How to Lead Before You Are in Charge
Make peace with the past, plant seeds for the future, and empower others in the present
In March 2005, the Walt Disney Board of Directors selected Bob Iger to succeed Michael Eisner As CEO of the Walt Disney Company.
But there was a six-month period before Bob Iger formally became CEO.
Until then, Eisner was still in charge.
Eisner had largely turned Disney around twenty years prior. Disney struggled until Eisner revitalized its now-powerful brand.
But in 2003, Roy Disney — son and nephew of Disney founders Roy and Walt Disney — resigned from his position at the company and led a campaign to replace Eisner. Roy Disney claimed the company had “lost its soul” and recent failures of the ABC network and a downturn in the Disney amusement parks supported Roy’s claims. Disney had even endangered its exclusive relationship with Steve Jobs’-owned Pixar Studios, which was wildly popular after a string of hits, including Toy Story and its sequel.
The company had become lethargic and decisions took way too long. Eisner had created a group called Strat Planning that reviewed every strategic decision across the entire company — sometimes taking months to make basic decisions. The Strat Planning group scrutinized and evaluated every acquisition and plan, sometimes killing deals before anything could happen.
Morale was low internally at the Walt Disney Company.
Based on the public and private struggles, the shareholders forced the board’s hand and dictated that Eisner must be replaced. Uncertainty hid around every corner.
The Board of Directors engaged in a lengthy search for the new CEO. After months of interviews and deliberations, the board selected Bob Iger. Bob had worked in the news and entertainment businesses that Disney had purchased, most recently as head of ABC Entertainment and then COO of the Walt Disney Company, working directly with Eisner.
There was one problem: since Bob Iger had worked with Eisner for the prior 10 years, people both inside and outside of Disney worried that nothing would change.
Was Bob Iger the man who could “save Disney”?
Bob had six months before he formally had the job of CEO. But he was forced to lead right away, before he was CEO. He had no time for mistakes.
How to Save Disney
Bob Iger explained the tense situation in his book, Ride of a Lifetime. Immediately after the company announced that he would succeed Eisner, the clock of skepticism started ticking. Eisner had six months left in his tenure before Iger would officially take over.
Bob immediately met with his closest advisors. He listed three objectives for the six months before he became CEO:
Make amends with Roy Disney. It made little sense for the Walt Disney Company to continue a public battle with an important member of the Disney family.
Salvage the relationship with Pixar and Steve Jobs. Disney Animation was broken, and Pixar represented the best animation and story-telling in the world. Jobs was one of the most respected business and technology leaders in the world. A healthy relationship with Jobs and Pixar would show the public that Disney was on the right track.
Improve internal morale by reducing the grip of Strat Planning. Each business within the Walt Disney Company felt constrained by the centralized authority of the Strat Planning group. Iger felt that strategic responsibility needed to be decentralized so that each business unit could make nimble decisions in the face of the quickly changing business environment.
Each objective had a specific purpose.
With Roy Disney, Iger felt the need to make peace with the past. There wasn’t time to carry forward past baggage.
With Steve Jobs, Iger wanted his company to operate in the new world created by technology. Iger wanted to plant seeds for the company’s future growth.
With the Strat Planning group, Iger knew that the only way to succeed in the current business environment was to push responsibility down to the leaders who were closest to the business operations. The future depended on great leaders making quick, smart decisions. Decentralizing the power of Strat Planning allowed the company to turn around the present circumstances.
Six months, three objectives, and one man. Saving Disney went from a catchphrase to a personal mission.
. . .
1. Roy Disney: Make Peace With the Past
Before Iger could even reach out to Roy Disney, Roy and another board member sued the Disney board over the selection of Iger as CEO.
There was only one way to make peace: a face-to-face conversation with Roy.
A meeting happened — even while Roy was suing the Disney board. No lawyers were present, just Roy Disney and Bob Iger.
During the meeting, Iger detected that Roy was hurt more than anything else. Roy felt separated from a company that he felt a strong connection to. The dispute was more about pride and ego than anything else.
Iger came up with a solution: extend the olive branch. Iger offered Roy a special board seat and an invitation to every film premiere and theme park opening. Roy would receive a consulting fee, and also an office so he could call Disney home.
Twenty-four hours later, Roy Disney dropped the lawsuit.
Bob Iger recognized that Disney could not be at war with a member of the Disney family. Iger could have dug in and felt the need to defend his selection as the next CEO. Instead, he defused a difficult situation by giving Roy the one thing that he needed more than anything else: a little respect.
. . .
2. Steve Jobs: Plant Seeds for the Future
Now that Iger completed the first objective of making peace with the past, he had to solidify the future of Disney.
Steve Jobs and Michael Eisner had epic clashes over Disney’s relationship with Pixar. Steve Jobs felt disrespected by Eisner’s comments about the tech industry. Jobs offended Disney when he said Disney was creatively broken. Ultimately, Pixar’s success drove Jobs to believe that he had the upper hand — and Eisner hated feeling like Steve Jobs could push him around.
Steve Jobs ended the Pixar-Disney partnership abruptly, scorching Disney.
But Pixar had something that Disney did not at the time: the best story-telling on the planet.
Iger knew that the future of Disney had to be linked to Pixar and its unique brand of animation.
Iger had an idea — don’t start with the Pixar relationship. Jobs had slammed the door on that partnership. It was not going to open easily.
Iger knew that Jobs responded to boldness. So Iger called Steve and told him that he thought the future of the television would include having every television show available on a device like the recently released iPod (the iPhone was a few years away).
Jobs was intrigued. He decided to open up — slightly — to Iger. Jobs showed Iger the new video iPod, which would allow users to not just listen to music, but also to watch video.
Jobs then took the opportunity to be bold: “If we bring this product to market, will you put your television shows on it?”
Iger had to make an immediate choice. Putting Disney’s shows on the new iPod could harm Disney’s business model. And he certainly didn’t have authority from the board.
Iger said “Yes”, though, without hesitation. This conversation was so different from the ones Jobs had with Disney in the past.
No negotiation, no disputes. Just a single question and an instant decision.
Five months later, Steve Jobs and Bob Iger announced that Disney’s most popular TV shows would now be available through iTunes.
Iger had struck a deal with Jobs that proved two things:
Iger — and Disney — will disrupt its own business model to gain a stronghold in the future, and
Making deals with Disney going forward would be fast, easy, and simple.
The future of Disney looked a lot brighter.
. . .
3. Dismantle Strat Planning: Decentralize to Move Faster in the Present
Michael Eisner created the Strat Planning group within Disney to help him make better business decisions.
No business within Disney was allowed to expand, invest, or start anything new without a thorough analysis from the Strat Planning group, which ultimately comprised around 65 talented individuals who evaluated every strategy and decision.
Strat Planning led to Disney making informed decisions. But there were downsides as well.
The ability to move quickly, and pivot quickly, was nonexistent. Morale was hindered, as every decision had to be vetted and justified. Yet, technology and the market required each business leader to confront new issues repeatedly.
Iger recognized that Disney needed the ability for its business leaders to make decisions related to each leader’s group. Strat Planning had to go.
One day, the head of Strat Planning scheduled a meeting with Iger. The meeting was supposed to cover ticket pricing in Disney’s Hong Kong park.
Iger acted quickly. He called the head of Strat Planning and asked why Iger and Strat Planning had to be involved in the setting of ticket prices in Hong Kong.
“We have to make sure they’re doing the right thing.”
Iger’s response started the decentralization of Disney: “If they can’t figure out what pricing should be, they shouldn’t be in their jobs. But if we believe they should be in their jobs, then they should be in charge of pricing.”
Iger canceled the meeting.
In the next few months, Iger transformed Strat Planning from a central decision-making authority into a much smaller, focused group. The smaller group was tasked with evaluating potential acquisitions instead of evaluating every decision inside of Disney.
Instantly, morale within Disney improved. One executive within the company said: “If there were church bells on the steeples throughout Disney, they would be ringing.”
Authority was now decentralized. Iger knew that for Disney to move forward, it had to be nimble, with each business within the company having the ability to make decisions and act quickly.
Iger later claimed that remaking Strat Planning was the most significant accomplishment in the six months leading up to his time as CEO. That claim is significant when considering the difficulties with Roy Disney and Steve Jobs.
. . .
Start Leading Right Away
If Bob Iger didn’t prioritize each of the past, present, and future immediately, he could never have succeeded as CEO and Chairman of the Walt Disney Company.
Iger had to start leading even before he was formally given the title of CEO. As soon as his position was announced, insiders and the public looked to him to do one thing: lead.
Don’t wait to lead. Assemble your closest advisers. Make a short list of objectives.
Eliminate the baggage of the past.
Plant seeds for the future.
Empower people with responsibility and accountability to make decisions.
Start leading as soon as you can — before you actually get in charge.
. . .
Learn the one lesson that has changed my life more than any other.