Acquisition of

Pixar by Disney
Group 2:
Abhinav Prasar(PGP/01/002)
Akhilesh Rai(PGP/01/007)
Manvender Dagar(PGP/01/031)

Disney Overview
Founded on Oct 16,1923 by brothers
Walt and Roy Disney
Headquartered at Burbank, California
Worlds second largest broadcasting
and cable company
Owner of 14 theme parks & several TV
networks such as ABC & ESPN
Walt Disneys first original animated
character Oswald the Lucky Rabbit

Pixar
Began in 1979 as the Graphics Group,
part of the computer division of
Lucasfilm
Spin-out as a corporation in 1986 with
funding by Apple Inc. co-founder Steve
Jobs
14 feature films and several short films
Released its first film in 1995 Toy Story
The film grossed $362 million and
became the biggest grosser of 1995

A history of poor
relations

Both companies had a history of acrimony

Steve Jobs abruptly called off talks to continue a
lucrative partnership with Disney
Jobs had often clashed with the CEO Michael
Eisner
Eisner disparaged an Apple advertising slogan
before a Congressional committee
Analysts, investors and media pundits also
questioned the hefty price Disney paid for a
small studio that released only one movie a year
In an industry where corporate marriages often
create internal warfare, Disney and Pixar have
found a way to make it work
After 2 years, Disneys stock climbed 28% since
its 52-week low on Jan 22, 2008

Pixars Evolution
Pixar has matured, allowing its strategic thinking
to evolve inside a sprawling corporation
Some of the studios executives once resisted
sequels and direct-to-DVD efforts, arguing that
quality and the brand could suffer
That has changed with films such as Cars 2
4 direct-to-DVD movies built around Tinker Bell
Pixar team has oversight of Walt Disney Animation
Studios and the DVD-focused DisneyToon Studios
Outsourced some direct-to-DVD animation to an
Indian company, a departure from its rigid stance
on outside animators

How are they making it

work?

Obvious tactics like effectively communicating changes

to employees
More unusual decisions on drawing up an explicit map
of what elements of Pixar would remain unchanged
Robert Iger agreed to an explicit list of guidelines for
protecting Pixars creative culture
Pixar employees were able to keep their relatively
plentiful health benefits and werent forced to sign
employment contracts
The sign on Pixars front gate would remain unchanged
Disney, despite its legendary corporate identity and
strong will, held back
Pixar kept its email system and no one was shifted to
Walt Disney World in Florida to work a shift
No Pixar telephone operators had to end with Have a
magical day

Key Leadership Decisions

There is an assumption in the corporate world
that you need to integrate swiftly. My philosophy
is exactly the opposite. You need to be respectful
and patient. Robert Iger
Giving incoming talent added duties
Pixar was assigned the difficult task of turning
around a storied animation department that had
fallen into disrepair
E.g., Pixar reworked Disneys Bolt
Original director of Bolt was replaced- led to some
hurt feelings
Disney has become a filmmaker-led studio and
not an executive-led studio. We are very proud of
that. John Lasseter

Issues to work out

Taken longer than investors anticipated to sort
through the pipeline of existing projects and begin
green-lighting new ones
Disneys plans for hand-drawn animation are
unclear
Pixar has unusual ideas in the pipeline that may
not become merchandising juggernauts like Cars
John Lasseter is responsible for Disney and Pixar
animation studios as well as other parts of the
Disney empire, including consumer products and
park design
Competitors like DreamWorks have received
plaudits for franchises like Kung Fu Panda

Timeline
Robert Iger
becomes Walt
Disney CEO
1/9/2005

Disney &
Pixar
signed
cooperative
agreement
1/1/1991
for 5
movies

1991

1991

1993

1995

Acquisition
consumated
5/5/2006
1997

1999

2001

2003

2005

2006

Walt Disney Pixar

acquisition is
announced
24/1/2006
Relationshi
p soured
1/1/2004

Rationale

Frameworks

Similarity

High Integration
High Integration

High Autonomy
desirable but limited
by need for
integration

Low Autonomy

Low

Low integration
Autonomy based on
focus other than
relatedness

10/24/16

High

Implementation
framework

Moderate and
selective integration
High autonomy
11

Low

Complementarity
Subhashini Chandran

High

What went right?

Leadership
Identity Crisis averted
Integration strategy

The Iger Era- 2005 to

present
Production, distribution deal- on the rocks
Robert A. Iger- 2005 Chairman and CEO
Disney
Felt the need to buy Pixar
John Lasseter (CCO) and Edwin Catmull
(Founder & President Pixar)- wary
Jobs lobbied for Iger based on prior
experience
Igers priority - Sorting out the relationship
Restarted acquisition talks, won early support
at Pixar
Talked candidly and clearly experiences at
previous employer
Able to build trust and gain confidence at
Pixar

There is an
assumption in the
corporate world
that you need to
integrate swiftly.
My philosophy is
exactly the
opposite. You need
to be respectful

Identity
preserved
Explicit guidelines protect
Pixars creative culture, promises
kept even after merger
PixarHRpolicies intact -Health
benefits, No employment contracts
Pixar separateentity, Studio
remained in Californiawith the
"Pixar" sign
Branding Equality
"DisneyPixar"
Studios' separate identities and
cultures (though common
ownership and senior
management)
Studio local ownership

Edwin Catmull, Pixar, Weve never

had to go back and look at it.
Everything theyve said they would
do they have lived up to.

Key to the
success

Mr. Igers decision give

incoming talent added
duties
Process not rushed
Pixar full autonomy
Pixars creative force, John
Lasseter, COO infused
Disney with a fresh spark
Edwin Catmull- retained
position President Pixar
also President of Disney
Pixars transformational
leadership adopted by
Jobs - largest individual
Disney
shareholder 7% stake, seat
on the Board
For Pixar shareholders
1 Pixar share = 2.3 Disney
shares

Conflict of Cultures
Bureaucratic
Hierarchical
structure of
organization
Distant upper
level
management
Micromanage
ment
Low Morale
Brain Drain of
creative talent
Productivity
and not
quality, rules
the day

Free spirited
creativity
WorkspaceHuts instead of
cubicles
Policy against
employment
contracts
Egalitarian
collaboration
Theme of team
work
Bonus
structure
Perfectionism

Challenges
Hard line between the studios
Not allowed to borrow personnel
from or lend task out to other.
Maintained local ownership
But when faced with problems
asked to solve on their own

What could have been done differently

Post integration Disney and Pixar strictly maintained
separate teams and offices with no cultural
integration
An integration to Death No, Most Definitely Not!
Pixar-Organic

Disney - Mechanistic

Relied on valuable intellectual asset that

used constant infusion of better
technology and maintained close eye on
academic innovations

Back then in 2006, the human capital at

Disney was not at par with Pixar in terms of
its innovation potential A cultural integration would have ended in
Separation

Collaborative working style

Team centric working culture

Disney endorsed top down managment style

leading to an aggressively competitive
culture where employees were evaluated on
individual performance

Concept of Creative brain Trust

Directors participated in Brainstorming
but ultimate decision authority to teams

Top managment oversaw entire production

process and dictated Direction

If no work needed on films, employees to

work on R+D Projects . This translated
into high employee loyalty at Pixar

Employees hired and Fired Based on Project

Demand

What could have been done differently

Has Pixar Lost its Way?

No new ideas. Relying on cash in sequels. New projects

postponed due to layoff
More Integration with Disney?

Back then Disney was not ready to match up to Pixar`s

capabilities : Maintenance of separate technical teams
Growth of Disney`s Ecosystem

Disney`s non Pixar computer animated effort Wreck-It

Ralph`s by WDAS doing better
WDAS more open to fresh talent whereas at Pixar ideas
generated in-house
Utilization of Differences to create a Learning Organization

More consolidation for technical and support areas of

Production
Efficient flow of information and Knowledge to support team
learning

Thank you