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Good morning to all new and old readers! Here is your Saturday edition of Faster Than Normal, exploring the stories, ideas, and frameworks of the world’s most prolific people and companies—and how you can apply them to build businesses, wealth, and the most important asset of all: yourself. 

Today we’re covering Disney and their journey to becoming one of the world’s most loved brands.

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What you’ll learn:

• Walt Disney’s famous strategy drawing

• Lessons on diversification, brand, and customer service

Cheers,

Alex

P.S. Send me feedback on how we can improve. We want to be worthy of your time. I respond to every email.

Disney: The Magical Story Behind Mickey Mouse

Today, Forbes’ Fourth “Most Admired Company” has entertainment, amusement parks, and retail stakes. And to think—Disney all began with a cartoon mouse. 

Walt Disney, the genius behind the Disney brand, started the Disney Brothers Studio alongside his brother in 1923. 

Walt says, “Mickey Mouse popped out of my mind onto a drawing pad 20 years ago on a train ride from Manhattan to Hollywood.” 

In the firm’s early years, Walt drew up a genius sketch of Disney’s business model. Check out the below graphic.

Walt Disney’s Famous Disney Strategy Drawing

In 1928, Mickey Mouse made it to the big screen, and the show was an immediate hit. 

Disney’s retail empire started in 1930 when the firm was asked to produce a Mickey Mouse comic strip. 

The Great Depression posed a serious problem for Disney. The public had little disposable income, and entertainment revenue slowed. Walt recognized merchandise’s profitability, and decided to put Mickey on something people could use. 

He created the Mickey Mouse watch in partnership with a Clock company. Mickey watches saved the firm from bankruptcy, allowing Walt to continue financing his films. Not only that, but every watch was a walking ad. 

In the firm’s early years, Walt drew up a genius sketch of Disney’s business model. Check out the above graphic. 

Disney’s first big innovation came in 1932. The firm released Flowers and Trees, the first cartoon in full color. Over the next few years, they released others, including The Three Little Pigs. 

One of Disney’s greatest strengths is its ability to corner the visual media market and music. “Who’s Afraid of the Big Bad Wolf,” a song from the film, became incredibly popular.

In 1934, Disney announced the production of its first feature-length film, Snow White and the Seven Dwarfs. The public criticized Disney for the idea, calling the upcoming film “Disney’s Folly.” They couldn’t have been more wrong. 

Snow White premiered in 1937: Counting its re-releases, the firm grossed nearly $1 billion throughout its lifetime. 

In the coming years, Disney released Pinocchio (1940), and Fantasia (1940). Unfortunately, both were box office flops. 

After the failed films, Disney’s company needed money. The firm did an IPO in 1940 and reinvested profits into operations. 

Refuge from hardship didn’t come until 1950, with the release of Cinderella. Cinderella grossed $8 million, over $100 million in today’s dollars. The same year, Disney released its first live-action film, Treasure Island, which was a similar success. 

In the 1950s, Walt’s ever-wandering mind quickly set its sights on amusement parks. He said, “There [should be] some kind of amusement enterprise built where the parents and the children could have fun together” 

Disney visited parks throughout the U.S. and Europe, honing his inspiration. He conceived of a clean park that told a story—today, these are still some of Disney Parks’ key selling points. 

When it opened in 1955, Disneyland offered 20 attractions. The opening went horribly, with employees calling it “Black Sunday.” Several rides broke, and the drinking fountains didn’t work in 100-degree heat. 

Despite the initial failure, Disney advertised the opening on ABC. The feature boasted over 90 million viewers. 

Over 3.6 million people visited the park in its first year, more than the Grand Canyon and Yellowstone. 

The second park was opened in 1971, costing the firm hundreds of millions in today’s money. Nevertheless, Disney World in Orlando, Florida, was very popular. 

The 1980s proved a tumultuous time for Disney. Its movies dropped in popularity, and by the mid-80s, 69% of its revenue came from its parks. 

The firm sought other revenue streams in TV, which was largely responsible for Disney’s waning market share. In 1983, Disney launched the Disney Channel, which showed Disney films, programs, and a few shows for adults. 

In 1984, Michael Eisner replaced leadership. Eisner, whose “strength is coming up with two outs in the last of the ninth,” redirected the firm’s focus. The firm became more involved in TV and pressed more films with adult themes. 

Eisner emphasized retail, and in 1987, Disney opened its first retail store. By 1990, the firm boasted 215 national locations and nearly $500 million in profits. 

Under Eisner’s guidance, Disney’s gross revenue swelled to $876 million by 1987 (over $2 billion today). 

Disney continued developing its joint thesis: Create great movies with a fantastic soundtrack. The Little Mermaid (1989), Beauty and the Beast (1991), and The Lion King (1994) were massive blockbuster hits. 

In the 90s and 2000s, Disney honed its acquisition strategy, purchasing ABC for $19 billion. Bob Iger became CEO in 2005, saying he planned to “buy either new characters or businesses capable of creating great characters and stories.” 

Disney acquired Pixar in 2006 for $7.4 billion. The firm bought Marvel during this time. More recently, in 2019, Disney purchased 20th Century Fox for $71 billion. All of these moves proved profitable. 

When streaming services became popular, Disney jumped on the trend. Disney launched Disney+ to “strategically position our businesses for the future.” The move succeeded, and in 2022, Disney+ surpassed Netflix’s 220 million subscribers. 

Despite recent COVID-19 turmoil, Disney remains a hallmark of the entertainment industry, with a market value of $183 billion. 

Disney does $88 billion in annual revenue, more than Warner Brothers and Paramount Studios combined. Approximately 62% of income comes from media distribution. 

Disney’s growth and power lies in its diversification. The firm has strongholds in amusement parks, media, retail, and telecommunications. 

The firm’s direct-to-consumer segment has strong subscriber numbers on Disney+ and ESPN+. Their box office and subscription market shares hold strong at approximately 26% and 15%, respectively. 

Here’s what we can learn from Disney about unique value, innovation, and customer experience.

Lessons

Add unique value to readily available innovations. Disney is responsible for some of the greatest innovations in film history, but the firm didn’t reinvent the wheel in some of its other market segments. The firm launched a retail market in the 1930s, and more recently, Disney watched Netflix’s rise to streaming prominence in the late 2010s. Disney decided they wouldn’t lie idle, with CEO Iger saying, “Netflix, Amazon, iTunes—whatever platforms emerge–we are looking at as having the same potential that home video had for the movie business. Which means there are entirely new opportunities to monetize our capital investment in content and do so in ways that work for distributors, for consumers and for creators.” The firm pulled its films from other platforms in 2017 and launched Disney+ in 2019. “The riskiest thing we can do is just maintain the status quo,” Iger says, and Disney refused to let that happen. Their streaming platform surpassed Netflix in 2022, at 221 million versus 220 million subscribers. Disney knows it’s “the only true global entertainment brand,” and leverages their unique quality and recognizability to commonly used innovations and strategies, creating more value. Iger notes, “People gravitate to what they believe to be popular... Technology is enabling even more of that.” There’s nothing wrong with doing what’s popular. For Disney, it works. 

Diversify your products as much as possible to avoid bankruptcy. Walt Disney said, “Times and conditions change so rapidly that we must keep our aim constantly focused on the future.” Differentiation is Disney’s USP—family-oriented programming and high quality are hallmarks of the firm’s products. Disney markets to families and its emphasis on retail sets it apart from its competitors, Warner Brothers and Netflix. Its focus lies in product development and market penetration. Disney’s diversification strategy constantly disrupts the entertainment industry. When the Great Depression hit in the 30s, Disney faced a crisis. The firm quickly invested profits into a merchandising empire, manufacturing functional Disney-themed products for sale. The move generated $35 million worth of sales, keeping the firm afloat. Diversification is one of the keys to Disney’s success and vast market share. The firm stands by its founder’s mantra, “I do not like to repeat successes, I like to go on to other things,” and constantly searches for new diversification opportunities. Recently, the firm’s theme parks faced disaster when the COVID-19 pandemic hit, and their streaming services kept them profitable. 

Build a brand with strong emotional resonance. Though CEO Iger says, “The heart and soul of the company is creativity and innovation,” Disney’s piece de resistance is its ability to create an emotional response in its guests. The firm aligns all efforts around its “Happiest Place on Earth” philosophy. Disney’s parks are highly immersive and detailed—the firm puts Mickey on their manhole covers. Even the park’s smell is curated to smell like popcorn to keep guests hungry. Disney’s attention to detail curates an emotional resonance with its guests. Walt says, “Disneyland will never be completed. It will continue to grow as long as there is imagination left in the world.” CEO Iger says, “When you think about it, media's the intersection of content and technology - it's all about storytelling, like photography and the camera.” Everything about the park is theatrical, with the employees calling themselves “cast members” to worker entrances labeled “Backstage.” Disney knows that emotions are a commonality within the human experience. They’re also the key to high profits. Everything about Disney parks evokes happiness and pleasure in its guests, which keeps 70% of guests coming back again and again. 

Customer service is an investment, not an expense. Disney’s goal is a “tremendous brand experience.” The firm constantly engages in its “impact on the consumer, either what experience you deliver for them or how to market and sell to them.” The firm cultivates brand recognition and boosts sales through strong customer service and a personalized experience. Characters and cast members ask guests personal questions designed to breed conversation for kids and adults alike. Walt says, “You're dead if you aim only for kids. Adults are only kids grown up, anyway.” Disney treats every guest and viewer like a VIP, regardless of who you are. They have a nontraditional, holistic understanding of its guests. From the moment you step into a park, you can tell they’ve maximized CX research. For Disney, the ROI of a lifelong customer far exceeds short-term costs. HBR says the firm’s constant “eye on the future” bleeds into their CX focus. According to Walt himself, “Disneyland is a work of love. We didn't go into Disneyland just with the idea of making money.” In other words, Disney knows it’s impossible to commodify a fantastic time. 

Invest in strategic acquisitions. “We really believe that Walt Disney is a very able company with great depth and a great set of franchises,” said Iger. While true, one of Disney’s key strategies is acquisition. The firm’s monopoly-esque approach to competition garners it billions in profits and keeps it innovative. In 1995, the firm did the second-largest corporate takeover in history, acquiring ABC and ESPN. Disney executives carefully measure their acquisitions, choosing firms whose assets create synergy. Iger says, “It's not about how much you make: it's about how good the quality is.” Following the deal, Disney started Radio Disney, a wildly popular listening platform on ABC’s Radio Network. Following the success of revitalized animated films, Disney purchased Pixar Studios in 2007. When the firm saw a need to expand its audience in 2009, it purchased Marvel Entertainment for 4 billion. The firm’s remarkable power allows them to view the market in “a less cluttered way,” garnering massive profits across its subsidiaries.

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Further Readings

• Walt Disney—The firm’s key financial data. 

• Historically Yours: Mickey Mouse is born—Disney’s tumultuous early history. 

• 50 years ago: Roy Disney made Walt’s dream come true—Early history of Disney parks. 

• Cartoon Producer Recalls Early Days—NYT reveals cartoonist’s thoughts on Disney. 

• A BRIEF HISTORY OF Mickey Mouse: Time’s history of Disney’s most recognizable character. 

• Antiques: The Life and Times of Mickey Mouse—A look at Disney’s early approach and business events. 

• The Disney Strike of 1941: How It Changed Animation & Comics—Disney’s approach to HR crises and industry impact. 

• Disneyland got off to a nightmare start in 1955, but 'Walt's Folly' quickly won over fans—Disney’s early failures. 

• A Crash Course in the History of Disney Animation Through Disney+---A history of Disney’s creative approach. 

• How Mickey got Disney through the Great Depression–Disney’s crisis management strategy. 

• Disney will pull its movies from Netflix and start its own streaming services—Disney’s streaming strategy. 

• DISNEY ANIMATOR RECALLS GAMBLE THAT WAS SNOW WHITE---How Disney strategized through crisis. 

• How Disney Became The World's Entertainment Leader—Disney’s business strategy.

• ​​Exploring Disney’s Fascinating Dark Phase of the 70s and 80s—Disney’s shifting approach through history. 

• Why Disney has its own government in Florida and how control of it could change—Disney’s legal control and impact. 

• Disney Empire Is Hardly Mickey Mouse—The bounds of Disney’s oversight. 

• DreamWorks and Disney Agree to a Distribution Deal—Disney’s distribution strategy. 

• For Disney World's 50th anniversary, a look back at the Mouse that changed Florida—Disney parks’ cultural impact. 

• NEW DISNEY TEAM'S STRATEGY—Disney’s shifting business strategy. 

• Disney Stores: Magic in Retail?---Disney’s strong retail market. 

• Disney Agrees to Acquire Pixar in a $7.4 Billion Deal–Disney’s acquisition strategy. 

• Disney Merges Its Consumer Products and Interactive Divisions—Disney’s merger strategy. 

• Disney announces strategic reorganization, effective immediately—Disney’s B2C strategy. 

• Walt Disney Co.---Financial information. 

• Disney’s Generic Competitive Strategy & Growth Strategies—Disney’s growth strategy. 

• The Disney Recipe—HBR’s take on Disney’s business strategy. 

• ELI5: How did Disney become so big?---Redditors discuss Disney’s early success.

That’s all for today, folks. As always, please give me your feedback. Which section is your favourite? What do you want to see more or less of? Other suggestions? Please let me know.

Have a wonderful rest of week, all.

Cheers,

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