Big business the Disney way

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Many Americans distrust so-called “big business” — unless that big business happens to be the Walt Disney Company.

When it comes to Disney, most anti-big-business bets seem to be off. Instead, people think about family entertainment, from television shows to movies to theme parks. That’s a great credit to the way Disney has done business since 1923. In fact, Disney business strategies are taught by the Disney Institute, which was established 25 years ago.

My family journeyed to Walt Disney World in Florida for an August vacation. While enjoying the four main theme parks — the Magic Kingdom, Epcot, Hollywood Studios and Animal Kingdom — along with golf on a PGA Tour course, various restaurants, and perks at a Disney resort hotel, it was hard to ignore how Disney excels at providing quality service, achieving synergy and innovating.

Few consumers today are surprised by incompetent or surly service at stores, restaurants or entertainment venues. But after more than a week immersed in Disney World, instances of poor service were rare exceptions.

Smiling, polite, friendly and helpful “cast members” were the rule. Even when I was selected to briefly become part of the Old West Hoop-De-Doo Musical Revue dinner show (as Davy Crockett’s angel — don’t ask), the singers and dancers were supportive and gracious.

The Disney Institute notes that the company emphasizes attention to detail that leads to consistency in service; designs standards and processes that raise customer satisfaction; and creates “metrics to gauge the needs, perceptions and expectations” of customers.

I experienced Disney’s use of metrics when asked to take a brief survey on the cleanliness of Epcot while leaving the park one evening, and taking an online survey upon returning home about golf at Disney World. Many businesses utilize customer feedback mechanisms. But it’s clear that Disney actually uses this information, while many others do very little with such feedback.

As for synergy, it’s clear that the various arms of the Disney entertainment conglomerate work together so that the result turns out to be far more valuable than what the individual parts might have produced separately. Movies, theme parks, hotels and resorts, stage shows, books, music, television, sports, and other endeavors meld together to create value, whether it be at one location, such as Disney World, or across this global enterprise.

Two of Disney’s biggest moves in recent years offer significant synergies. In 2006, Disney acquired Pixar Animation Studios, which ranks as one of the most successful film studios in Hollywood history. While previously distributing Pixar films, now Pixar tales and characters — from Toy Story’s Buzz and Woody to Monsters Inc.’s Mike and Sully — create added value by being in-house at Disney.

And in 2009, Disney acquired Marvel Entertainment, with its thousands of superheroes and villains. That has been a big plus for Disney’s movie business, and presents additional avenues for increased revenue.

As for innovation, Walt Disney said, “I believe in being an innovator.” Indeed, innovating and creating are central to entrepreneurship and business, and that is perhaps most apparent when it comes to an entertainment business. If the firm does not excel at creating, then it will decline and eventually fail. Disney has not been immune to creative lulls during its corporate history, but it emerged from those troubled times. That’s notable, as it’s often difficult for large firms to establish a culture and incentives that promote risk taking, creativity and change.

Oddly, where the Disney World experience fell short was in merchandising. It struck members of my family how much merchandise was missing regarding some highly successful Disney vehicles. For example, products tied to top Disney Channel shows — such as Wizards of Waverly Place and Good Luck Charlie — were nowhere to be seen. And I found no apparel for my favorite Pixar film — The Incredibles.

But in the end, Disney stands out as a big business being warmly embraced. Of course, the fact that it is in the entertainment business — selling beloved stories and characters — helps tremendously.

But it must be kept in mind that every big business was once a small startup. Walt Disney and his brother Roy kicked things off in 1923, with Mickey Mouse debuting in 1928’s Steamboat Willie, which was Disney’s first animated feature including sound effects and dialogue.

And small firms only become big businesses by serving consumers well. As Walt Disney put it, “Give the public everything you can give them.” He understood that building a small business into a large enterprise was a positive accomplishment.

Unfortunately, and ironically, this lesson was lost to misguided politics in the otherwise enjoyable Cars 2 film, released in June, with the Disney/Pixar filmmakers taking a slap at “Big Oil.” Such politics, no doubt, played a part in Cars 2 poor box office performance relative to other Pixar films. In the end, big energy firms gained market share by doing the same thing as Disney, i.e., provide value to consumers. And families use gasoline to drive to see Disney movies; ride in planes using jet fuel to arrive at Disney theme parks; and work in the energy business to buy Disney merchandise. Disney should understand that big in business is not bad.

Raymond J. Keating is the chief economist for the Small Business & Entrepreneurship Council, and author of Warrior Monk: A Pastor Stephen Grant Novel.