect he felt he deserved, including his long-gone uncle, Walt. I had never had any real connection to Roy, but I detected vulnerability in him now. There was nothing to be gained by making him feel smaller or insulted. He was just someone looking for respect, and getting it had never been especially easy for him. It was so personal, and involved so much pride and ego, and this battle of his had been going on for decades.
Once I saw Roy in that light, I began to think that maybe there was a way to appease him and put this fight to rest. Whatever I did, though, I didn’t want to allow him to be too close to me or the company, for fear that he would inevitably try to start an insurgency from within. I also couldn’t agree to anything that would be seen as disrespectful toward Michael, or look like a validation of Roy’s criticisms of him, so a delicate balance was required. I called Michael and explained my predicament and asked his advice. He wasn’t happy to hear that I was offering an olive branch to Roy, but he acknowledged that peace with him was important. “I trust you to do the right thing,” he said. “But don’t let him in too far.”
I contacted Stanley once more and proposed the following: I would give Roy an emeritus role on the board and would invite him to film premieres and theme-park openings and special company events. (He wouldn’t attend board meetings, however.) I’d also give him a small consulting fee and an office on the lot so he could come and go and call Disney his home again. In exchange, there would be no lawsuit, no public proclamation of victory, and no more airing of criticisms. I was stunned when Stanley said we should draw up an agreement to be executed within twenty-four hours.
Just like that, a crisis that threatened to loom over my early days as CEO was resolved. Making peace with Roy and Stanley would be viewed by some parties as a kind of capitulation, but I knew the truth, and that was far more valuable than perception.
The drama with Roy reinforced something that tends not to get enough attention when people talk about succeeding in business, which is: Don’t let your ego get in the way of making the best possible decision. I was stung when Roy and Stanley sued the board for choosing me as CEO, and I certainly could have gone to battle with them and prevailed, but it all would have come at a huge cost to the company and been a giant distraction from what really mattered. My job was to set our company on a new path, and the first step was to defuse this unnecessary struggle. The easiest and most productive way to do that was to recognize that what Roy needed, ultimately, was to feel respected. That was precious to him, and it cost me and the company so little.
A little respect goes a long way, and the absence of it is often very costly. Over the next few years, as we made the major acquisitions that redefined and revitalized the company, this simple, seemingly trite idea was as important as all of the data-crunching in the world: If you approach and engage people with respect and empathy, the seemingly impossible can become real.
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ONCE THE PEACE accord with Roy was signed, my next task was to explore if there was any chance of repairing Disney’s relationship with Steve Jobs and Pixar. Two months after I’d called Steve to tell him I’d been named CEO, I reached out to him again. My ultimate goal was to somehow make things right with Pixar, but I couldn’t ask for that initially. Steve’s animosity toward Disney was too deep-rooted. The rift that had opened between Steve and Michael was a clash between two strong-willed people whose companies’ fortunes were going in different directions. When Michael criticized the tech industry for not having enough respect for content, Steve was insulted. When Steve suggested Disney was creatively broken, Michael was insulted. Michael had been a creative executive his whole life. Steve believed that because he ran Pixar, which was the ascendant animation studio, he knew better. When Disney Animation began to slip even further, Steve became more haughty with Michael because he felt we needed him more, and Michael hated that Steve had the upper hand.
I had nothing to do with any of that, but it didn’t matter. My asking Steve to just change his mind, after he’d so publicly ended the partnership and excoriated Disney, would be far too simple for him. There was no way it was going to be that easy.
I had an idea unrelated to Pixar, though, that I thought might interest him. I told him I was a huge music lover and that I had all of my music stored on my iPod, which I used constantly. I’d been thinking about the future of television, and it occurred to me that it was only a matter of time before we would be accessing TV shows and movies on our computers. I didn’t know how fast mobile technology was going to evolve (the iPhone was still two years away), so what I was imagining was an iTunes platform for television. “Imagine having access to all of television history on your computer,” I said. If you wanted to watch last week’s episode of Lost, or something from the first season of I Love Lucy, there it would be. “Imagine being able to watch all of Twilight Zone again whenever you wanted to!” It was coming, I was certain of that, and I wanted Disney to be in front of the wave. I figured the best way to do that was to convince Steve of the inevitability of this idea, “iTV,” as I described it to him.
Steve was silent for a while, and then he finally said, “I’m going to come back to you on this. I’m working on something I want to show you.”
A few weeks later, he flew down to Burbank and came to my office. Steve’s idea of small talk was to glance out the window, make a brief comment about the weather, and then immediately start talking about the business at hand, which is exactly what he did that morning. “You can’t tell anyone about this,” he said. “But what you’re talking about with television shows—that’s exactly what we’ve been imagining.” He slowly withdrew a device from his pocket. At first glance it looked just like the iPod I’d been using.
“This is our new video iPod,” he said. It had a screen the size of a couple of postage stamps, but he was talking about it like it was an IMAX theater. “This is going to allow people to watch video on our iPods, not just listen to music,” he said. “If we bring this product to market, will you put your television shows on it?”
I said yes right away.
Any product demo by Steve was powerful, but this was a personal demonstration. I could feel his enthusiasm as I stared at the device, and I had a profound sense of holding the future in my hand. There could be complications if we put our shows on his platform, but in the moment I knew instinctively that it was the right decision.
Steve responded to boldness, and I wanted to signal to him that there could be a different way of doing business with Disney going forward. Among his many frustrations was a feeling that it was often too difficult to get anything done with us. Every agreement needed to be vetted and analyzed to within an inch of its life, and that’s not how he worked. I wanted him to understand that I didn’t work that way, either, that I was empowered to make a call and that I was eager to figure out this future together, and to do so quickly. I thought that if he respected my instincts and my willingness to take this risk, then maybe, just maybe, the door to Pixar might crack open again.
So I told him again, yes, we were in.
“Okay,” he said. “I’ll get back to you when there’s more to discuss.”
That October, five months after that first conversation (and two weeks after I officially became CEO), Steve and I stood on a stage together at the Apple launch and announced that five Disney shows—including three of the most popular on TV, Desperate Housewives, Lost, and Grey’s Anatomy—would now be available for download on iTunes, and for consumption on the new iPod with the video player.
I’d essentially brokered the deal myself, with assistance from Anne Sweeney, who ran ABC. The ease and the speed with which we got it done, combined with the fact that it showed an admiration for Apple and its products, blew Steve’s mind. He told me he’d never met anyone in the entertainment business who was willing to try something that might disrupt his own company’s business model.
When I walked onstage that day to announce our Apple partnership, the audience was confused at first, thinking, Why is the new Disney guy up there with Steve? It can only be one reason. I had no script, but the first thing I said was “I know what you’re thinking, but I’m not here for that!” There were laughs and groans. Nobody wished we were making that announcement more than I did.
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A FEW DAYS after I got the job in March 2005, a meeting showed up on my calendar about ticket pricing at the theme park we would soon be opening in Hong Kong. The request came from the office of Peter Murphy, the head of Strategic Planning. I called the person who was running Parks and Resorts at the time and asked him whose meeting it was.
“It’s Peter’s,” he said.
“Peter’s having a meeting about ticket pricing in Hong Kong?”
“Yes.”
I called Peter and asked why.
“We have to make sure they’re doing the right thing,” he said.
“If they can’t figure out what pricing should be, they shouldn’t be in their jobs.” I said. “But if we believe they should be in their jobs, then they should be in charge of pricing.” I had the meeting canceled, and while it wasn’t a hugely dramatic moment, it was the beginning of the end of Strat Planning as we’d known it.
Peter has a first-rate mind and an almost unequaled work ethic, and as I’ve mentioned, Michael had come to depend on him almost exclusively as the company grew. Peter consolidated and protected his burgeoning power. His skill and his intellect often caused him to be disdainful of other senior leaders, and as a result he was feared and disliked by many of them. It was a tense and increasingly dysfunctional dynamic.
As far as I knew, it hadn’t always been that way. When Michael and Frank Wells came in to run the company in the mid-’80s, they created Strat Planning to help them identify and analyze a range of new business opportunities. After Frank’s death in 1994 and the Cap Cities/ABC acquisition in ’95, Michael needed help managing the newly expanded company. In the absence of a clear number two, he leaned heavily on Strat Planning to help him make decisions and steer Disney’s various businesses. I recognized the value of their contributions, but I could also see, with each passing year, that they were growing too large and too powerful, and that the more influence they wielded, the more disempowered the people who were running our individual businesses became. By the time Michael named me COO, there were about sixty-five people in Strat Planning, and they’d taken over nearly all of the critical business decisions across the entire company.
All of our senior business leaders knew that strategic decisions about the divisions they ran—Parks and Resorts, consumer products, Walt Disney Studios, and so on—weren’t actually theirs to make. Power was concentrated within this single entity in Burbank, and Peter and his people were viewed more as an internal police force than a partne
r to our businesses.
In many respects Peter was a futurist. He felt our business leaders were old-school managers whose ideas were at best variations on the status quo. He wasn’t wrong about that. There were many people at the company at that point who didn’t have the analytical skills and aggressive attitude exemplified by Peter and his team. You can’t wear your disdain for people on your sleeve, though. You end up either cowing them into submission or frustrating them into complacency. Either way, you sap them of the pride they take in their work. Over time, nearly everyone abdicated responsibility to Peter and Strat Planning, and Michael was comforted by the analytical rigor they represented.
To my mind, though, they were often too deliberative, pouring every decision through their overly analytical sieve. Whatever we gained from having this group of talented people sifting through a deal to make sure it was to our advantage, we often lost in the time it took for us to act. This isn’t to say that research and deliberation aren’t important. You have to do the homework. You have to be prepared. You certainly can’t make a major acquisition without building the necessary models to help you determine whether a deal is the right one, but you also have to recognize that there is never 100 percent certainty. No matter how much data you’ve been given, it’s still, ultimately, a risk, and the decision to take that risk or not comes down to one person’s instinct.