Walt Disney's corporate evolution from founder to Eisner's transformation

Disney

History of the Disney Corporation: The Early Years

Walter Elias Disney started his career as an animator and then an art director and story manager. Walt Disney lost the rights to "Oswald the Lucky Rabbit," a character he created, and he thereby set out to manage and control his own brand. Oswald the Lucky Rabbit became Mickey Mouse and the Disney empire began. By 1937, the Disney company had produced its first feature-length film, Snow White and the Seven Dwarfs. At this early stage in the company's evolution, Disney was a flat, nonhierarchical, and democratically run company with an emphasis on fun and creativity.

An astute businessman as much as a creative, Walt Disney developed and diversified throughout the middle of the 20th century. In the 1960s, Disney delved into live action films and television. The Mickey Mouse Club became a hallmark of the brand. In the mid-1950s, Disney opened its first theme park Disneyland in Anaheim, California. The theme park was run effectively, as Disney outsourced merchandising and food to cut costs.

Before Walk Disney's death in 1966, he had purchased land in Florida for the development of a second theme park. The ambitious project would not come to fruition until 1971, but it proved to be a roaring success. After his father's death, Roy Disney took over the company in 1967 and helped propel the company and diversify its interests further. Resort hotels, travel companies, and traveling shows like Disney on Ice became part of the company repertoire. In 1976, Tokyo Disneyland opened. Reacting to a decline in its animated film viewership, Disney also expanded into the realm of live action movies with the start of Touchstone productions.

Too Big for its Britches?

As if Disney was not becoming big enough, the company took its first steps towards being a genuine corporate behemoth. In 1995 Disney bought television network ABC. On paper, the investment seemed perfect, as ABC could be used as a distribution network. Purchased for $19 billion, it was the second largest acquisition in U.S. history. Disney was now the largest entertainment company in the States, with a worldwide distribution network including 224 ABC affiliates, 10 TV stations, 21 radio stations, ESPN and ESPN2, several newspapers and 100 periodicals

The timing of the acquisition, however, proved poor. Just a year prior to the acquisition, Disney experienced major internal turmoil with the untimely death of Wells in a helicopter crash. Katzenberg vied for Wells position as President of the company. Eisner refused, thereby driving away one of the company's key figures and architects of Disney's golden years. Katzenberg would then go on to co-create Dreamworks with Stephen Spielberg and David Geffen.

With the ruckus caused by the shake-up in upper management, Disney was on the road toward a significant decline. Adapting poorly to the change in corporate culture and character, Disney was being shaken to the core. Combined with its major investment and expansion projects with ABC, Disney faced some major challenges during the 1990s. Not only had Katzenberg left, but also the merger with ABC proved to be tumultuous. Clash of corporate culture was only partly mitigated by the Disney corporate boot camp that was designed to manufacture synergy among the disparate departments. Current strategic challenges for Disney include managing synergy, managing creativity, and managing the brand.