Have you discussed something on a theoretical level with someone only to realize it was just mental calisthenics? In other words, did that conversation deal with the REAL world?
I came across a Harvard Business Review article, What is the Theory of Your Firm? by Todd Zenger that put teeth into strategic planning. His article discussed Walt Disney’s 1957 Theory of Value Creation in Entertainment (seen here).
As I studied this 1957 vision, I realized that it fit well into one of the major steps of strategic planning: the vision. As Zenger said, “It’s founder had a very clear theory about how his company created value, which was captured in an image held in the company’s archives.”
As a small business owner or an artist, how you can integrate this into your strategic plan resulting in a single sentence that projects a 10-20 vision using horizontal or vertical integration?
Using Disney’s map as a template, it seems his original core were films. However, I could have argued that the theme parks had risen as a second core. In any event, they complimented each other. Next Disney drew satellite profit centers like TV, music, merchandising, etc.
But the magic of Disney were the lines that connected the main core to the satellites. They were his animated characters. It is like the theatrical film was the heart, the satellite profit centers (or assets) the organs, and the connecting Disney characters the veins and arteries.
From this, Zenger imagined that Walt Disney’s theory (or vision) could have been, “Disney sustains value-creating growth by developing an unrivaled capability in family-friendly animated (and live-action) films and then assembling other entertainment assets that both support and draw value from the characters and images in those films.”
The interesting historical fact pointed out by Zenger is that the power of this theory was revealed within 15 years after Walt’s death when the core film machine shifted away from animation. The whole empire slowed to a crawl. In my words, the heart stopped pumping, anemia set in and the organs suffered. Michael Eisner took charge in 1984 as the surgeon and rediscovered the theory generating film greats as The Little Mermaid, Beauty and the Beast, and The Lion King.
Zenger laid out three “sights” of strategy that compliment our strategic planning sessions:
- Foresight: Projects where the industry and customers are heading in 10-20 years. Our Opportunities step addresses these developments.
- Insight: Theory must be company specific so as to discourage copycats. The Threats step questions the competition’s abilities to steal market share.
- Cross-sight: The combining of assets and theory, or as I like to say, Praxis (marriage of theory and practice.) Many don’t see this, but accounting can play a large role in this implementation.
Many strategy books deal with similar concepts from different points of view. The important part is that without a vision (theory) a business just flounders hoping to fall into a lucky opportunity.