The Organization Behavior of PIXAR - Research Paper Example

?Running Head: ORGANIZATIONAL BEHAVIOR Organizational behavior at PIXAR Studios: The danger of an insular work culture Address Telephone E-Mail Course Number Date Instructor’s Name Organizational behavior at PIXAR Studios: The danger of an insular work culture Introduction Pixar animation studios has become the front runner in an industry of only a very few companies that provide high end animated entertainment for children. Competing and exceeding the reputation of the Walt Disney Studios, the company was acquired by Disney and is now producing films at the highest level of excellence. The organization is built upon a family style structure in which stakeholder interests are a priority and quality is the highest goal over financial concerns. The objective of their enterprise, according to their website is “to combine proprietary technology and world class creative talent to develop computer animated feature films with memorable characters and heartwarming stories that appeal to audiences of all ages” (Pixar, 2010). In order to pursue this goal, the company has created a strategy-culture in which a strong culture has developed so that the employees are highly loyal. However, the insular corporate culture has created some issues in which communications in the organization are not up to the original standard expected by the mandates. The business is experiencing some of the effects of expansion as lower level employees are fighting to be heard. From its smaller beginnings of merely 44 employees when purchased by Steve Jobs, the company now has 850 employees with 19 executives (Hoover’s, Inc., 2011). With a large work force all operating towards a limited number of projects, the experiences that first brought Lasseter to form his own business can eventually become seen as a threat to the company if the creativity of lower level employees is not allowed to flourish. However, according to Hoover’s, Inc. (2011), the average amount of revenue per employee per year is at $300,000, making the business a capital-intensive industry. Investment and start-up costs make competition difficult, but also mean that competing creative types have a shot at finding financing even in the high-risk, but potentially high return nature of the business. Company History Pixar Studios did not start out on a successful tract. The company started as Pixar, Inc. in 1984, a company that sold computer hardware and turned to selling animation software as well as providing commercial animations for advertisers. John Lasseter and a handful of employees, shortly from the junior animation ranks at the Walt Disney Company, formed this company as a division of the company owned by George Lucas under the special effects branch (Pixar, 2011). The hope of the company was to create a success through animation, creating short length promotional films which were bringing in no financial return. The company ran reporting nothing but losses in the couple of years and was having trouble financing the one project they were determined to create (Price, 2009). The company was purchased by Steve Jobs in 1986 for ten million dollars when the division was formed into an independent company as Pixar, thus beginning the course towards a revolution in the animated film industry. The company was co-founded by Ed Catmull, who was also the vice-president of the special effects division at Lucas, Inc (Pixar, 2011). Through innovative techniques and building a reputation through short films, the company gained enough credibility to engage in their first efforts towards a full length, feature film project. With Lucas, Inc., Steve Jobs, and innovations that had the capacity to rock the animated film industry, the next logical step was to include the Walt Disney Company as a part of one of the most powerful innovative groupings ever developed. The project was Toy Story, a fully computer generated animation film that the Disney Studios came on board to finance in 1991. There was a murmur of disapproval in Hollywood, the belief that a fully computerized animation was viable as a long term investment as a film style highly doubted. Disney strictly dictated the terms of their involvement and by 1993 they had halted production due to problems with the script, putting doubts upon the potential for success and further fueling rumors of the unviable technology of computer generated animation. However, by 1995 the film was completed and released to an enthusiastic audience, fueling the creating of computer generated animation films that would revolutionize the industry (Price, 2009). The business, now considered a animated film studio, generated a series of highly successful films including A Bug’s Life, Monster’s Inc., Finding Nemo, and The Incredibles (see Fig. 1), all films with commercial success which Disney found to be not only moneymakers for their investment in the films, but a problem because mothers who were surveyed on the issue were expressing more trust in the Pixar name than that of the Disney name (Price, 2009). The power position was shifting as Pixar was now in a more powerful position than was Disney and the contract between Pixar and Disney was ending in 2005. Fig. 1 Budget versus Gross Earnings on Early Pixar Films (IMDB, 2011) According to Price “the distribution of Pixar’s films made up around 45% of the operating income from Disney film operations” (Price, 2009, p. 5). Lasseter now had what he had coveted most during his time at Disney – freedom. He now had the freedom to make films that meant something to him, rather than generate the vision of others. In 2005 he gained the titles of chief creative officer for the now combined Disney and Pixar animation, with the additional title of principal creative officer for the worldwide division of Disney theme parks and resorts (Price, 2009). Pixar had gained so much power that Disney needed them in the ‘family’. In 2006, the Walt Disney Company acquired Pixar for the price of 7.4 billion dollars, done through an all stock transaction (Pixar, 2011). Lasseter came away from the deal with the title of Chief Creative Officer over all of Disney, holding more stock than both Roy E. Disney and ex-CEO Michael Eisner. Pixar had become a powerhouse company, even though they were owned by another company. Their work was supporting the film division of the Disney Company and Lasseter who had been fired from his dream job as a Disney animator, was now in control over the Disney creative world (Paik, 2007). Background The Pixar philosophy is based upon ideals that have been reflected in their creative works. Velarde (2010) describes the work of Pixar by saying “in our often dark and negative world, Pixar films offer hope, imagination, beauty, and a degree of purity and innocence that is counterculture in our age” (p. 9). Through a discussion of Pixar films, Velarde (2009) promotes the virtues that are presented by the films. The innocence of the ideals that the animators have are not given out as pabulum for the masses, but are carefully constructed through some of the harsh realities of life. The metaphors are rich, with adult issues often discussed in terms that allow for both children and their parents to enjoy their film experience. In the same vein as the Walt Disney Company who has released copious books on the topic of how to have success ‘the Disney way’, books on the success of Pixar hope to provide a blueprint for success through their philosophies on business. The first way in which Capodagli and Jackson (2010) describe the business atmosphere is as a ‘corporate playground’ (p. vii). One of the most prevalent descriptions of the atmosphere in Pixar Studios is that of a family of people who depend upon one another. Ed Catmull, president of Pixar is described as a man who leads by the example of Walt Disney, who lets creativity, be the guide towards success. Capodagli and Jackson (2010) state that “Collective creativity within a corporate culture never happens by accident. It begins with creative leadership that is trustworthy, and in turn trusts others to accomplish big dreams” (p. x). The philosophy of the corporate culture is to create a long-term collaborative team of people from which output will be consistently of high quality. Where the standard in the film industry is to have a single project contract with each new project, Pixar has an affiliation with all of those involved in the film. As an example, Brad Bird who directed The Incredibles and won two Academy Awards for the film, had previously jumped from single project to single project, but became an affiliated director with Pixar without a contract. Randy S. Nelson, Dean of Pixar University, explains this philosophy by saying “Contracts allow you to be irresponsible as a company. You don't need to worry about keeping people happy and fulfilled. What we have created here — an incredible workspace, opportunities to learn and grow, and, most of all, great co-workers — is better than any contract” (Taylor & LaBarre, 2006). In high contrast to the more popular trends of business in the last several decades, a condition that Capodagli and Jackson (2010) call “the crippling short-term mentality that has become a cancer in American business culture” (p. x), the Pixar philosophy has been to emphasize quality over short term goals. Lasseter is quoted as saying “Quality is the best business plan of all” (Capodagli and Jackson, 2010, p. x). The Pixar University motto is Alienus Non Diutius which means “alone no longer”. The theory behind the company and the way it instructs its employees in order to create a work culture is through tying the individuals into a collaborative team who all understand the philosophy and the nature of the business. Taylor and LaBarre (2006) write “it’s the heart of our model” Mr. Nelson says “giving people opportunities to fail together and to recover from mistakes together”. Problem Statement The problem with an insular corporate culture is that it can be characterized through a belief in their sovereignty in the industry and easily blindsided by problems that fly in contrast to the corporate culture (Dubrin, 2011). The culture within the Pixar Studios allows for a very generous and successful set of behaviors that have provided for the promotion of creativity and the experience of being on the cutting edge of animation technologies. However, the difficulty within the organization has been in adhering to one of its own standards in allowing all of the 850 employees to have a voice in the creative processes as they have ideas that they want to move up the ladder. Literature Review The Corporate Brand According to Fleischer (2006) there is a specific relationship between branding and corporate governance, the way in which a brand is perceived by the public being located within the decision making process that the consumer makes in buying the product. A comparison can be made between the experience of buying a pint of Ben & Jerry’s ice cream with the experience of buying Haagen Dazs ice cream. One reflects a fun, quirky experience, where the other reflect a high end, elegant experience, even though both products only bring the consumer a pint of ice cream. That the Pixar Studios reflect a public image of a stakeholder model of corporate governance increases the image that it is a company which represents virtue. This virtue, one of the central themes of most of their films, provided the company with a standard that has become a part of the Pixar name, lending it value to the consuming public which is comprised of mostly of parents. Fleischer states “Whatever its content, the "message" of the deal structure reaches consumers indirectly through early adopters or other opinion leaders - knowledgeable, sophisticated consumers who experiment with new products and are particularly sensitive to the trustworthiness of the manufacturer. Just the sort of consumer, in other words, who might pay attention to deal structure” (p, 1583). The consumer, with all of the advantages of the information that is available, is interested in more than just the quality of the product. Disney had to make the decision to embrace the new technologies and to take the primary competitor into the fold in order to best serve their needs. Pixar had made a name that was competing with Disney and excelling beyond their level, thus the best defense was to take Pixar into their fold. While Dreamworks, one of their other primary competitors, came up with their own computer generated animation films, Pixar was still outdistancing the industry (Booker, 2010). The nature of the firm based reputation or ‘brand’ in regard to corporate issues in balance with the consumer decision making process can be seen in the prolific litigation that was publically exposed during the 1990s with the Walt Disney Company that was damaging the overall image of the company (Rosen, 2007: Stewart, 2006). Pixar’s Corporate Culture The situation at Pixar is that the corporate culture is powerful and overwhelmingly positive, creating an atmosphere that ensures that to step away from the company is painful and difficult. This allows the company to keep the talent it has nurtured and to provide for a continued level of success through psychologically connected relationships of dependency. The three mandates of the company management are as follows: 1. Everyone must have the freedom to communicate with anyone. 2. It must be safe for everyone to offer ideas. 3. We must stay close to innovations happening in the academic community (Finney, 2010, 160). In order to support these three mandates, the company “ultimately, by fusing technology with art, while enshrining the notion of learning at each stage, Pixar can attract the very best talent and keep it” (Finney, 2010, p. 161). According to the descriptions that have been determined by Lussier and Achua (2010), Pixar is a high performance company with a strong culture, the nature of the culture being so strong that people who do not fit into that culture would not be tolerated within the company. Even a leader within the company who did not adhere to the existing culture would have a difficult time within the structure, and eventually find them pushed out of the corporate structure. Strategy-culture develops over time with leadership who has a relatively clear idea of how the culture should be evolved. Research that Lussier and Achua (2010) discovered suggests a relationship between innovations and strategy, organizational structure, and leadership styles. Pixar has utilized a strategic-culture theory in order to provide for a strong corporate structure in which to promote innovation. Corporate Culture and Organizational Behavior One of the most important aspects of corporate success that has been observed in the highly influential and monetarily successful firms of the last few decades has been in the development of a strong corporate culture (Cameron & Quinn, 2011). Pixar created a strong culture and has utilized their cultural style to encourage certain organizational behaviors. According to Sinha (2008) “Just as society has a culture, so has an organization. Organizational culture has been called ‘corporate soul’ – the spirit and the ethos…that percolates all aspects of organizational culture” (p. 298). Sinha (2008) goes on to say that organizational culture, unlike societal culture, “is cultivated through a planned design that is deliberately adopted, and is enforced by various means” (p. 299). According to Kee (2003) there are ten basic cultural rules that must be addressed in order to assess a corporate culture and its structures that affect behavior (see Appendix 1). In assessing these ten elements, the primary aspect of a corporate environment is in the relationships that are built. Through these relationships, it is clear that the behaviors that are developed are relevant to acceptance and to the individual becoming a part of the collective. In understanding the overall behavior of a corporate culture, understanding the relationships that are built within the culture and the way in which they interact with one another provides the framework for addressing problems within the corporate system and for finding solutions. Problem Analysis As in evidence, the work culture that has been developed within Pixar Studios has contributed to its success for a concern with stakeholders within the corporation, and an interest in fostering emotionally based relationships that create loyalty within the employees. Pixar is a corporation that is currently looked to for its example of how to best create and foster a creative environment, where the importance of the ideas of all the members of the company is equally considered. Communication is open and anyone is allowed and encouraged to bring ideas to anyone else within the company. Pixar University is required for all employees with even accountants made to take drawing classes. The reason given by the Dean of the University, Mr. Nelson, teaching drawing is not as much about fostering drawing talents as it is about teaching someone how to observe. He goes on to suggest that even accountants can benefit from being taught how to observe (Taylor & LaBarre, 2006). Therefore, there is a high concern with creating an environment that is both open, but defined by similar belief systems that will promote similar behaviors. As the company has grown, a problem with lower level employees being able to openly communicate with the top creative staff has caused some problems as they have tried to bring their more experimental and controversial ideas to the forefront. In order to provide growing technologies and innovation, allowing latitude and open communication from fresh employees who may have a new perspective on the way in which the work is created will allow for a competitive advantage. However, from observing the work culture, there is a sustained hierarchy that is subtly, but slowly beginning to creep over the creative atmosphere within the company. Through the development of a system in which open communications has been encouraged, but an unwritten separation has begun to be the behavioral norm, the organization is beginning to see the signs of production without as much innovation. These types of stagnations are to be expected. As seen in the budgets of the first five movies produced by Pixar, the budget jumped from the struggling company that was making something out of next to nothing when it made Toy Story for a budget of $30,000,00 in 1995 to when it made A Bug’s Life in 1998 where they spent $120,000,000 (see Fig. 2). As can be observed in the line chart (see Fig. 2), the budget dramatically increased, then decreased steadily for the following four films. The profit margin for films created recently has varied greatly, with Finding Nemo and Toy Story 3 showing a great Fig. 2 Budgets for Pixar Studios films (IMDB, 2011) margin of gross profit, but the budgets, while increasing in price, still remain relatively steady (see Fig. 3). If one compares the figures that are represented within these charts, it can be observed that while the profit margins are varied and high, the steady level of costs can be attributed to a lack of growth in the technology, which in turn might suggest some stagnation in the innovation of new techniques and concepts. In the pressure to make more films in shorter time frames, the budgets are stagnating while the work is being created at a rapid pace. The goal of the company, to have high quality as the basic business tenet, is in conflict with the mandate to make more and increasingly profitable films (Schwartz, Siegfried, & Stafford, 1997). According to Sorenson & Waguespack (2006), a direct relationship has been established through their research on the type of relationships that Hollywood people have with one another and to the success that they have achieved in their collaborations. In an insular corporate environment that mimics the Hollywood film industry through a confined society, the danger of this type of shifts in the relationships within the company has provided for this type of hesitancy on lower level employees to step up and assert their ideas when they feel their position may be more precarious should their ideas not succeed. In the analysis of the problem, the situation is that the lower level employees who are fresh from their education and have yet to earn a say in projects also have unbiased ideas and concepts that come from a fresh perspective. Although the official company position on communication within the ranks is Fig. 3 Budget versus Gross on Films since Disney Takeover (IMDB, 2011) an open door policy, the assumed culture has developed a sort of closing off of ranks as the unmentionable propriety of a command structure has taken over. Despite the fact that the company began through out-of-the-box thinking, the high pressure of success has created an insular culture in which communications are structured through unspoken organizational behaviors that the employees learn to live with and through a sense of sovereignty in the industry that is beginning to affect their ability to fully see the future in computer animation. The ‘Pixarians’ as the employees of Pixar are called, work in an environment that was created to inspire creativity. The ‘Habitat’ as it is called is created to inspire the employees on a daily basis, the atmosphere fun and “play is a part of our work” is a motto that is lived within their work space (Capodagli & Jackson, 2010, p. 41). Therefore, it must be understood that the growing problem is still relatively small and only just now beginning to become an issue. Although communications are officially encouraged, the turn of the economy in 2008 and the pressures that are companies are feeling to perform in a less than ideal economic environment has begun to wear a bit through a noticeable scramble to maintain the status quo. The Walt Disney Company has a specific hierarchy for their organizational structure and in 2006 when Pixar was acquired by Disney; one of the details that was included in the acquisition was that the leadership would be maintained and that the culture that had been cultivated would not be changed. This was a specific goal of Lasseter who believes that open communications is a key to creative success. Recently, however, the company has seen some of the influences of the hierarchal structure begin to emerge through informal and unspoken behaviors as fear from the weight of the economy has put additional pressures in all sectors. As can be observed when looking at a chart that outlines the budgets and gross earnings on the films throughout its history since making its first feature film, the company has been routinely successfully and may have observed its peek if some innovations and new, fresh concepts are not brought into the company (see Fig. 4). As can be observed in the chart, the two films that had the highest earnings are Finding Nemo and Toy Story 3. Where Finding Nemo was successful in 2003, in eight years the only other film to do well, although it did very well, was Toy Story 3, but the is the second sequel of the franchise, thus new and fresh ideas are needed to support upward success. Fig. 4 Budgets and Gross Earnings on Pixar Films Solutions The first solution that needs to be addressed is in trying to break the unspoken culture that has emerged despite the mandates of the corporate culture that has strived to support open communication. Simply saying that there is open communication between all members of the team does not free up the social pressures that are working towards stifling some of the voices that would otherwise be heard. Implementing open, round table discussions that give access to upper level creators that might not otherwise be encouraged is one of the first ways in which the solutions for the problem might be found. Through formalizing these discussions, it gives permission to those employees who have yet to speak to have a voice in a forum that is designed for that purpose. Shared responsibilities for decisions across multiple levels of employees allows for the fear of failure to be somewhat mitigated, thus inspiring greater assertion of innovative and creative ideas. Through mitigating blame and only considering success as a barometer, rather than having a focus on failure, the people within an organization will behave without fear. Fearlessness will promote innovation as trying something new has no cost, where not trying can have a high cost (Hellriegel & Slocum, 2007). Renewing the enthusiasm for innovation with which the company was first built will help to foster creativity to the point that something new will have to emerge. Through addressing this problem before an informal hierarchy suddenly comes close to formalization, the company will retain the spirit with which it was built. Where Disney has created a great work culture in which many lower level employees feel kinship within the structure, the employees of Pixar are mandated to be creative, and in re-administrating the open communications with which the initial films were first created, the revitalization of innovation will provide for a more profitable and supportive work culture in which the behaviors fully reflect the belief systems. Reflection It is difficult to find fault with the way in which Pixar has created a well-orchestrated work culture in which people are encouraged to act in ways that promote creativity. The leadership is aware of the association of fun to creative work, thus have filled the ‘Habitat’ with games and stress relievers in order to provide a more conducive environment to creating films that reflect those virtues that support healthy and vital lifestyles. The creative outlet allows for the creator to put forth their world view through metaphor and representation, thus it is important for Pixar in continuing support for the life filled creative spirit inside their corporate culture that inspired A Bug’s Life and Finding Nemo. Therefore, the creeping pressures that are beginning to affect the way in which the culture of the corporation reacts in regard to open communications must be stopped before it develops into a full part of the way in which the culture operates. Through taking measures that show the employees that they are being listened to and that they will have a voice in the creative process, the company will be saving any eventual turn-over that might occur due to dissatisfaction. Even though he was fired, it was John Lasseter’s dissatisfaction with his lack of freedom to create at Disney that supported his creation of the company, placing Pixar in direct competition with Disney and forcing Disney to aggressively address that competition. Through re-asserting the mandate for open communications, the company can see a revitalization of innovation and support fresh and new ideas that will take the company through to the next evolution of animated films. Figures Fig. 1 Budget versus Gross Earnings on Early Pixar Films (IMDB, 2011) Fig. 2 Budgets for Pixar Studios films (IMDB, 2011) Fig. 3 Budget versus Gross on Films since Disney Takeover (IMDB, 2011) Fig. 4 Budgets and Gross Earnings on Pixar Films References Booker, M. K. (2010). Disney, Pixar, and the hidden messages of children's films. Santa Barbara, Calif: Praeger. Cameron, K. S., & Quinn, R. E. (2011). Diagnosing and Changing Organizational Culture: Based on the Competing Values Framework. San Francisco, CA: Jossey-Bass. Capodagli, B., & Jackson, L. (2010). Innovate the Pixar way: Business lessons from the world's most creative corporate playground. New York: McGraw-Hill. Dubrin, A. J. (2011). Essentials of management. Mason, OH: Cengage Learning. Finney, A. (2010). The international film business: A market guide beyond Hollywood. New York: Taylor and Francis, Inc. Fleischer, V. (June 2006). Brand new deal: The branding effect of corporate deal structure. Michigan Law Review. 104(7): 1581 – 1637. French, R. (2011). Organizational behaviour. Hoboken, NJ: Wiley. Hellriegel, D., & Slocum, J. W. (2007). Organizational behavior. Mason, Ohio: Thomson/South-Western. Hoover’s, Inc. (2010). Pixar Animation Studios, Inc. D&B Company. Retrieved from http://www.hoovers.com/company/Pixar_Animation_Studios_Inc/cjchri-1.html IMDB. (2011). The Internet Data Base. Retrieved from http://www.imdb.com/ Kee, M. J. (2003). Corporate culture makes a fiscal difference. Entrepreneur. Retrieved from http://www.entrepreneur.com/tradejournals/article/135285285.html Lussier, R. N., & Achua, C. F. (2010). Leadership: Theory, application, skill development. Australia: SouthWestern/Cengage Learning. Mungenast, H. (2007). Mergers & Acquisitions. Mu?nchen: GRIN Verlag GmbH. Paik, K. (2007). To infinity and beyond! The story of Pixar Animation Studios. San Francisco: Chronicle Books. Pixar. (2011). Pixar. Pixar. Retrieved from http://pixar.com Price, D. A. (2009). The Pixar touch: The making of a company. New York: Vintage Books. Rosen, K.M. (2007). Review: Mickey, can you spare a dime? “Disneywar”, executive compensation, corporate governance, and business law pedagogy. Michigan Law Review. 105(6): 1151-1168. Schwartz, G. Siegfried, S. L. & Stafford, B. M. (June 1997). Digital culture and the practices of art and art history. The Art Bulletin. 79(2): 187-216. Sinha, J. B. P. (2008). Culture and organizational behaviour. Los Angeles: SAGE. Sorenson, O. & Waguespack, D. M. (December 2006). Social structure and exchange: Self-confirming dynamics in Hollywood. Administrative Science Quarterly. 51 (4): 560-589. Stewart, J. (2006). Disney war. New York: Simon and Schuster Publishing. Taylor, W. C. & LaBarre, P. (29 January 2006). How Pixar adds a new school of thought to Disney. New York Times. Retrieved from http://www.nytimes.com/2006/01/29/business/yourmoney /29pixar.html Velarde, R. (2010). The wisdom of Pixar: An animated look at virtue. Downers Grove, Ill: IVP Books. Appendix 1 10 key cultural elements 1. Assumptions: Unwritten rules that are accepted as fact. 2. Norms, customs, and to routines: How people behave, interact, and work at all levels of the organization. 3. Power: Not the result of position or a title, power which can be positive, negative, or mixed--determines who influences opinion. 4. Rites and rituals: Ceremonies and events that highlight what is important and not important. 5. Roles and responsibilities: Determine expectations and provide insight into performance measures. 6. Stories and myths: Help describe the company's history 7. Structure: The invisible organizational chart that identities relationships, communication, and power. 8. Symbols: Nonverbal communications that help explain values and beliefs. 9. Systems and rules: Methods to control, measure, and reward desired behavior. 10. Values: What the organization cares about the most (Kee, 2003). Read More