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Let's start in 1995. Longtime Disneyland President Jack Lindquist has left the company. But instead of appointing another theme park lifer to replace him, Eisner tapped Paul Pressler, head of the company's successful Disney Stores and a manager with no theme park experience.
Instead of holding back, and learning the theme park business from managers who'd been working it their entire lives, Pressler moved swiftly to run Disneyland like a giant Disney Store. And fans noticed the differences. Souvenirs themed to park attractions disappeared, replaced by acres of plush toys and character-themed clothes straight out of the Disney store. Maintenance crews swept, painted and mended less often. Trash floated in ponds and cluttered paths. Burned-out light bulbs stayed in place, dimming Main Street's evening luster.
In times past, fans' disappointment would have spread slowly, by word of mouth. But in 1995, fans also could express their frustration to other around the world on the alt.disney.disneyland Usenet group. And they did. Disney's sterling reputation began to tarnish, and fans compared notes and launched websites illustrating the deterioration in their favorite theme park. Al Lutz' "Promote Paul Pressler" site drew attention from major newspapers, with its cheeky recommendation that the new Disneyland president be "promoted" to position in the company far away from the theme parks.
Why did Disney change the way it ran Disneyland? The theme parks were the company's cash cow, earning billions in revenue even when the rest of the company suffered. Why would Eisner entrust one of the company's jewels to a man who had not a single day of experience working in, let alone managing, a theme park?
Because that's the way things are done now in American business, that's why.
Michael Eisner knows television. He knows the movie business. He worked his way up through the industry as a production chief, then a studio head. He's produced shows and knows how filmed entertainment gets made. A generation ago, most managers were like that. They worked their way up through the production side of their industry, knew how to do what their company did and knew how to motivate and teach those who were doing the company's work.
Today, that's not often the case. American business has fallen in love with the idea that "management" is a unique skill -- one that exists apart from the particular function of a specific business. The modern manager can run anything -- a movie studio, a newspaper, a cereal company. The work of the company is not relevant. Armed with MBAs and no practical experience, these managers run their companies not from the factory floor or theme park sidewalks, but from top-floor offices, making decisions based on spreadsheets and computer models.
After the death of Disney President Frank Wells in a 1994 helicopter accident, Eisner showed signs of transforming from an old-school studio executive into a modern-style by-the-numbers manager. No longer running the company with a trusted partner, but by himself, Eisner began to populate the company with more of these business school managers like Pressler, turning away from the Disney lifers would had sustained the company for years.
Wall Street loved it. After languishing for much of 1994, Disney's stock took off in 1995, along with the rest of the market. Pressler and other managers cut the company's expenses while enjoying ever-increasing attendance at Disney's theme parks.
But what Pressler and other number-crunchers saw as "waste," long-time fans saw as the magic that distinguished Disney's theme parks from those run by Six Flags and others. But the immaculate streets, well-tended landscapes, innovative attractions and unique souvenirs were going away under Disneyland's new management.
Dissent spread. Internet critics spread the word about debacles like Disneyland's failed "Light Magic" show, helping torpedo that parade within one summer. Fans continued to visit the parks, but more of them with increasingly heavy hearts, as the saw their once-favorite park in decline.
Rather than abandon Disneyland, they turned their disappointment with the company against Pressler, and eventually, Eisner. The Disney CEO has in the past five years become the villain of Internet discussion boards. Current and former Disney employees, or "cast members," joined the chorus, voicing their contempt for a management team that pocketed millions in salary, stock gains and fringe benefits while front-line employees faced dissatisfied customers, long hours, poor support and even layoffs.
While the number-crunchers squeezed customers' experience to fatten the company's bottom line, Eisner bullied Hollywood. He cut deals, including two with highly regarded rivals Miramax and Pixar, expanded the company's share of the movie business and infuriated many within the industry along the way. He bought ABC and ESPN, returning the company to Eisner's roots in the television business. Encouraged by his number-crunchers' success with inflating profits, Eisner expanded Disney's operations and took on even more responsibilities for himself.
But customers' frustration with the company continued to grow. In 2001, they showed Disney they'd had enough, when fewer than 10,000 visitors showed up for the opening of the company's highly-touted California Adventure theme park in Anaheim. Poor reviews on the Internet from those disappointed fans crippled the park, dissuading an untold number of tourists from visiting. A depressed American economy and the Sept. 11 terrorist attacks accelerated the decline, and by 2002, Disney was forced to turn to aggressive discounts to lure visitors to its parks. Disney was becoming more like Six Flags in ways the company's fans had never feared to imagine.
And then, Roy. Forced from the board by Eisner's insistence that he abide by a mandatory retirement age, Roy quit and launched a campaign against the man he's once brought into the company. Finding few allies among the business-school types on Wall Street and in the press who looked only to Disney's recent stock surge, Roy turned to the Internet for support. He launched SaveDisney.com and linked to nine Web sites (including this one) which had publicized criticism of Eisner and Disney's management over the past several years.
Roy Disney became the Howard Dean of the anti-Eisner movement. As Howard Dean became the voice of Democrats frustrated with their party's inability to challenge George W. Bush, Roy Disney became the public face and voice of the Internet movement to replace Michael Eisner. Bolstered by an online echo chamber of support, Roy's message of dissent spread, attracting the attention of stockholders, analysts, fund managers and, eventually, journalists who could no longer ignore the growing dissatisfaction with what the Disney Company was producing.
And yesterday in Philadelphia, at Disney's annual stockholders' meeting, 43 percent of shareholders voted to withhold their support for Eisner -- a stunning and historic rebuke to a corporate CEO.
Disney management spun the shareholder revolt as a call to separate the jobs of company chairman and CEO. Which the board has now done, installing former U.S. Sen. George Mitchell and Disney' chairman. But fans remain unsatisfied.
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Score what's happened to date an emerging victory for consumers angry and frustrated with managers who run corporations for their stockholders instead of their customers. Consider this a warning to near-sighted managers and corporate boards who value short-term profit over their customers' long-term satisfaction. With the Internet, disappointed customers can spread the word, organize and eventually convince even jaded Wall Street analysts that corporate myopia endangers their investment.
Consumers are growing sick with school-trained managers who don't understand their companies' business. Who see customers' satisfaction as irrelevant to their bottom line. These consumers now are speaking against profitable companies that won't bother to hire needed extra hands. They are joining with employees to protest businesses that demand productive workers give back pay, benefits or even their jobs while top-level managers rake in larger bonuses.
The Internet has given these customers and these employees a global voice -- one that many other consumers find as trustworthy, if not more, than the voice of "traditional media" businesses' PR departments have courted for years. Smart corporate executives will learn from the example of Michael Eisner: Drag your managers away from your spreadsheets and put them in front of your customers. Demand that your managers learn your company's business -- not just your company's numbers.
If you don't, Michael Eisner's fate awaits you, too.
A couple of comments:
First, in 1998, I was working for Universal Creative on 'Men In Black: Alien Attack.' One of the project's art directors was a WDI veteran. I remember her slamming Paul Pressler -- claiming he was turning Disneyland into a shopping mall. She claimed he neglected the "show" to boost retail operations. Exactly as Mr. Niles reports.
Second, it is mind boggling to note that when Pressler left the company, his departure was sited as an example of Mr. Eisner's inability to maintain a pool of talented executives. Can you believe it? The mainstream media were blind to what Pressler had done.
Regarding the lackluster opening attendance of DCA: I was working at WDI Orlando when DCA opened. On the opening day, I wrote a satirical press release that I circulated around the office (and to email chums) it read: "Although skies were gray, Disney executives and cast members joined together at the front gate to welcome the park's first guest. Twenty-five minutes later they welcomed the park's second guest."
And i think its sad that they then put eisner's main hack/buttboy-mitchell-as the new chairman.
Another exampl;e that they still dont get it and are on a very slow learning curve.
http://www.latimes.com/business/la-fi-disney5mar05,1,5168128.story?coll=la-home-headlines
One of the interesting points is the "consent solicitation"....
This "battle" is far from over
Michael Eisner could learn a lesson from that guy. After 10 years of steadily cutting back on the Disney theme park experience, you don't have to be a Disney geek to see the problems - even the Wall Street types are starting to see what Disney is offering today isn't the premium product they used to sell.
Eisner's job being split into two looks like a move to buy some time and save face. People must remember though that it is not just Eisner that is the problem, but much of the current board.
At least for California things are looking better. Matt Ouimet at least walks the parks. Things are looking up under his direction, but with the current Disney board, they are the ones who can ultimately tug the string on Pinocchio.
Cheapness can work in business, but Eisner chose the wrong places to be cheap. The cheapness brought to the animation wing hurt the high-quality animated films. The cheapness brought to ABC has killed its ratings and ad revenue. And we all know what the cheapness has done to the parks.
Meanwhile, the studios have found little penny-pinching. While high-spending worked well for Pirates of the Caribbean, it flopped hard on The Haunted Mansion. In fact, in the 90s when the parks were Disney's cash cow, their profits were often not used on the highly successful parks, but thrown at the movie studio praying SOMETHING would become a franchise. Then park money got thrown at ABC, and we all know how well that has turned out. Then more money at the flop that is ABC Family. Then, when the parks finally need money, do they get it from elsewhere in the company? No! The parks, who had excelled for nearly a decade, got no handouts and had to cut back. Cut back so fiercely, it hurt the parks even more.
I have said it before and I will say it again, especially in the current takeover climate. The parks are unlike any other company out there. They need to be treated differently. And the only way that will happen is if they are spun off from Disney. No more stealing park profits for other divisions. The parks would rely on nobody but the parks, which would undoubtedly keep Disney on top for years to come.
If you put the parks into a seperate company, you can't simply allocate studio and network assets to them. They have to be licensed, as they would be to any other company. Sure, maybe Disney licenses the characters to the parks cheap. At first. But what happens when the studios need cash? The fat coffers at the parks are gonna look mighty tempting for draining.
Eisner is no longer the man he was over ten years ago. The cheapness virus has affected him and he sees EVERYTHING in dollar signs.
Stanley Kubrik removed himself from the outside world and then created Eyes Wide Shut, a movie that was so out of touch with reality it tarnished his brilliant movie career. Eisner has removed himself from the world of "little people" and has created a company so out of touch with those people, that it has forever tarnished a career than might have been legendary.
