Editor’s note: In The Fix’s new Friday column, tech and media journalist David Tvrdon reflects on how the forces of business, technology and journalism intersect and what that means for the media industry.
There is one scene in the Titanic movie I always comes to mind whenever anyone talks about transformation or reorganisation. It’s the iceberg collision scene and it’s the perfect three-minute summary of a catastrophic failure.
They should have seen the iceberg sooner (at least in the movie) but once they did it was too late. Even though the whole crew gave it 300% to avoid collision, it just couldn’t be helped.
I realize this is a super dated analogy and there are better examples, such as Nokia’s failure to maintain dominance over the mobile market or Yahoo’s inability to recognize Google’s threat. Or, the news media’s laziness to innovate in the ad market and then see their lunch eaten by tech giants.
But the Titanic example portrayed in the movie is so vivid I just can’t un-see it.
Disney’s strategic reorganization
This week, The Walt Disney Company announced yet another strategic reorganization of its media and entertainment businesses.
“In order to further accelerate its direct-to-consumer strategy, the company will be centralizing its media businesses into a single organization that will be responsible for content distribution, ad sales and Disney+.
The change comes as the global coronavirus pandemic has crippled its theatrical business and ushered more customers toward its streaming options.“
Disney+ is at the centre of the reorganisation. Until the pandemic the company’s “cash cow” was the parks and resorts division, which recently laid off 28,000 people as a result of park closures.
You might not remember, because 2020 feels like a century, but this is Disney’s second reorganisation in the last three years. The last one happened in 2018.
At the time, The Wall Street Journal wrote:
“Walt Disney Co. is reorganizing its operations in a move that positions two top executives as potential successors to Chief Executive Robert Iger.
Kevin Mayer, the company’s longtime head of strategy who has specialized in acquisitions and digital investments, was named chairman of a new direct-to-consumer and international segment, while parks chief Robert Chapek added consumer products to his portfolio, giving him oversight of what would be the company’s biggest business unit by revenue and profit.“
Today we know who succeeded Iger (Chapek) and who left for a brief TikTok CEO stint (Mayer). Of course, now we know that the first transition wasn’t easy as The Information recently reported and there was infighting between division chiefs. Anyway, that’s quite normal whenever a reorganisation happens.
The lessons for news media businesses
The most important lesson is how a Titanic-size business like The Walt Disney Company (+200k employees) managed to adapt.
First, Disney needed to understand that renting all their best titles to Netflix is not a sound longterm strategy and decided to build their own streaming service. Then came the first reorganisation.
Now, with the pandemic attacking its most profitable business and the stellar success of Disney+ it was time for yet another reorganisation to cement the importance of the company’s digital efforts.
In his recent piece, Ben Thompson compares Disney to The New York Times and how the paper of record transformed its Page One meetings only concerned with the print paper with to, as NY Times put it: exclusively be a forum for planning coverage and for ranking items for digital display. One focus will be presentations for mobile devices, where more than half of Times readers now obtain their news.
The next lesson is in communication. First, the company needed to understand the ramifications of the 2018 reorganisation and adjusting on that could push the transformation to the next, perhaps final level – all hail digital. (Not meaning Disney+ becomes a cash cow for the company but rather an entry point and a communication platform for its costumers; once the pandemic goes away, parks will start earning the most money.)
Both The NY Times and Disney gave a strong signaling towards their staff (also to the outer world) that digital is most important for them.
And the last lesson might be that a transformation within a company or a newsroom might not happen on the first try.
In a recent interview [in Slovak], Mark Thompson, the departing CEO of the New York Times, confessed they did not get the transformation of their digital product team right on the first go and reorganized it three times. Then the incoming CEO Meredith Kopit Levien got it on second try right. Imagine that, NYT failing four times.
As Thompson added later in the interview it was because they learned from their mistakes. Similarly, Disney recognised it had to further adapt and so it did.
It’s too late once you see the iceberg and have little time to avoid a fatal collision. It’s much better to expect icebergs all the time and adapt your course constantly.