Life of Walt Disney [...] two questions: How did Walt manage each functional piece of the business and develop needed organizational capabilities? In addition, how did Walt achieve strategic and financial objectives?
WALT DISNEY'S FINANCIAL BEGINNINGS
Walt began his career in Kansas City, Missouri, where his family lived, and for years, the business teetered on the brink of collapse. Disney learned how to manage what little funds he had, and continue with his work from these early experiences. While still in Missouri, he incorporated a company called "Laugh-O-gram Films." With his last $500 from the venture, he began a series of cartoons based on "Alice in Wonderland." When his money ran out, he headed to Hollywood, where he set up a "studio" in his uncle's garage, and "wrote to M.J. Winkler, a film distributor, announcing that he was 'establishing a studio in Los Angeles for the purpose of producing a new and novel series of cartoons'" (Disney). Winkler purchased a set of the cartoons for $1,500 each, and Disney had his first real cash flow.
Because of his prior money troubles, he asked his brother Roy to come to California and help him with the business. This was probably one of his best business decisions. It left him free to create and draw, and left someone else in charge of the day-to-day expenses. "In 1923 they launched the Disney Brothers Studio with $200 Roy had saved, $500 borrowed from Uncle Robert, and $2,500 that Flora and Elias contributed (and for which they had to mortgage their house in Portland)" (Disney). With this money, they bought a camera, moved into a tiny apartment together, rented a studio in the back of a real estate office, and hired two assistants (Disney).
While Roy managed the money, Walt was still deeply involved with the business. After each setback, it was Walt who dreamed up new ideas to replace old, such as Mickey Mouse to replace Mortimer Rabbit, who ultimately belonged to Universal Films. In this way, he still managed each step of the business as it grew and became successful. It was Walt who realized cartoons needed sound to keep them current, and Walt who devised the idea of putting cartoons to classical music in the Silly Symphonies. These ideas were extremely popular, and made the Disney Studios the most popular animators in the country. When the Silly Symphonies really took off, Walt created a separate studio with separate animators to work exclusively on Silly Symphonies. It was one of the many ways managed each functional piece of the business and develop needed organizational capabilities
Disney's business aplomb had been tested many times, but when "Snow White" came along, everyone thought Disney was crazy to try to develop a full-length feature film. It would be too expensive; audiences would not sit through a full-length cartoon, and on. "Walt was upset by the way bankers had got in the way of his vision" (Rich, 1983, p. 46).
Walt was also involved in all the training of his staff, so they could create the same figures he created. He sent them to school, and trained them at the studio, and their drawing improved. "Now they were beginning to explore a new art - the art of animation" (Thomas, 1966, p. 102). When "Snow White" became a hit, and the money began pouring in, Walt became even more involved. "With the cash that 'Snow White' generated, Walt began building a new studio in Burbank. It was a $3 million investment, and Walt was personally involved in virtually every element of its design" (Disney, 2002). During World War II, the cartoon market slowed down, and the studio ended up $4.5 million in debt. After the war, Walt and Roy argued about the direction the studio should take. Walt ended up sending the studio in three different (and ultimately profitable) directions, "True-Life Adventures, live-action films, and a reinvigoration of cartoon features, led off by 'Cinderella'" (Disney, 2002). It was also Walt's vision for a clean, safe amusement park where children could play that ultimately led to the creation of Disneyland. Walt formed his own company, separate from the studio, and called it WED (Walter Elias Disney). "He borrowed on his life insurance, sold his vacation home in Palm Springs, borrowed money from employees, and founded Walt Disney, Incorporated (which later became WED Enterprises, for Walter Elias Disney), to do the work" (Disney, 2002).
Throughout his career, Walt continually had to meet financial and strategic objectives, and despite setbacks, he always managed to meet them, even if it meant going over budget, for which he was famous. In "Snow White," he felt Snow White looked too pale, and so thousands of frames were repainted with pink cheeks. In "Pinocchio," he felt something was missing, so Jiminy Cricket was added after the film's completion, at extensive cost. However, these details helped make the films the hits they were, and added to Disney's coffers in the end.
Ultimately, Disney obtained total creative control by taking control of everything the studio did. "Visitors to Disney-land also comment on the 'cult of Walt' which has taken place of the earlier creative atmosphere. Everything ends up on his desk. In Ford's empire, they were afraid to call the top man Henry. In Disney's, they dare call him nothing but Walt" (Fishwick, 1954, p. 187).
After his successful Oswald the Rabbit cartoons were swallowed up by Universal Pictures, Walt always wanted to be independent; he swore he would never work for anyone again. "Other film companies were also anxious to release the Mickey Mouse films - if they could induce Walt to work for them. But Walt was firm. He would work for nobody but himself" (Thomas, 1966, p. 90). Initially, this made it more difficult for the studio to survive, but in the long run, it proved to be a sound decision, Disney always worked for himself, and the company, though it went through many rough times, always prospered in the end. "By 1936, eight years later, critics and fans alike agreed that Mickey Mouse was the most recognized figure in the world. Songs were written about him. Watches had his face on them. He could be found everywhere. Disney was called 'a genius'" (Unknown, 1999).
Walt also decided to sell his films through film distributors; thereby continuing to work for himself, while the distributors in each state marketed the films. When the idea became too costly, he stopped it. "Initially, too much of the money was going to the distributors and too little to the Disney enterprise. So Walt decided to put an end to the state-selling system. Now he could...Film companies everywhere were happy to assume distribution on Walt's terms" (Thomas, 1966, p. 91). As his business grew, Walt was involved in each step of its financial and strategic success. He took over government contract work after the financial problems during World War II, and earned enough to bankroll his projects after the war.
He worked his staff extremely hard, and they often did not appreciate the long hours and low pay, in fact, they struck in 1940 for better wages. He was personally wounded by their strike, and told himself he must stay totally focused on the business, not the people.
This was a staff exhausted by four years of work on the most difficult project of their young careers, frustrated by the lack of individual recognition, angered by an unfair salary structure that rewarded those Walt personally favored and fed up by the studio's parochial code of behavior in a town that thrived on social gaiety and sexual abandon (Eliot, 1993, p. 48).
Walt was always an innovator in his business dealings, which helped him stay ahead of his competition while constantly challenging himself and his animators.