The main argument that I make in my book is that CEOs matter, not because they do or control everything, but because they shape everything that matters. You had a predecessor who also had a very long tenure. You'd waited a long time to become CEO. You were very ready for it when you got the job. One of the first things that you had to do was to tell the very storied part of Disney, which was the animation business, that they needed a reset. And you brought in Pixar as a way to help the company reimagine its future. Can you walk us through how you had Disney confront this reality, and what it took to get people to get on board?
The signs were all there that Disney Animation was faltering, and that its importance to the company was rather significant and therefore had to be fixed and fixed fast. It wasn't that the company was in denial, but I think because they had no solutions in terms of how to fix Disney Animation, there wasn't any real movement to try to do so. They were kind of stuck in neutral in that regard, knowing there was a problem, but not knowing how to get out of it. I studied the company very carefully. It was very clear to me that at least in 2004, 2005, when I became CEO, the animation business to the company, and animation in particular, was probably more important than any other business in terms of not just the bottom line, but the perception of the company. And so I felt a sense of urgency, and I acted very quickly to address it. And that was to buy Pixar and to not only bring Pixar into Disney, but bring the leadership of Pixar into Disney Animation to turn Disney Animation around. And fortunately, it paid off. The people at Pixar that came in, John Lasseter and Ed Catmull, in fact, turned Disney Animation around and relatively quickly. And the rest is history. The success of Disney Animation since then, with movies like Moana and Frozen and Tangled and Zootopia has been very, very obvious not just to the bottom line, but to the overall perception of Disney.
One of the tasks that CEOs have to do is to both build on the heritage of the company, and you inherited-- we teach courses at Harvard Business School about Disney, about the extraordinary flywheel of how Disney for years had built amazing IP that it was able to leverage through theme parks and everything else. And yet CEOs have to also grow the company into new areas. How did you balance both the exploitation of the core of Disney as well as its movement into new areas? You made some very big bets. How did you think about that balance?
Many people, Disney, even into the 2004, 2005 period, were still stuck in its past in many respects, stuck in the past that really was Walt Disney's past. And what I found interesting about that is that Disney, Walt Disney himself, was a real futurist and an innovator, and someone that was willing to challenge the status quo all the time and move forward, create new rules, break boundaries, et cetera, and so on. But there was this belief that he was so larger than life and so iconic and so successful that almost everything that he created should not necessarily stand still, but be honored to a fault, actually. I talk often about it being revered. And I actually determined that that was way too powerful in terms of adherence to the past and it should be respected. Meaning, let's respect what he did. Let's respect who he was. Let's not relegate it to a museum case of some sort to be looked at and appreciated. Let's use it to build on it and to change from it, which is exactly what Walt would have done. So it was immediately basically emphasizing the need not to ignore our past, to respect it, but again, not to revere it to a fault and to enable us to bring the qualities forward, but also maintain a culture of innovation and risk taking.
One of my own observations has been that people forget that traditions were once innovations, that you could not have a tradition that wasn't innovation once. And the obligation of a leader, as you did, is to innovate today something that then has the opportunity to become a tradition tomorrow.
We get criticized at times for changing out older attractions in our theme parks that sometimes were built in the 1950s and 1960s, and no one likes us to do that. And they say, well, Walt created that. How can you touch it? Well, Walt himself would have changed it. They forget that he wasn't wedded to his past or to Disney's past. He was always looking ahead and always willing to essentially create change, even if it was unpopular initially.
Say a word about how you influenced the culture of Disney. Because lots of people understand the word, but they don't quite understand how a CEO actually has an impact on the culture of a company.
I wanted to be a collaborative environment, a collaborative company. Not everything should be top down. But I also wanted everybody to know that as CEO, I was an authority figure and that I had the final say. And kind of a balance between being an autocrat and being a democrat of sorts. Allowing a process to be collaborative and with many people engaged and a lot of people and hearing input from many different sources, but at the same time, everybody knowing at the end I could dictate what we wanted to do or when the debate should be shut off, that opinion should be shut off, and we should proceed or move forward. So that certainly was one. I loved accessibility. I say I love it because I thought it was important. I was someone people could engage with. And so I made sure that, for instance, in time allocation, that I was there a lot. I cut off most extracurricular activities. I was only on one outside board. I attended very few conferences. I didn't give that many speeches. I spent my time at the company, with our people and with our people at all levels. That was really important. One, it gave me an ability to influence. Two, it gave people an ability to feel respected and appreciated, because I had the opportunity by seeing them to actually express appreciation and support. And I think it also gave me an ability to demonstrate enthusiasm and optimism and also to preach to them what I thought was the most important about the company and its future.
One of the CEO's scarcest resources is their time. My colleague Mike Porter and I did a study of how CEOs manage their time, because new CEOs would say to us, oh my God, I've been a good person at managing my time my entire career, but this job is challenging me in ways that I never could have imagined. So talk a little bit about how you dealt with what seemed to be the infinite and myriad demands on a CEO's time, and yet it's not like-- the job expands, but the hours in a day don't.
I was fortunate to have been COO for five years before I became CEO, and I was able to observe how my predecessor managed his time. And I quickly discovered that as CEO of Disney, particularly for an extended period of time, you're drawn outside the company constantly. You're asked to speak and appear and you can easily, either wittingly or unwittingly, become distracted and your time gets even more challenged. And so I promised myself when I came in, particularly in the early stages, first maybe five years of being CEO, I would devote 99% of my non-family time to Disney. Now, how do you allocate the 99% of your time? One, there are things a CEO must do. You have to preside over board meetings and earnings calls and meet with critical constituents or constituencies, investors and employees and your senior team. So that's very, very clear. Second, anything that required either significant capital allocation or could have a significant impact on the perception of the company and its brand, as a CEO, you must be involved with those matters. Really important. The third bucket was where could I make a difference? In other words, if I was asked to engage in something and I really didn't think that my involvement mattered, then I shouldn't be spending my time doing it. I should delegate and rely on other people to do that. And the company got more successful. I had the freedom to choose things that I actually enjoyed doing. Now, that discretionary bucket was small. But for instance, even though I mentioned I thought I could have a positive influence on the creative process, there were days when I had no engagement in creative processes, because I was drawn in so many other directions. Those were days that I left work not happy, and so I made sure that there was something creative in every single one of my days.
It's rare to have a CEO who both at some point voluntarily decided to step down and then had to come back in. What have you learned about the succession process from your own experience of having done it once, didn't go as you hoped for, now you've thoughtfully done it again? What lessons could you share for someone else who thinks about making sure that succession, which is the last act of a CEO, goes as well as it possibly could?
We had a process back in 2019 and '20 when we chose my successor. Looking back, perhaps it wasn't as thorough as we thought, in part because we thought we knew the person extremely well. He'd worked for the company for a very long time and for me directly. And we knew his strengths and we knew some of his weaknesses as well. I'm not suggesting that we discounted the weaknesses, but in our zeal to check a box with succession and enable me to move on, first as executive chairman and ultimately to leave, I'm not suggesting that we ignored some of the issues, but I think we discounted them a bit more. I think the other thing that we missed is the environment was changing dramatically. We now live in an age where I think this crisis is almost omnipresent. We live in a state of almost perpetual crisis, or an environment in which a crisis can occur almost on a very regular basis. I think that requires a different kind of leadership, and I don't think we realize that at the time. Now, this is, in a way, hindsight, but I realize today that leadership needs to be capable of managing an environment in perpetual crisis. So what does that mean? I think it puts even more emphasis on stamina. It puts even more emphasis on someone's ability to, one, admit the crisis and deal with it, but never lose hope and optimism and balance that optimism and hope with realism. It requires someone to have a really good team of people to either take up the slack while the leader is dealing with the crisis, or to help the leader contend with the crisis as a team. Extremely important. And who does the people choose as those that-- who does the person choose as those that he or she is closest to? The ability to, I think, in a crisis, presence becomes even more important. You can't retreat to a bunker. And I think you have to be-- I don't think people want fearless leaders, but they don't want fearful leaders. They want somebody that's going to show some vulnerability, but never show that they're frightened. We didn't ask ourselves those questions, though maybe it would have been premature to do so. This was before COVID hit, right before COVID hit, for instance. But as we approach succession this next time around, choosing my successor this past February, we asked ourselves some of these very questions about that person. Is he resilient? Does he have the stamina? Does he choose a good team? Is he someone who can call it what it is, meaning we're in a real crisis, but then deal with it in a reasonable and sane and steady way, mature way?
Bob, I know it was not on your wish list, but it's rare for someone to become a CEO again, and you returned to Disney for the second time. What was different about being CEO for the second time around?
I came back with an agreement to stay for two years, and that's interesting unto itself, because when you become CEO initially, you think, well, I don't know. I'm not going to be there forever, but I could be here a long time. And so you want to get certain things done right away, but your decision making can stretch over a period of time. Suddenly you're back and there's a clock ticking that's louder than you ever experience. And you think, well, I got to get a lot done in a very short period of time. And you immediately have to come to grips with, am I going to be a short term CEO managing more for the present or am I going to think long term and leave the company with a momentum or strategy or a pathway into the future? Very, very different than the first time around. And we talked about balancing being an autocrat and essentially running a process that is all inclusive and democratic of sorts. If you don't have as much time, then you're going to have to show up to pay earlier, and in effect, become more of an autocrat. And I didn't really want to do that, but I thought, OK, no messing around here. We'll have a collaborative process and discussion and make sure everybody feels part of it all, part of the decision making process. But the time to act was much faster and had to be. And I had to balance that again with not trying to basically come in and just order everybody around to do things very, very quickly. That was challenging.
