Innovator Article

Collective Creativity Brings Disney’s Magic Alive

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Distinguished Speaker • by Tim Akin

“If you can dream it, you can do it. Always remember that this whole thing was started with a dream and a mouse.”

—Walt Disney

Behind the Disney magic that has inspired a sense of awe and imagination in young and old for several generations is a rich legacy of quality creative content, exceptional storytelling and a spirit of innovation. Today, The Walt Disney Company is the world’s leading international family entertainment and media enterprise, with four business segments: media networks, parks and resorts, studio entertainment and consumer products.

Disney Consumer Products alone is a $30 billion business, reining as the world’s largest licensor with merchandise ranging from apparel, toys and home décor to books and magazines, foods and beverages, stationery, electronics and animation art.

Overseeing finance and accounting and strategic reviews of the segment is Executive Vice President and Chief Financial Officer Anne Gates, who visited the Graduate School of Management’s Bay Area campus in October as a Dean’s Distinguished Speaker.

Drawing on her two decades of executive experience at Disney, Gates presented a multimedia and operational tour of its many franchises and “magical” products. Like a ride at Disneyland, she bounced from Disney·Pixar’s Cars and Toy Story movies to the multi-billion- dollar Disney Princess line and new ideas such as Disney Baby for new parents and Disney English, an immersive, interactive digital learning environment for children based on Disney storytelling that is a big success in China.

Gates explained how Disney’s collective creativity fills a pipeline of innovative new products.

“We have to control our own destiny and pull it all in-house,” she said of the team-based brainstorming, design and prototype process. “It very much operates like a virtual toy company linking across our retail network. It’s brand management 101, but nobody else does this in the entertainment industry.”

She said Disney identifies key partners as licensees, such as Mattel or JAKKS Pacific, Inc., that do the heavy lifting on manufacturing, retail placement and marketing. The challenge in a market dominated by price-competitive Wal-Mart and Target is balancing high product quality with gross margins for licensees.

“That’s the piece we are constantly battling, especially in this economic environment: it’s quality versus the margin,” she said. “But we are not going to give up on the quality.”

To stay on top of the issues, she said Disney now has offices near Wal-Mart headquarters in Bentonville, Ark., and Target headquarters in Minneapolis.

And it’s not just bricks and mortar, it’s competition from Amazon.com, Walmart.com and other online retailers that carry Disney merchandise.

“Our Disneystore.com site’s biggest competitor is us—the rest of our licensing—so the site has to create added value.”

One of the biggest missteps, she said, was licensing the Disney Store chain to The Children’s Place. “They didn’t understand the ethos of Disney,” she explained. “That experience fundamentally altered our retail strategy and focus.” Disney took back its stores, introducing “The Best 30 Minutes of a Child’s Day” theme with interactive areas for kids. She said store traffic is up 20 percent and now more people visit the more than 350 Disney Stores worldwide than the company’s theme parks.

Wrapping up, Gates recalled a brief encounter with Apple co-founder Steve Jobs, a Disney director and its largest shareholder, who had passed away two days before. “He lectured me on quality and why it is so important and how that drives both bottom- and top-line growth. And he was, and is, so right.”

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