There was big news recently about Disney’s decision to buy LucasFilm, George Lucas’s company which is best known for owning the Star Wars franchise (movies, books, consumer products tie-ins, etc.) and the special effects house Industrial Light and Magic. Disney made it clear that what it really wanted was Star Wars for future films and to sell Star Wars branded stuff. This is the third of their acquisitions of large creative entities (Pixar and Marvel preceded it).
I’m not here to question or go into details about the acquisitions (I’ll leave that to M&A experts). Rather, I think it’s an interesting example of Disney’s human resources strategy, at least at the creative level, and is another data point in a pattern of companies shrinking their core competencies.
I have a good network of H.R. executives in the apparel business. Starting about 20 years ago the trend of offshore manufacturing was just starting. At first, it was interesting to observe how many of the H.R. people would justify their production staying in the U.S. because they were a “manufacturing” company. This often came from the deep historical roots of the company with a founder who started the company from scratch by inventing a machine or process (for those of you in high tech, think HP). However, the call of cheaper labor and friendlier tariff laws drew nearly all of them offshore. What they morphed into were design and marketing companies. As one of them said at a seminar talking to future graduates of fashion and apparel companies, “What we’re really hiring now are lawyers and business graduates.” They went from being design, manufacturing and marketing companies to design and marketing ones.
Disney’s history is rooted in the story of Walt Disney and his imagination. Great attention was paid to those who adapted fairy tale characters for 20th century tastes and the accompanying theme park rides (Imagineers). In 1970, you would have said that Disney was a creative arts company that figured out how to leverage it, to a certain extent, into commercial products. In the last 10 years, and I must admit I am reading between the lines here, Disney executives did the analysis which showed them that their capital was better spent on developing commercial products and producing entertainment than developing creative content from scratch. This isn’t to say that they won’t invest in improving the performance of their new employees. However, it does say that they felt that dollars invested in nurturing creative people was better spent someplace else.
Like with the apparel business, Disney has made a fundamental strategic shift as to the best direction for their business. From a talent acquisition perspective, they’ve also told young job seekers in creative fields that they are better off plying their trade at a smaller shop and hope to get bought rather than knocking on Mickey’s door. This illustrates why H.R. needs to be in tune with our company’s strategy. You can’t be making talent management plans unless you know how they are going to support your company’s strategy, which may be changing under your feet.
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