Does Disney Care about its Crumbling Reputation?
Woe be to any company that puts anyone but the customer at the center of its strategy. It is now quite clear how much The Walt Disney Company is struggling. It is also clear that part of the problem is a fundamental disconnect between the Company and enough of its customers to be of material concern.
I wrote a detailed article toward the end of 2019, warning that Disney's LucasFilm's division risked much by going a direction its existing customers didn't want to follow. Many fans were alienated. Not enough new fans were created. All future films were cancelled. It wasn't complicated to figure out why, but companies often can't see what they don't want to see. Now the same mentality appears to be pervasive across the entire Company.
Disney has enjoyed a stellar reputation among the public for decades. That is no longer the case. Every year Axios and Harris team up to survey tens of thousands of Americans on their feelings toward large corporations. From 2016 - 2019 Disney ranked as high as #5 and no lower than #7.
Disney's reputation started to plummet in 2020. Disney was most recently ranked #65. Within that statistic is more for Disney to be concerned about. While the Company ranks relatively-highly for the products and services it provides (#44). It ranks relatively low on Trust (#80), placing Disney equidistant between Burger King (#68) and ExxonMobil (#92). That's potential trouble for a company whose products are primarily aimed at children, but whose purchases are filtered through parents and other adults.
In a recent interview with the Wall Street Journal, former CEO, Bob Chapek, indicated that optimizing the guest experience requires Disney to ensure "the cast [Disney employees] is at the center of everything that [we] do.” Unfortunately, this outlook had led to a company more interested in creating products its staff wants to sell than it is in creating products its customers want to buy.
Bob Iger, Disney’s resurrected CEO, acknowledged this problem during Disney’s recent town hall meeting. After lauding his Company for telling stories like Black Panther and Coco, that had “changed the world for the good" he continued. . .
“When you tell stories it is a delicate balance. You are talking to an audience, but it is also important to listen to an audience. It is important to have respect for the people that you are serving, and you are trying to reach and not have disdain for them.”
There are a number of things CEO’s should never have to say to their employees. One of them is that they shouldn’t have disdain for the people on whom their livelihood depends. A CEO shouldn’t have to say that because respect for customers must be baked into a company’s DNA. Sure, a company can fake it for a while, but, ultimately, their contempt will show through in its products and services—and in a free society customers will always have the last word.
Iger followed up the above quote with a short commentary that disagreements with various groups “doesn’t mean [Disney] should stop trying to do the right thing.” Phrasing Disney's creative choices as a question of right and wrong indicates Disney's management may perceive the Company has a higher calling than earnings, market capitalization, and providing opportunities for career advancement.
Moving forward, it’s possible Disney’s fortunes will be restored should its customer base catch up with the Company’s messaging. Alternatively, ESG-inclined shareholders could reveal themselves to be more interested in what their company has to say than they are in profits. Short of either of those occurrences or a change in Disney’s perspective, its investors may intensify their curiosity as to whether the sum of Disney’s parts is worth more than the whole--a sentiment that no doubt is playing a role in speculation Iger has been brought back to sell the company.