Organizational Insight: Bob Iger Reshapes Walt Disney
Bob Iger took control of the troubled Walt Disney Company in 2006 after holding the position of COO under its autocratic CEO Michael Eisner. For several years Disney had been plagued by slow decision making and analysts claimed it had made many mistakes in putting its new strategies into action. Its Disney stores were losing money, its Internet properties were not getting many hits, and even its theme parks seemed to have lost their luster because only a small number of new rides or attractions had been introduced.
Iger believed that one of the main reasons for Disney's declining performance was that it had become too tall and bureaucratic and its top managers were following financial rules that did not lead to innovative strategies. So one of Iger's first moves to turn around its performance was to dismantle Disney's central strategic planning office. In this office several levels of managers were responsible for sifting through all the new ideas and innovations sent up by Disney's different business divisions, such as its theme parks and different movies studios. They then selected the best ones and presented them to the CEO for discussion and perhaps approval.
Iger saw the strategic planning office as a bureaucratic bottleneck that actually reduced the number of ideas coming from below and that often meant the right decisions were not being made at the top. So he decided to dissolve the office in 2008 and reassigned its managers back to their different business divisions.18
The result of cutting out an unnecessary layer in Disney's hierarchy was that its different business units were generating more new ideas by 2009. The level of innovation increased because managers are more willing to speak out and champion their ideas when they know they are dealing directly with the CEO and a top-management team searching for innovative new ways to improve performance, rather than a layer of strategic planning "bureaucrats" only concerned for the bottom line.19 In 2009 Disney acquired Pixar, for example, and Iger created a partnership with Steve Jobs, Pixar's major owner, that has led to several joint initiatives. By 2011, Disney reported sharply higher operating profits despite the recession. Its decentralized management approach is helping it to invest resources in those products that will do the most to promote its growth, and allow it to remain the vacation place of choice, especially as the global economy recovers.20
What problem has the company been experiencing?
How has the company attempted to deal with the problem?