So how long should I keep the strategy?

The short answer to this question is deceptively simple- keep the strategy as long as it continues to work.

But lets look into this further, and with an example from Disney that I discovered in an article in HBR by Todd Zenger and which I have sued in my teaching at SMU.

Illustration: @1957 Disney
Illustration: @1957 Disney

I love this diagram from 1947. It shows Walt Disney’s original strategy, and importantly, the linkages between the various elements of Disney’s then business.

In a recent interview, Jeffrey Katzenberg described his first day at Disney as the newly appointed head of The Walt Disney Studios. The equally new Disney CEO, Michael Eisner, gave him a simple, unambiguous mandate: fix animation at Disney.

Disney long-timers informed Katzenberg that Walt Disney had left extensive notes about the business which were stored in the Disney archives.

Looking through these records, he discovered that Walt Disney had left a recipe for his company- the strategy map above.

The strategy map depicts a range of entertainment-related assets—books and comic books, music, TV, a magazine, a theme park, merchandise licensing—surrounding a core of animated and live action movies. It shows a web of linked connections that add value to each other, primarily between the core movies and the other assets and how they support each other.

If you look at the strategy map the old Disney comic strips promoted films; films “feed material (back into)” comic strips. The theme park, Disneyland, supports movies, and movies in turn support the park adding fresh creative ideas and maintaining high public awareness. The iconic Disney TV shows I watched as a child publicizes Disney music as well as highlighting the theme parks magic castle on every show. The movies feed “tunes and talent” to music.

Walt’s strategy in words might read: “Disney sustains value-creating growth by developing an unrivalled capability in family-friendly movies and then assembling other entertainment assets that both support and draw value from the characters and images in those movies.” (from Zender)

After Disney’s death, the leadership team took its eye away from this strategy. There were fewer animated kids movies, Movie revenue declines, gate receipts as Disneyland languished. The TV show was cancelled.  Disney was dying.

In 1984 there was a hostile acquisition attempt, based on selling off key assets, including the film library and prime real estate surrounding the theme parks- which would have destroyed the company forever. A prescient Board rejected the move and instead hired Michael Eisner.

With Katzenberg, Eisner’s rediscovery of Walt’s strategy map guided a heavy reinvestment in animated productions, producing hits that included The Little Mermaid, Beauty and the Beast, and The Lion King. Over the next 10 years Disney’s box office share jumped from 4% to 19%. From that base, Character licensing grew by a factor of eight. Driven by the new movies, attendance and margins at the theme parks rose dramatically. With the new movies, Disney’s share of income from video rental and sales soared from 5.5% to 21%. With more creative content based on the popular movies, Eisner opened new theme parks, and made further investments in live-action films, and expanded into adjacent businesses consistent with the theory, including Disney merchandise retail stores, cruise ships, Disney Saturday morning cartoons, and themed Broadway shows. By essentially dusting off Walt’s theory and aggressively pursuing strategic actions consistent with it, Disney succeeded again. The companies market capitalization grew from $1.9 billion in 1984 to $28 billion in 1994.

Unfortunately, other strategy moves which struggled to link with Disney’s original synergistic strategy – such as the acquisition of a Los Angeles TV station, purchase of TV’s Cap Cities/ABC, and purchase of the Anaheim Angels sorts team – addedd little value to the overall company. After initial success, Eisner started to ignore the core animation asset and the company failed to keep up with technology trends.Their best animators subsequently migrated to Pixar. Eventually, Eisner stepped down, in 2005.

His successor, Robert Iger, may also have had his eye on Disney’s original strategy as he quickly moved to acquire Pixar, followed by purchases of Marvel and Lucasfilm. The Marvel and Star Wars casts are quite different from Disney’s traditionally princess-heavy character set and its up for debate whether this strategic experiment proves to be successful. If the a similar range of linkages can be developed then potentially it could be a world class success. But if the purchases are merely standalone, then like Eisner before him, Iger’s strategy could be less than successful. But Walt Disney’s road map for growth has clearly endured long past his death, providing a remarkable illustration of posthumous leadership.

Effective corporate theories like this Disney example provide managers both with vision and an ability to navigate the changing surrounding strategic terrain over an extended period of time. They provide a strategy (formed by a focus and strategic linkages) that can be repeatedly used to select, acquire, and assemble complementary bundles of assets, activities, and resources from the abundance available.

So how long can your strategy last- if its a good one at least have a century, and Disney’s ideas are still going strong.