What Can CEOs Learn from Bob Iger’s Return To Disney
The Walt Disney Co. board’s decision to bring back Bob Iger as a CEO which stunned media observers and Hollywood Sunday evening, came together in just a few days, according to two company executives.
How CEOs relate to the employees and the board matter
A senior Disney insider said a Disney executive contacted Iger to ask if he would be interested in returning to his Burbank, California headquarters. The 71-year-old Iger led Disney from 2005 to 2020. Iger has said in interviews that he was not interested in returning as CEO.
The executive then shared Iger’s response with the board, which concluded it was time for another leadership change. Over the past few days, the board — led by chairman Susan Arnold — moved to put Iger back in the CEO position.
It’s like Howard Schultz going back to Starbucks. If the employees love you and the board believes in you, you are the unanimous choice as CEO.
The board’s change of heart is one of the most dramatic reversals in corporate history. It throws the spotlight on Kareem Daniel, the chairman of Disney Media and Entertainment Distribution (DMED), who has worked with Chapek for 20 years. Daniel and a few other top executives are expected to discover their fate in the next 24 hours, said the senior Disney executive. Other changes are expected across the company the week after Thanksgiving.
CEOs need to be collaborative both within and outside the company
Chapek had ongoing issues internally — and with some industry peers — he was being a leader who made big decisions without taking in sufficient information, according to the senior Disney insider and other high-level industry sources. He did not bring the stakeholders along. For a CEO to not be collaborative is a red flag.
A group of top Disney creative and business leaders had told the board over the past few months that they were considering leaving the company if Bob Chapek, who stepped up as CEO in February 2020, remained in the role, according to one senior Disney insider. This person said the board realized its chief executive wasn’t up to the job after the high-level company executives shared their frustrations.
The board’s move came just days after Disney reported a $1.5 billion loss from its direct-to-consumer division, which includes streamers Disney+, Hulu, and ESPN+.
On November 11, Chapek also flagged cost controls in content and marketing, a hiring freeze, and the possibility of layoffs. Disney stock lost 10 percent over the past month and is off 41 percent year-to-date (other media stocks have also seen steep drops this year). Meanwhile, Jim Cramer highlighted this on his show earlier this month, calling for Chapek to be fired after Disney’s latest quarter. These are signs for activist investors to step in if the right measures are not taken.
CEOs need to do their due diligence before changing the company's identity.
You may take a CEO position having a vision of your own. However, to make the vision a reality, you must do your due diligence and avoid making changes that can cause others to alienate you. Despite being with the company for decades, Chapek did not succeed in doing what was needed in his new role. One of Chapek’s biggest moves — the separation of distribution, DMED, from content, Disney General Entertainment Content (DGE) — did not work, the senior Disney executive said. The new structure, which Chapek instituted to enable Disney to act more like a tech company, alienated creative executives who lost power over budgets and distribution of their projects. One cannot expect an iconic media and entertainment company to mirror other streaming giants overnight.
A former senior Disney executive who saw Chapek in the past two weeks described him as looking “beleaguered.” However, the current senior Disney insider said the CEO had been full of confidence after the board in June offered him a new three-year contract.
While getting the CEO office for internal senior executives can be possible, they must bring the employees and the board along. And only make decisions by truly doing their due diligence.
