Photo by Benjamin Suter on Unsplash
5.03 | 02.12.22
This week, Soonish presents Part 2 of The Persistent Innovators, a miniseries I've been guest-producing and guest-hosting for Innovation Answered, InnoLead's podcast for people with creative roles inside big companies.
You can think of Persistent Innovators as the corporate equivalent of human super-agers—meaning they don’t settle into a complacent old age, but manage to keep reinventing themselves and their products decade after decade. Two weeks ago I republished the miniseries' debut episode about Apple, and now I want to bring you the next episode, about The Walt Disney Company.
The episode focuses on how the rise of new technologies like computer graphics and smartphones forced Disney to rethink both of its core businesses: feature animation and theme parks.
"What Makes Disney a Persistent Innovator?" was first published at Innovation Answered on January 31, 2022. You can hear the entire miniseries at innovationleader.com or in your podcast player of choice.
Resources Related to This Episode
Bob Iger’s Advice to Hollywood On His Way Out, Sway, The New York Times, January 27, 2022
How Walt Disney Taught the Art of Storytelling to His Animators, Bulletproof Screewriting, March 26, 2020
Ex-Dreamworks Animation CTO Ed Leonard: How the C-Suite Can Foster Innovation, Innovation Leader
David Remnick, Future Perfect, The New Yorker, October 20, 1997
Joey Hasty on LinkedIn
Kaitlin Milliken, Innovation at Sea: How Royal Caribbean is Deploying New Technologies to Upgrade Your Cruise, Innovation Leader, October 7, 2019
High-Tech on the High Seas, Innovation Leader
Royal Caribbean’s head innovator Joey Hasty: Turning dreams into memories, Microsoft Transform, May 22, 2019
Xeni Jardin, Applied Minds Think Remarkably, Wired, June 21, 2005
Notes
The Soonish opening theme is by Graham Gordon Ramsay.
All additional music in this episode by Lee Rosevere.
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Listener support is the rocket fuel that keeps our little ship going! You can pitch in with a per-episode donation at patreon.com/soonish.
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Full Transcript
Wade Roush: You’re listening to Soonish. I’m Wade Roush.
If you listened to the previous episode, you know I’ve been working on a freelance project for Innovation Answered.
That’s a podcast from InnoLead, the Boston-based company that provides resources for people with R&D, design, or product development inside big companies.
I’ve been working on this project for a few months now, and it involves reporting, producing, and guest-hosting a series of four episodes that unpack the histories of a special breed of companies we’re calling Persistent Innovators.
You can think of them as the corporate equivalent of human super-agers. Meaning, they don’t settle into a complacent old age, but manage to keep reinventing themselves and their products decade after decade.
The first company I looked at was Apple. And two weeks ago I republished that episode here for Soonish listeners.
Now I want to bring you the second episode in the miniseries. This one is about The Walt Disney Company.
The focus is on how the rise of new technologies like computer animation and smartphones forced Disney to rethink both of its core businesses, feature animation and theme parks.
The folks at InnoLead encouraged me to take at thoughtful, storytelling-based approach to these stories, which is why I thought Soonish listeners might be interested.
By the way, if you’re a supporter of Soonish on Patreon – well, first off, thank you so much! I couldn’t make the show without you. The way my Patreon account is set up, supporters get charged by the episode, not by the month. And I wanted you to know that these stories from the Persistent Innovators miniseries are bonus episodes. So you won’t see any charges on your Patreon account for Soonish.
If you’re not a supporter and you’d like to help the show going in the future, you can always do that at patreon.com/soonish.
And you can check out fresh new episodes of The Persistent Innovators over at innovationleader.com.
Okay, here we go. This is the full version, including ads and everything, of Innovation Answered, Season 6, Episode 3: What Makes Disney a Persistent Innovator?
Kristen Krasinskas: Hi, I'm Kristen Krasinskas from InnoLead.
If you work inside a large organization in any kind of innovation related job — whether you're in R&D, design, emerging technology, or new product development — I'd love to invite you to learn about the resources we provide.
We can connect you to a network of peers and make sure you have the data, templates, and case studies you need to succeed.
You can find out more — and sign up for our email newsletter — at innolead.com.
Now, on with the show.
Wade Roush: Hello and welcome to The Persistent Innovators, a special miniseries from Innovation Answered, InnoLead’s podcast for corporate change makers.
I’m Wade Roush. I’m a technology journalist and podcast producer based in Boston, and I’m your guest host for the miniseries.
This is Episode 2. And if you haven’t already, I hope you’ll listen to Episode 1, where you can hear a broad outline of what we’re trying to do with the series.
So if I mention the title The Black Cauldron, what comes to your mind?
If you or your kids enjoy fantasy books, like I did, you might think of the 1965 novel The Black Cauldron, which was part of The Chronicles of Prydain series by Lloyd Alexander.
But chances are you don’t think of the 1985 animated movie from Disney. You probably haven’t even heard of it.
But it was a real movie! In fact, The Black Cauldron was the most expensive animated feature ever made up to that time.
The film was technically stunning, partly because the creators used some early forms of computer graphics.
It also had an innovative musical score by Elmer Bernstein, which you’re hearing now.
[Audio clip: The Black Cauldron]
But it was a disaster at the box office, earning just $21 million against a budget of more than twice that.
Critics said the movie had a storyline that was cumbersome and humorless.
And they missed the strong characters that had been such an important part of animated Disney classics like Bambi or Pinocchio.
An even the chairman of Walt Disney Studios at the time, Jeffrey Katzenberg, thought it kinda sucked.
Katzenberg later told one writer that, quote, “It was heartbreaking to see such wonderful material wasted,” unquote.
So, if this is an episode about what makes Disney a persistent innovator, why am I starting there, with one of the company’s biggest flops?
Well, it’s because The Black Cauldron was a moment of reckoning for Disney.
By the time the movie came out, it had been nearly two decades since the death of the company’s visionary founder and namesake, Walter Elias Disney.
Disney Animation Studios was then and still is the creative core of the company. It was the engine that powered the theme parks and the TV shows and everything else.
The studio had been built around Walt Disney’s own belief that there was a scientific approach to doing great animation.
He thought part of the secret was to connect with the audience’s subconscious and bring to life their innermost fancies and fantasies.
Which is what helped Disney bring out hit after hit after hit, from Snow White to Mary Poppins.
But with the utter failure of The Black Cauldron, it became clear that Disney’s filmmakers had somehow forgotten all the lessons.
And it would take a while before they started to get their groove back, with movies like The Little Mermaid and Aladdin and The Lion King, making Disney into the virtual hit factory it remains today.
The point is, we think of Disney as one of the most innovative companies on the planet. It’s the epitome of American soft power, churning out stories the whole world loves, whether those stories show up in movies or theme parks or cruises or streaming TV.
But even a company like Disney can lose its way.
And what I’m going to do today is talk with former Disney executives and look at how, over time, the company has put together structures that help to perpetuate Walt Disney’s creative practices long after the man himself exited the stage.
But nobody can stay at the top of their innovation game 100 percent of the time. Not even the companies we’re calling Persistent Innovators.
So I’m also going to look at a couple of times when those structures and practices weren’t enough to keep Disney and its creations from being overtaken by shiny new technologies.
Because I think that even more interesting than seeing how Persistent Innovators succeed, is seeing how they pick themselves up after a stumble.
Wade Roush: Let’s pick up in the early 1990s, a few years after The Black Cauldron.
And let’s focus in on a gentleman named Ed Leonard. Today he runs his own venture capital firm, but in 1993 he was working as senior software engineer at Hughes Electronics.
He was helping the company build simulation and training systems for the military.
Ed Leonard: And so my job was to really create innovative ways of teaching people how to do this without sending them out into the field. And so lots of what we call glass training, which was basically high touch UIs with simulation behind them.
Wade Roush: But then Leonard got a phone call from his former boss, who had left Hughes to take a job at Disney.
Ed Leonard: And she gave me a call and said, You know, they're doing some really interesting stuff here. They really care a lot about innovation and technology, and … they're ready to do a real push in this. And I'd love for you to come out and see what they're up to. And long story short, I went and spent…kind of 25 years at the heart of my career doing technology innovation for filmmaking, particularly focused on animated features.
Wade Roush: At the time Leonard joined Disney, Michael Eisner had been CEO for almost a decade, and under his lead the company was getting seriously interested in computing.
Including the kinds of simulations that powered Hughes’s training systems.
They saw it as a potential way to up their game in animation.
Now, Disney Studios has never been afraid of new technologies.
In 1937 the studio invented the first sophisticated multi-plane camera, and used it to give depth and dimension to the backgrounds of animated features like Snow White and Bambi.
But those movies also had simple and compelling stories, which The Black Cauldron just didn’t.
Ed Leonard: It was a pretty low point for Disney, the mid-80s where, you know, films like Black Cauldron came out and probably haven't heard of that. But not many people have. But they lost their way, and I think that they recognized that they had somehow gotten away from the foundation that Walt had put in place in the early days, and which was to basically, you know, pair innovation with creatives and create something interesting, ultimately, you know, using storytelling as the primary motive, but ultimately using technology to tell the best story possible to bring it to life in ways that people were delighted.
Wade Roush: Disney engineers realized they wanted more flexible ways to use visual effects to tell great stories on screen. So in the late 1980s they started building some top-secret new technologies.
Ed Leonard: I had grown up, if you will, my early career was in aerospace and defense. And so I was used to security clearances and lots of secret projects. So I went I went to Disney and, you know, tried to go, Hey, I want to see what you guys are up to. Let's, let's go to your computer room. And of course, there's a little Mickey Mouse with a badge on, with the little hand up saying, stop, no, no un authorized access. And it was funny to me because I'm thinking like, OK, here we are at Disney. And these guys were serious. No, you can't go in there.
Wade Roush: Fortunately Leonard’s new job as director of R&D for Walt Disney Feature Animation came with security clearance. And that’s when he learned that the project Mickey was guarding was called the Computer Animation Production System, or CAPS.
For decades, the traditional way to make an animated feature had for artists to hand-paint individual frames or “cels” on sheets of celluloid or acetate, or multiple sheets if they were using a multi-plane camera.
They’d photograph that frame, then put in the next painted character sheet or move the background sheets just a little before photographing the next frame.
The results could be beautiful, but the process was incredibly painstaking.
The CAPS system gave animators superpowers by taking the enclosed spaces in any cel and automatically filling them in with any color the artist wanted.
It could also move each layer digitally.
And that opened up the possibility of new kinds of camera movements that just weren’t possible in traditional animation.
Disney used CAPS for exactly one scene in The Little Mermaid in 1989. But the technology’s real coming out moment was in this obscure little film from 1991.
[Audio clip: Beauty and the Beast]
Ed Leonard: Then you started seeing things like Beauty and the Beast with the ballroom scene, Really interesting innovation that was such a pivotal moment of the film. The filmmakers go, “We need this to be spectacular. We need this to be the moment, you know, we need to make this as rich as possible”And I think that that that moment, in my opinion, looking back at them, that was a moment where Disney and the creative executives really kind of doubled down. It was sort of a moment of real, an aha moment, if you will, where they go, Wait, this is so we need to do this on every one of our films. We need to figure out where and how are we going to push innovation to tell a better story? And then you saw that evolution happen. And I had, you know, I was fortunate to be a part of that. Lion King was my first feature animated film and again for Lion King, you know, was again, another pivotal moment. It's a wildebeest scene where, you know, Simba is trapped and these wildebeests are coming.
[Audio clip: The Lion King]
And at that time, everything was hand-drawn. So it's like, OK, it's just not as compelling to see six hand-drawn wildebeest coming over the top of a hill. You know, the director wanted hundreds and hundreds and really get this feeling of, Oh my gosh, you know, this is this is a real stampede, and computers and technology were a way to do that again, driven by the creative. But. And you know, again, you know, that film went on to do over $200 million, which is unheard of for an animated film. And, you know, started really a revolution that, you know, continues to this day and in filmmaking, particularly in the animated space.
Wade Roush: Yeah, right. Well, this is a these are great examples, and I’m glad you brought them up, because if you hadn’t, I probably would have. But the ballroom scene in Beauty and the Beast, let's just be clear, it was kind of a hybrid of the best of hand-drawn animation for the characters and CGI for the background, for the ballroom itself and the chandelier and the sky. And then the same with that scene in The Lion King. Simba is hand animated, but the stampede is using kind of an early version of crowd creation animation. Right? So this is an era when Disney is beginning to make that transition. But it's still got a hand in its traditional forte of hand-drawn animation, right?
Ed Leonard: Oh, absolutely. And I think, you know, Disney stayed anchored in doing what's referred to as traditional animation for a long time, and there were many, many films that had come after those early films that were kind of rooted in hand-drawn animation. The thing that you know, that’s really important to recognize is, it’s certainly true that these were hand-drawn animation. But there was a ton of technology. And this CAPS system was basically a digitized way of putting together lots of hand-drawn animation in ways that created lots of visual richness. And so, so while those those films remained 2D in nature, we started to see this really interesting evolution happen where they used 3-D to give the to understand the complexities of the scene, to drive the camera. And then they basically used they used traditional methods to bring that to life.
Wade Roush: Beauty and the Beast was just the start. Disney relied on the CAPS system for all of its big animated hits in the 1990s. And under Ed Leonard’s guidance the system grew more powerful with each film.
But here’s where we need to step back and define what animators mean when they talk about 2D and 3D.
In the 1990s, 3D didn’t mean that the images popped out of the screen the way they do in when you’re wearing polarized glasses in a movie theater today.
It just meant that the objects in the image were built first as 3D models in a computer-aided modeling system before they were positioned and rendered in a series of 2D images.
In the Disney features of the 90s, some of the backgrounds were born as 3D models, like the ballroom in Beauty and the Beast. But all the characters were still 2D.
Now, it just so happened that up in the Bay Area, there was a little company owned by former Apple CEO Steve Jobs where animators were trying to use 3D for everything, even the main characters.
And even though CAPS had been a major advance for Disney, it was about to get overtaken by this upstart, which was dead set on leading the transition to the next era of feature animation.
That company was called Pixar. And there’s nobody who can talk about the tensions during this time better than Ed Leonard, as we’re about to hear.
Wade Roush: Ok, so this was sort of the period that's now known as the Disney Renaissance. You're just coming off the release of Beauty and the Beast. And then there's Aladdin and then The Lion King and Pocahontas and Hercules and Mulan. But this is also the exact time when Pixar was starting to figure out CGI. They're making Toy Story. And that comes out in 1995. So I'm just curious if you can say a little more about the balance of thinking inside Disney at that time, you know, between traditional 2D animation and CGI. Was there a feeling inside Disney that we need to figure out the CGI future because someday all of our films are going to be 3D?
Ed Leonard: I wouldn’t say it that way. Here's how I would say it. It was very clear to everybody by the time Lion King came out, that technology was going to change the face of animated films forever, for sure. Without a doubt. The question was, how quickly and what did that mean? And there was lots and lots of great debate internally, from creative to business. Like, do people want CG films? You know, we, you know, people would often ask, Well, why don't you just have live action? Why do you spend all this time and money trying to animate? Well, it's because you can bring together these worlds in ways that are fantastically expressive and intentionally designed from the very little detail to every little nuance you. I mean, I was, you know, as a technology guy coming in, I had I had no idea it took five years to make one of these films. I had no idea it was hundreds and hundreds of people. I had no idea that every little thing in the film was designed with intention, from color palettes to lighting to character design. And so all of that stuff combined allowed filmmakers great power to bring this vision to life in ways that were just really super expressive and actually hit their creative intent.
Wade Roush: In other words, from inside of Disney it was hard to see how you could build 3D characters that were as expressive as the 2D characters Disney had been creating for 70 years.
So the company hedged its bets. It didn’t dive into full 3D animation itself. Instead it paid Pixar $26 million for the distribution rights for three computer-animated feature films, starting with Toy Story.
Ed Leonard: Everybody stood back and said, Well, you know, let's see how they do. Can they can they make this? I mean, they make a great, you know, 10-minute little short and there's great performance in the characters. But, you know, are people going to respond to this? Is this going to be something that audiences will want to see more of? And it was very clear, when it came out that, that question was answered opening weekend. Everybody loved it and they want they want more of that.
Wade Roush: Toy Story was the real beginning of the 3D revolution in feature animation. And Disney was definitely part of that revolution.
In fact, many years later, in 2006, Bob Iger, Eisner’s successor as CEO, decided to buy Pixar for $7.4 billion in Disney stock. Which, by the way, made Steve Jobs into Disney’s single largest shareholder.
But the purchase of Pixar wasn’t really an innovation strategy. It was a catch-up strategy.
Because while Disney had profited from a string of Pixar hits in the late 90s and early 2000s, like A Bug’s Life and Toy Story 2 and Monsters, Inc. and Finding Nemo and The Incredibles and Cars, it still hadn’t figured out how to make its own successful 3D movie.
Wade Roush: Folks like Iger, I guess, would talk about how they would go to the parks and realize that all of the characters they were seeing at the Main Street parade were Pixar characters. They weren't Disney Animation characters, right? And like realizing that there's an existential problem here. So I just kind of wonder whether you feel like Disney got trapped in a way, unable to let go of that, that that magnificent tradition of hand-drawn animation or 2D animation and unable to move forward fast enough to really take advantage of the newest technology and what audiences wanted?
Ed Leonard: No question. That's why I left. I wouldn't have left Disney for DreamWorks, I mean, I you know, my biggest frustration at Disney was how quickly they were embracing this technology.
Wade Roush: And by quickly, Leonard really means how not quickly.
And sorry I’ve been putting off this big reveal, but now you know why I wanted to talk with Ed.
Because in 1994, Walt Disney Studios chairman Jeffrey Katzenberg left the company to co-found a rival animation house with Steven Spielberg and David Geffen.
It was called DreamWorks SKG, now just Dreamworks, and it went on to make some of the biggest animated features of the last few decades, like Shrek, Madagascar, and How to Train Your Dragon.
Ed Leonard joined Katzenberg at DreamWorks in 2002.
Ed Leonard: And Jeffrey, when Jeffrey started DreamWorks, it was largely based on a lot of these learnings that, you know, evolution was hard. So taking this traditional company that had done hand-drawn animation for decades and changing everything to 3D instantly, there was a lot of challenge in that. And yeah, I mean, listen, isn't this the challenge with how you innovate in a company that's massively successful? It's really hard. And most companies, you know, either recognize it if they're very successful and start to incubate innovation ahead of or alongside of their core business or they purchase innovation. And that's, you know, that's ultimately what what I think Disney did with the purchase of Pixar, in my opinion. They made up for the mistakes that maybe they hesitated a little bit too long. And you know, frankly, when DreamWorks, you know, came to the table, they were willing to invest in technology. They recognize how important it was.
Wade Roush: What were you able to do at DreamWorks that you maybe couldn't have done at Disney? Was it sort of like taking the brakes off?
Ed Leonard: We had a couple of conversations prior to me leaving Disney, and I was convinced, like all these things I thought were important, you know, investing in innovation. And I could imagine how this marriage of technology and artistry could be something remarkable. You know, Pixar had proved it. And I thought it was a start, not an end. I mean, I think that we can do more and better and bigger. And so that was that was the mission at DreamWorks. It was to not use some technology to enable artistry, but to marry technology and artistry to create something nobody had seen before.
Wade Roush: The story here is not that people completely stopped going to movies from Disney Animation.
Although the studio definitely put out a couple more big flops, like 2002’s Treasure Planet .
The point is, the studio did eventually figure out how to marry storytelling and 3D technology in a way that felt distinctively Disney.
It just took a long, long time.
They started to get the formula right with Tangled in 2010 and Wreck-It Ralph in 2012.
But the real proof that Disney had fought its way back to the top of the animation business was Frozen, in 2013.
[Audio clip: “Let It Go” from Frozen]
Frozen was a fully computer-animated, but it had all the classic Disney ingredients. A fairy tale plot, compelling characters, dazzling images, catchy show tunes, and a dash of humor.
It became the highest-grossing animated feature up to that time.
Only two films have surpassed it since then, and they’re also from Disney, namely Frozen II and The Lion King remake.
Ed Leonard: I would say they have figured it out and they are doing, you know, wonderful work.
Wade Roush: I think the reason that this episode and this time in Disney history is so interesting from the perspective of someone trying to unpack innovation and how it works and extract lessons is that it seems like, you know, even inside companies that are structuring their teams around innovation, they can sometimes get, well, overshadowed by some other technology that comes out from left field, and they just don't buy in fast enough, right? So everything they're doing around innovation winds up being not enough.
Ed Leonard: Right. I think that's true, and I think that that's a that's an eloquent way of describing the, you know, the historical evolution of 2D to 3D, which happened slowly. When you bring to life characters like Shrek, or like Woody in Toy Story, it's entirely 3D all of a sudden. I mean, this isn't Kansas anymore. This is a this is a new way of filmmaking. And so to me, it's like, that's not an evolutionary step. And isn't that true with lots of companies that innovate is like, you get so keen on having to protect what you built because it's a massive, you know, enterprise and you're, you know, there's shareholders and there's just a ton of, you know, people that you're serving as, you know, as leadership. And so, in the middle of that to say, Hey, we're no longer going to make 2D films, we're just going to make all 3D films, it’s like “What are you talking about?” It's like they just it's not possible to do in a company like that.
And by the way, same thing happened at DreamWorks. Dreamworks didn't invent the 3D technology. They [00:37:30] purchased a company called PDI and we and then we went in and which, by the way, amazingly talented artist and amazingly talented technology, but couldn't scale it. I mean, it's great if the 100 people that built it could could make the film, but that would give us one film every three years and we wanted two a year. So how do you get in there? Open that box. Build it for scale. And then, you know, use it to drive creative innovation. That's that was sort of what we did at DreamWorks. And I think and I think that's the part that really Disney had a hard time doing. They I mean, to this day and again, I don't claim to know much about what they're doing, but I do know that Pixar pipeline is completely separate from the from the pipeline at Feature in Burbank. And that's something that we very intently didn't do. You know, at DreamWorks, we said, OK, we're going to integrate all this great technology. We're going to make it available everywhere. And the same innovation that happened in local pockets for each of those films, they became mainstream uses in the next film. And so and that's and that's how I think DreamWorks was able to so quickly become such a powerhouse in animation where it took, you know, the Disney company decades. You know, DreamWorks did this in a handful of years.
Wade Roush: Now, there’s whole different side to Disney, and that’s Parks and Resorts.
And on that side of the business, there’s a whole division of the company called Imagineering, that’s in charge of making sure the company doesn’t taken by surprise by new technologies.
But even there, the company doesn’t always succeed.
And in the second half of the show we’ll dig into an interesting case study.
But before we go there, a word about our sponsor.
Wade Roush: The Persistent Innovators is sponsored by Patsnap, the connected innovation intelligence company, and their online courseware site Innovation Academy.
Coming up later in the series I’ll talk with an executive from Patsnap about how the company can help innovative companies understand the R&D and intellectual property landscapes in their fields. And I’ll ask them how they think about the challenges of persistent innovation.
But for now I just want to say thank you to Patsnap for their support. You can learn at www.patsnap.com and academy.patsnap.com.
Wade Roush: One of the great things about making a tech podcast is it gives you an excuse to call up people who are your heroes in the innovation world and ask them to talk about their craft.
One of the big treats for me as I reported this episode was my interview with Bran Ferren.
These days Ferren is chief creative officer at a technology studio called Applied Minds.
But I’ve admired his inventiveness and his Da Vinci-esque resumé ever since I read an epic New Yorker profile of him back in 1997, when Ferren was at Disney. I’ll link to that piece in the show notes.
As that article explains, Ferren got his start in lighting design for rock concerts, but his work gradually expanded into visual effects for stage shows and movies, as well as documentary filmmaking and museum design.
In 1993 Disney’s president Frank Wells and its CEO Michael Eisner decided to buy Ferren’s production company and make him president of research and development at Walt Disney Imagineering.
Bran Ferren: My charter was help invent the future of The Walt Disney Company. The notion was based at Imagineering because that's where a large percentage of the technical innovation happened on a regular basis, which was fine with me. And, you know, I mean, the pitch that Eisner and Wells made is that we can give you a bigger sandbox, you know, to play in now.
Wade Roush: The roots of the Imagineering division stretch back to 1952, when Walt Disney set up an engineering company called WED Enterprises (for Walter Elias Disney) to help design and build Disneyland.
In 1986 the company renamed the unit Walt Disney Imagineering. And by the 1990s it had outgrown its sole focus on the theme parks and morphed into something like the R&D lab for the whole company, outside of filmmaking.
Bran Ferren: Part of the challenge was defining what my job was, which was actually part of my responsibility. So there was this thing called the internet that was starting to become public. I had an internet account when I was at MIT in 1970, but let's put it this way—no executive in The Walt Disney Company, when I was there, had a computer in their office. And I know because I bought the first computers for Michael and for Sandy Litvack and for, you know, the the key people in the company to just start to understand this new thing called the internet. And so our job was to actually look out years into the future, and we had proposed a series of quite novel things to move Disney forward. The first one was the Fellows program, which was designed to get the best and brightest and most innovative talent that is traditionally thought of as being Silicon Valley or the high technology world and get them to come to Disney. And so we hired Marvin Minsky, the father of artificial intelligence, Danny Hillis, who later became my partner at Applied Minds, who again was one of the lead thinkers in supercomputing and massively parallel machine architectures. Seymour Papert, who was a pioneer and application of computers to education and children. And you know, as we built this, Alan Kay joined. Alan was CTO at Apple Corporation at the time that I talked to him and he had been the CTO at Atari and was a pioneer. And Alan also invented the concept of the personal computer called the Dynamo at Xerox Parc. So these were all people who had the technical expertise, but were all really top creative thinkers known for their ability to think in multidimensional ways and not accept the status quo. So that was sort of one side of it. Another side of it was building a enhanced corporate research and development activity whose job it was, much like DARPA, to avoid surprise. And the way you do that is to be out in front.
Wade Roush: Ferren was at Imagineering for 10 years, from 1993 to 2003.
And he says his Imagineers divided their time between projects that would have an obvious near-term payoff and others that might never earn a cent for the company.
On the near-term side, they designed and built innovative new theme park attractions like the Tower of Terror at Disney’s Hollywood Studios and the Test Track slot-car ride at EPCOT.
On the more blue-sky research side, Imagineers explored totally new kinds of communications and storytelling technologies.
They built one of the first digital cinema projectors.
They created demos showing how television might become more interactive.
Long before iTunes or Spotify, they experimented with direct music delivery into the home.
Ferren says the goal wasn’t to deliver fully formed products, but to show the larger company where technology was going.
He even proposed building a virtual world called Disney Space that sounds like it was ripped right out of The Matrix or Ready Player One.
Bran Ferren: I wrote a white paper on this saying that we're going to blur the lines between what a theme park is in the physical world and what you could do in the virtual world. So you will meet people online and then extend that relationship by meeting them and their families in the park and then take those relationships and bring them back home. And you know, this was obvious to me that it had to go in this direction. [00:16:55] I thought this should take three to five years to get done and it's just what everyone's talking about now with Metaverses and all of that other stuff. So I've been consistently wrong at how long it takes the world to actually get around to doing some of this stuff. But we were actually pretty right about where that was happening.
Wade Roush: What Disney was doing with Imagineering used to be pretty common in corporate America.
But nowadays, not so much.
Lots of big companies used to create isolated divisions, like Lockheed’s famous Skunk Works, where the idea was that researchers would get more creative if you dialed up their autonomy and dialed down the bureaucratic requirements.
Wade Roush: I'm not sure whether it would be fair to call Imagineering a skunk works exactly, because it's pretty big and it's a pretty major division and serves many, many customers within Disney. But in a way it’s a skunk works. It's a protected place for innovation. And I wondered if you could speak a little bit about whether you feel like that's necessarily the best way to make sure that a company has a vision of the future and that it's out ahead of its competitors? Or by contrast, are there ways to spread that kind of innovation out across a company?
Bran Ferren: Well, I think by and large, whether one wants to admit it or not, big companies aren't innovative. The bigger they get and the larger market share they have, the more conservative they become, and they depend upon major product lines which don't change that much over time. There are exceptions, but there are not a lot. And so I find the best way to maintain innovation within that framework is to isolate it and protect it. And in fact, even with Imagineering—so Imagineering is not protected. But then again, it is, from the perspective that it's not a profit center, it’s a cost center. So there is no product that generates revenue from Imagineering. At the same time, the things that Imagineering invents generate revenue for the theme park operators or consumer products or whoever else we happen to be doing them for. So we're guided by other people's economics.
Wade Roush: So now that you’ve heard Bran Ferren explain why Imagineering exists and what it does for Disney, I want to bring in another former Disney executive.
He can also testify to the importance of setting up protected spheres for innovation, because he’s done the same thing in his current job.
Joey Hasty: My name is Joey Hasty. I'm head of innovation and transformation at Royal Caribbean Group, which is the parent company of Royal Caribbean….and a few other cruise lines. I formerly did a similar role with Disney in the Parks and Resorts division. Sort of one part product design, one part futurist.
Wade Roush: Joey Hasty was at Disney for 17 years, from 2000 to 2017, and he held the titles of executive creative director and digital innovation director.
And a lot like Bran Ferren, his job at Disney was to uncover emerging technologies that might lead to new strategies or business opportunities.
But those opportunities rarely took the form of world-changing products.
Often they were more like ways to help park guests have better experiences, or ways to use technology in the parks tell better stories.
Joey Hasty: There are some really unique parts of the way Disney works that you might not find in other companies that I think are part of the movie-making heritage for Disney. For instance, Disney would spend a lot more time than I think other companies at pre-visualizing concepts, mostly in prototypical fashion. So we got tangible maybe much faster than other groups. Another differentiator was it was design thinking with designers. [00:13:30] We define it as human centered design. it's a pedagogy that really comes from IDEO and the Stanford D School around making users first, taking human centered approach to concept development, which is absolutely right to make sure that the questions you ask are the right questions. The thing that you're going after is the right thing.
Wade Roush: Now, if you’re going to put a lot of work into some new technology, it’s always smart to make sure that it’s something people actually want.
And not just something that sounds great in the lab or the studio.
But here I’m going to quote Master Yoda, who is, after all, part of Disney universe now:
[Audio clip from The Last Jedi: “The greatest teacher, failure is.”]
Wade Roush: And I’m going to relay a story Hasty shared with me about a big project that didn’t pan out the way his team thought it would.
It’s called the MagicBand. It’s a plastic bracelet with an RFID radio that allows Disney guests to identify themselves and do things like unlock hotel room doors, spend digital cash, or skip long lines for rides.
Joey Hasty: The MagicBand is a really interesting project. If we taught it in business schools, it might be a case study on how personalization can go wrong. The idea originally was to give us a platform to personalize the vacation for guest. If you think about a Disney vacation, especially Disney World, lots of people don't realize that Disney World is the size of San Francisco. It is a very, very large, large area. Four theme parks. Twenty-six resorts. It’s massive. And we wanted a way to personalize experiences. We know your name and we can use information about you in a way that really draws you into the story. That was sort of our goal with the MagicBand, and also to allow for things like removing friction, park entrance, opening doors, paying for things. And it was five years, a five-year journey going from that idea to the first product that was on a guest wrist. And part of that journey was learning about how to deliver personalization at scale in real time, which is a really hard problem
But there's a couple of things that I think other companies can learn looking at the Magic Band as a product first. Even when you get all the technology right, the end user, the end user result can sometimes be surprising. That dismissing of the recommendation is what I love to use because it's a real one. We spent a lot of time and effort imagining that we would watch our poor guests cross the parks five and six times, and these parks are ginormous, and so they just be exhausted trying to go ride everything. And we wanted to make the experience better…using an algorithm to carve out the best possible easy path. We'll kind of find the best ride times, wait times so that you can write as much as you can. But when we make those recommendations, guests would ignore them for all sorts of really good reasons, but they would ignore them nevertheless. And so it delivering personalization at scale is a hard problem.
Wade Roush: Right, because we just don't understand human psychology as well as we would like.
Joey Hasty: That's right. Guests would have a plan and then ignore their own plan, or some guests would feel like, “Oh, this is a recommendation from Disney.” The feeling was they want to keep me from some other ride. So emotions were really surprising and sort of all over the map.
Wade Roush: So it took five years and I guess a billion dollars of testing to get this onto people's wrists. That's a long time for even for a big project like this. How do you keep a project going that long? How do you make sure that there's enough internal support and a momentum investment to make it all the way to the finish line?
Joey Hasty: First, I'd love to address your “five years is a long time.” That is spot on. Five years is way too long. And that's because Disney, at its heart at the time, was just transforming into a technology company like all companies need to be today. At the time, it just wasn't. And so there was a ton of inefficiency in the way we brought that technology to bear because we were just transforming into a technology company. I think the company probably pulled it off much faster today. Your question was around how do you keep momentum, how to keep the popcorn popping five years in? And that's a great that's a great question. We did a couple of ways. We did it by cycling in design teams, getting more and more thought and help to scale it across the parks and resorts. We did it by keeping the roadmap for the product really fresh, our intent. We still haven't met—Disney, I can't say “we” anymore—but Disney still hasn't met the full intent or the full capabilities we dreamt up for that product. And so we did it by constantly sharing that that roadmap and keeping the organization excited about that possible future. In some ways, the magic band is still a diegetic prototype of a future we hope to see one day.
Wade Roush: The MagicBand is still very much a part of the experience at Disney’s parks in the U.S..
But one interesting coda to the story is that when Disney opened its newest theme park in China, it didn’t bother with the MagicBand.
Why? Because of the smartphone.
Joey Hasty: The iPhone was introduced two years into the MagicBand project and Steve Jobs was on the board. But even at that moment, we couldn't see what a transformational device it would be. So today, for instance, when Disney opened Shanghai Disneyland, Hong Kong Disneyland, we don't use the MagicBand, we use the phone, because it's actually a much better personalization platform with a ton more technology that we don't have to deliver to guests. So it just becomes a better platform for some of the same goals. In fact, an even better platform for those goals.
Wade Roush: Is it fair to say that today most Disney parks, especially, I guess, Shanghai and Hong Kong, are more digital, more digitally activated than you could have possibly conceived 10 or 20 years ago?
Joey Hasty: So much, so much more technology involved. So much more connection in real time information than we ever dreamt possible at the outset of some of this. Part of that is culturally and the tools that are available. But really, if you look across even the U.S., guest expectations are constantly rising. We all expect to be able to pay for things as quickly as I can. Ordering a Starbucks, we all expect to be able to order groceries and see that they're 10 steps away, right? We don't want to guess where things are we? We all expect to get workarounds from traffic like we do with Waze. And so those inventions sort of in the market are constantly raising guest expectations about every experience. And so if you think if you think about it, we're sort of in an experience arms race. And I don't think it's ever going to slow down.
Wade Roush: I don’t want you to get the wrong takeaway from the MagicBand story.
It’s not that it was a dumb idea to use technology to personalize the guest experience.
Instead it’s that even the most experienced innovators need to keep testing and testing and testing to see which of their assumptions are wrong.
And that is exactly what Joey Hasty did at Royal Caribbean, where his team came up with a way for cruise guests to board their ship faster.
Joey Hasty: Boarding sort of feels like a combination of checking into a hotel, leaving the country, the TSA, all that fun into one 40-minute menagerie. And so when we went in and looked at that experience, the teams were doing a great job of trying to make each step of the process a little bit better. But you'll never iterate a candle to a light bulb. We said, what if we just didn't do any of it? What if we allowed guests to use their phone to check in the night before? Take a selfie, use facial recognition as an underlying technology, and let you go from the car to the bar in under five minutes? Security told us it could never be done. Port Authority was really nervous about it. Hotel ops didn't know how to operate it. But we stood up a play test. What would that feel like for you, what would it feel like as a guest? And then creating those tools for each of those teams so that we can make that experience real. That’s a really great example of hiding that complexity from our guest, so that they can just enjoy the moment. And designing products and technology to bring that to life. And today, I'm really proud to say you can go from the car to the bar in under five minutes. In fact, it created a brand-new problem that we couldn't foresee, and that's that bars are crowded an hour earlier on the ship.
Wade Roush: Well, that sounds like the perfect time to explore the rest of the ship, if everybody's in [00:31:30] the bar.
Joey Hasty: Exactly right.
Wade Roush: Hasty says he agrees with Bran Ferren that innovation teams like Imagineering do their best work when they’re protected from everyday business pressures.
Joey Hasty: I find that there are two moments in the process where if you don't have that protective layer [the] ideas have almost no chance of survival. The first is that very first seed of a prototype where we have some crazy idea that is going to be disruptive to the company. So already there is going to be some pushback from some folks in the company. Some detractors for the concept. But really, we have a hunch. We don't know that it will be successful. We couldn't know until we go till we go test it. But we have a hunch that there is an opportunity area here without that insulation insulation from the company, it's really easy for those detractors to just put the kibosh on it on a concept before we go and try. The second is when we're ready to to sort of go from prototype to operationalization, really, as we get so many users, so many stakeholders within the company to buy into this moment with us to try with us. Someone once asked me, How do you get consensus? And I realized we almost actually never get consensus. Instead, we ask for cooperation. We're not asking you to agree this is a great idea. We don't even know that this will be successful once in the market. What we're asking for is for you to come along the journey with us and try.
Wade Roush: Even before Bran Ferren left Disney, he and Danny Hillis set up a new company called Applied Minds. Today Ferren calls it an “Imagineering for hire.”
Bran Ferren: We do a whole collection of projects that are specifically designed not to be narrowly focused in one area, but to be broad. On one level, that's exactly what Imagineering does for The Walt Disney Company, which is be able to take a broad view and take a creative perspective, a business perspective and a technical perspective all at the same time. So to that extent, it's similar. But the difference is The Walt Disney Company Imagineering is optimized specifically to serve the needs of that and their shareholders. Where we are designed to serve the needs of other companies that come to us looking for help.
Wade Roush: One of my final questions for Ferren was whether, in the end, he would really call Disney a persistent innovator. And if so, what sets it apart.
Bran Ferren: It's quite innovative as compared to a company that manufactures screwdrivers or, you know. So I think it's a matter of degree. The big difference is that it's a company that depends on its creative output and the strength of its brand and the ability to reinforce the brand in a way that is significant. Just as if you look at the computer industry, you know, personal computers, there's Apple and everyone else, right? …The innovation leader in that business has been Apple consistently, and every time people expect that they've run out of steam, they do something like the iPhone. They came in and turned the entire industry upside down.
But those companies, the companies like Disney or such are design-centric, storytelling-centric and are based upon developing deeper relationships with the consumer than companies that provide for lack of a better word, generic or commodity or other sorts of things where it's just cost. I mean, you know, if you're buying the Disney product or an Apple product, you're going to pay more than alternatives that you might have paid otherwise. I think a lot of companies get themselves in trouble because they think it's about satisfying customer needs, which is largely nonsense. It's far more compelling to satisfy customer desire than it is need.
Why do you buy an Apple computer? The fact is Apple products are very well engineered and very well designed and very thoughtful. The reality is, it's all tied together the emotional side, the technical side, the performance side. And at a company like Disney, you have to be thinking about those all the time. But you have to remember the core competency of The Walt Disney Company is storytelling. So anchoring your belief and conviction in innovation really has to be connected to: what is it that you're there to deliver that's going to maintain the value of that corporation. Is it about quality? Is it about innovation? The reality is it's about all of those things and just the balance and how it's done is something that you have to keep changing, because it's a changing world. And if you don't have an organization capable of making those changes, you end up being Eastman Kodak or you end up being Sears & Roebuck, or you end up being a whole variety of other companies that were directly relevant in the top of their game, not so many years ago, and are less so now because they made one or two or five missteps along the way.
Wade Roush: As we’ve seen, Disney hasn’t always stayed at the very cutting edge of technology.
Sometimes it gets too wrapped up in its traditional way of doing things. And then it has to play catch-up.
But even as it Disney comes up on its 100th anniversary next year, it’s in no danger of going the way of Kodak or Sears.
Because the one thing Disney has never forgotten—except maybe in the case of The Black Cauldron—is that its real business is giving life to our subconscious feelings and fantasies.
For proof I think you can point to contemporary examples like Encanto, the Disney Animation film about a magical family in Colombia, with a soundtrack that’s going viral on the music charts right now.
[Audio clip from Encanto: “We Don’t Talk about Bruno”]
Or you can look at Star Wars Galaxy’s Edge, the attraction at Disneyland and Walt Disney World that provides visitors with customized experiences like the chance to build your own light saber. When the California version opened it was so popular that it left the rest of Disneyland almost empty.
Or you can point to Disney+, the streaming TV service that Disney introduced in 2019.
Considering that Bran Ferren’s Imagineers were experimenting with interactive television in the 1990s, it took a really really long time and several false starts for Disney to figure out how it wanted to compete in the era of digital TV.
But now the service has 118 million subscribers, all paying Disney $8 a month. Nice work if you can get it.
I think the theme here is that Disney’s investment in the technology behind its storytelling has ebbed and flowed. But it’s always been there.
In a way, it’s the star we’ve never stopped wishing on.
[Audio clip from Pinocchio: “When You Wish upon a Star”]
Wade Roush: The Persistent Innovators is a miniseries from Innovation Answered, InnoLead’s podcast for corporate innovators.
It’s written and produced by me, Wade Roush, and edited by Scott Kirsner.
Music in this episode by Lee Rosevere.
I’d like to thank Kristen Krasinskas, and Collin Robisheaux over at InnoLead for all their help.
A special thank you to our sponsor PatSnap, and to my guests Bran Ferren, Joey Hasty, and Ed Leonard.
I’ll see you in two weeks for our next episode, about the LEGO Group.
Until then, stay safe, and thanks for listening.
