Creating Growth
Good morning everyone
Today’s letter is coming to you from The Beach Hut in Paternoster where we are ending off my birthday week. It was a fun week of celebrations that started with tapas at Pinchos, where we reminisced about Barcelona whilst enjoying the wham of a white anchovy laced tomato salad with the slightly salty Newton Johnson Albariño. The next day we spent lazy hours with much loved friends at Local, a recently launched “multi-outlet platform that supports local first – local farmers, creators, chefs and most importantly, lovers of food” (Thank you Marcus Zandhuis, CapeTownMagazine.com founder for introducing me to this gem). This time last year we were locked away, so these celebrations were a real blessing.
I ‘grew’ older this week, but powerful growth doesn’t come from the simple passing of time but from intentional action. This week’s letter focuses on creating strategic growth.
/ strategy
Reid Hoffman’s two-part Masters of Scale Conversation with Robert Iger, How Acquisitions Became an Ecosystem gives insights into some of the most successful acquisitions in the media and entertainment industry. The lessons can be applied in any context.
Acquisitions are a time-honoured vehicle for triggering growth. They often go wrong.
Iger, former CEO of the Disney Company, led the acquisition and successful integration of some of the world’s most iconic entertainment brands. He ensured that Disney not only acquired but was inspired and transformed through his acquisition of Pixar, Marvel and LucasFilms.
To think I don’t know where Buzz is hiding, my Spiderman has lost an arm and my light sabre doesn’t have batteries …ah well…let’s see what we can learn from Iger’s successes…
When Iger took the CEO role at Disney he had three goals for securing the businesses future – invest in branded content, embrace technology, and go global. These shaped his acquisition strategy.
First on his list was Pixar. Iger was clear that he didn’t just want the existing slate, he wanted what Pixar talent could enable for Disney. He explains to Hoffman that “I wanted John Lasseter, and Ed Catmull, who had run Pixar, and turned it into what it was. I wanted them to run Disney Animation. So, I was going to say to them, ‘your sandbox is doubling in size. Not only are you making great stuff at Pixar, but you can come down and do that at Disney’.”
Iger sold them not only on the deal but on the future impact that they could have. They could ‘double their sandbox’.
Painting a vision of the future can help secure, and settle, a deal.
Hoffman comments that “For the newly acquired property to thrive, its employees need to understand their value in the new ecosystem. They’re not just there to raise the stock price of the parent company. They’re there because they have something unique and important to contribute. And it’s the parent company’s job to communicate that.”
In concluding the deal, Iger went as far as drafting a social compact document that included maintaining Pixar rituals like a muffin for new employees and monthly beer bashes.
Respecting small details can speak volumes.
Intriguingly when Hoffman asked Iger what he thought he could have done better, he responded that he wished he had savoured the moment more. It was a deal that changed Disney’s future, but he was moving on to the next thing.
It’s a hard lesson. Moments like that don’t typically come around again. Of course, you can do better the next time, but that unique moment is gone forever. So, take Iger’s advice, pause and celebrate your successes.
Iger, then turned his attention to Marvel. Because of the Pixar deal, Steve Jobs now sat on the Disney board and he wasn’t a fan of comics. He didn’t understand Iger’s enthusiasm. Iger explains what he saw in Marvel:
“You have these avid fans all over the world. It’s almost a religion to people. My thought was, in looking at Marvel, they have thousands of characters. We kept counting. We lost track at one point. We went in, our first pitch to the board, “Hey, we can buy 4,000 characters.” No, it’s 6,000. No, it’s almost 8,000 characters. And stories you can tell and were being told for a lot of them, forever, endless. Endless. But Marvel, which was fairly successful at the time, well, they only released one film… they weren’t being managed as a brand. That mentality didn’t exist at Marvel. And I thought, wow, let’s bring them into Disney, give them the resources. Distribution, marketing, and the capital to make more films in higher quality and put a spotlight on that brand. Amp it up. Not small Marvel, big Marvel, and anything you make that’s Marvel, remind people it’s Marvel, not Disney, not anything else. And that’s what we did.”
Iger didn’t try to erase Marvel’s culture. He used Disney’s resources to unlock what Marvel had. He looked for integration and alchemy.
Iger’s largest deal, and potentially most challenging deal, was the $71.3billion purchase of 21st Century Fox. Fox was a challenging purchase as it included some profoundly non-Disneyesque like Deadpool and The Simpsons. So, how would this acquisition not end up resulting in Disney becoming a sprawling, unfocussed conglomerate?
Hoffman elaborates, “Remember, a great brand manager makes sure everything they do is additive in some way to the brand. If every touch point doesn’t bring delight, don’t do it. Days before the launch of Disney Plus, Bob confirmed publicly that not all of the new Fox holdings would stream on their new platform. Mature content would be directed to Hulu, in an exclusive deal that would keep the Deadpools firewalled off from the Dumbos.”
Even with a behemoth deal like that, the Disney team kept focused on the details, integrating properties that would reinforce each other and finding appropriate homes for those that didn’t.
In each instance, Iger shows the power of understanding what each asset brought, respecting the people and culture that created it, and looking for the ways that Disney could amplify their essence.
/ self
I was going to dive into the work of Stanford Professor, Carol Dweck whose book Mindset: The New Psychology of Success gets consistently referenced by multiple authors.
Dweck’s research over thirty years has shown that “the view you adopt for yourself profoundly affects the way you lead your life. It can determine whether you become the person you want to be and whether you accomplish the things you value.”
Dweck differentiates between two mindsets, growth and fixed, saying that “When you enter a mindset, you enter a new world. In one world – the world of fixed traits – success is about proving you’re smart or talented. Validating yourself. In the other – the world of changing qualities – it’s about stretching yourself to learn something new. Developing yourself.”
She makes the argument, backed by solid research, that adopting a growth mindset enables us to adopt the behaviours and habits necessary to live a meaningful life.
However, doing justice to Iger’s ‘growth through acquisition’ strategy has meant that we’ve run out of space for Dweck’s ‘growth through mindset’ strategy. This is just a teaser. We’ll return to it soon.
If you just can’t wait, Maria Popova provides a great overview.
/ soul
The backdrop to my birthday celebrations was the tragedy of this week’s Table Mountain fires.
As the fires were fought by brave souls, others rallied with kindness and generosity. One of those people was young artist Shakil Solanki, who donated the proceeds from the sale of four editions of this beautiful work to Gift of the Givers. They, of course, sold in a heartbeat. There is profound soulfulness in an act of creativity mobilising resources to mitigate the consequences of destruction. Thank you to Elana Brundyn who brought Shakil’s generosity to my attention.
As you go into the week be mindful of Iger’s regret. He will never know what he might have experienced if he’d paused longer to enjoy the Pixar moment. Don’t let the joy of life slip past you, be sure to savour the beauty.
Best wishes
Karl
PS: If you’d like to know more about Iger’s journey, you can read Robert Iger’s 15 Years Leading Disney.
PPS: If you enjoyed this letter and haven’t yet subscribed, you can do so here, and for the occasional extra snippet follow me on LinkedIn and Instagram.
(This letter was first published on 25 April 2021)