Managing Change: Pixar and Disney - Assignment Example

DISNEY AND PIXAR Pixar’s success and Disney’s decline explained through Nadler and Tushman’s open systems model The success of Pixar and decline of Disney may be traced to how these organizations responded to the changes in their social and technical environments. Upon cursory reading, Pixar appeared to have made a name for itself primarily through the use of digital technology in animation, to which it owes its commercial success, while Disney remained dedicated to the traditional method which no longer found strong following in the market. Closer inspection shows that there was a fundamental difference in the way the organizations functioned that was separate from the technology each used. Organizations may be seen to operate as open systems which interact with their environments in a complex and dynamic way. According to Ingols, Cawsey & Deszca (2011), open systems are called so because they are not isolated from their environment, but freely exchange information, materials, and energy with them. They are comprised of interdependent parts connected by a complex set of interrelationships. They move towards equilibrium, and once in equilibrium, will not change unless some energy is introduced. Individuals within a system would have a different perspective of the system’s function and purpose than those outside of it (p. 65). Looking at organizations as open systems enables managers to better identify areas of misalignment and risk (Ingols et al., 2011). The Nadler and Tushman open system model, shown below, aims to provide such a perspective to managers: http://testconsultant.blogspot.com/2008/01/open-system-thinking-and-software.html The Nadler-Tushman Congruence Model (1980) is comprised of inputs (environment, resources, history, etc.) that shape the strategy. The strategy drives the transformative processes box which eventually leads to the outputs (organizational, group and individual). Feedback loops flow back to earlier stages to complete the model. The transformative work process includes four categories, namely informal organization, formal organizational arrangements, individual (people), and task (work). The Congruence Model states that these four categories in the work transformation area should be congruent (i.e., should fit) with each other (Jones, Brazzel, & ITL, 2006, p. 196). Pixar is an example of an open system which takes full advantage of the dynamics within the organization itself, and between the organization and the environment. Within Pixar, the informal organization is as important as, if not more than, the formal structure. Pixar has developed a “culture of collective creativity” that “values people above ideas,” and tasks are boldly addressed because of the empowerment of employees. Feedback is swift because lines of communication are open; everyone feels safe to offer ideas, and innovation is highly prized (Catmull, 2008). Strong long-term friendships are forged, and as a result, the organization feels competent to take risks. This makes the external influences welcome within the company, thus it takes advantage of inputs from the academic community, the technical and artistic fields, and of course the demand from the market. In contrast, Disney is a highly traditionalist organization which emphasized hierarchy and centralization. Eisner insisted on maintaining strict control even over creative processes and roundly criticized ideas not in line with his own, thereby discouraging people from taking initiatives for fear of reproach. Regard for people took a back seat to revenues and stock performance. In other words, corporate Disney did not promote openness among its employees, lacked congruity or “fit” among its component parts, and discouraged open feedback and communication. It was unreceptive to outside influences, preferring to stick to its “proven” traditions harking back to early Disney years. It felt it has found its equilibrium, and resisted any risk that may disrupt it. In short, Pixar has taken full advantage of the influences of internal and external components in its system, and has become more agile to change in response to the need for it. On the other hand, the Disney system is rigid and closed to new influences from the environment, thereby shutting down effective communication, stifling creativity, and losing out on opportunities to keep abreast of market demand. Pixar was gaining both followers and revenues and Disney was losing theirs. 2. Change Management Plan In the case study requirement, the task is to inform Eisner of a possible change management plan. The case study, however, is situated in 2006 under the term of Robert Iger as Disney CEO and successor to Michael Eisner, whose term ended prior to the Disney acquisition of Pixar. The recommendation, therefore, will be within the context after the acquisition had taken place, and is directed at Bob Iger. The problem between Disney and Pixar is contained within the creative function, particularly of the animation department. There is a class of the creative process, organizational relations, culture, but most of all, overall strategy. Disney’s strategy is risk averse, to follow the traditional formula for animation, which has not been received well in the market. Pixar’s strategy is to innovate and try the unconventional which necessarily entails a measure of risk. The change to be effected is through Organizational Development (OD), which is an action-oriented, rather than theory- or research-oriented approach to providing techniques that help an organization grow or change (Landy & Conte, 2007, p. 620). According to Landy and Conte, there are three possible scenarios in organizational change. The first is an episodic encounter in which an organization seeks to reinvent itself through revolution or imitation. This may be addressed by an unfreezing-change-refreezing process. The second is in assisting an organization in its process of continuous change. This situation would require a freezing-rebalancing-unfreezing sequence. Lastly, the third is assisting an organization in evolving from an episodic to a continuously changing organization. This will require a hybrid approach of unfreezing-change-rebalance. In the case of Disney-Pixar, the third type of change is necessary – to evolve from an episodic to a continuously changing organization, because digital animation is fast changing and highly competitive. What is necessary, therefore, is for the previous Disney set-up to be un-frozen, the change to be introduced, and system components to be rebalanced afterwards. At this point, attention is invited to the kinds of interventions in the OD process, shown in the table in the Appendix. As earlier mentioned, the Disney-Pixar is fundamentally a strategic problem of two divergent companies being combined; therefore, a strategic intervention is required. Mergers and acquisitions intervention refers to the techniques OD practitioners resort to in assisting two (or more) organizations to form a single entity. While Disney-Pixar is such a case, the M&A intervention is best done prior to the actual merger, not after. The best, therefore, is to adopt the built to change organization approach, which helps the organization adjust to continuous change, consistent with the episodic-to-continuously changing organization discussed above. Disney’s traditional principles hold stability and equilibrium paramount, and avoid change because it is costly. “Built to change organizations, on the other hand, assume that the source of effectiveness is the ability to change continuously” (Cummings &Worley, 2009, p. 161). Built to change organization approach may be coupled with culture change, which enables organizations to develop cultures (behaviors, values, beliefs and norms) which are best suited to their strategies. The aim of developing a common culture is to get organizational members to pull in the same direction (Cummings & Worley, 2009, p. 161) Together with the change in strategy, there is also a change in organizational structure necessitating a technostructural intervention. High–involvement organization is best suited for this, since it is characterized by flat structure, lateral approach, and shared leadership throughout the organization (Lawler III, 2008, p. 217) – exactly Pixar’s current organization. For this to work, there should be a willingness for everyone in the organization to assume leadership attributes by exercising discretion within the scope of their responsibilities, coaching others, organizing work, and functioning as a team. This is otherwise known as employee empowerment. This leads the change process to the grassroots level, the human-process approach. Process consultation appears to be best suited to the Disney-Pixar dilemma. A work group or team discusses a work-related issue before some consultants or managers. Afterward, the consultants or managers provide their observations and feedback, as well as suggestions for alternative strategies in order for the team to attain their objective. Process consultation differs from other OD techniques because it assumes that behaviour should change before attitudes, while other techniques work on the basis of attitudes changing before behaviour (Landy & Conte, 2007, p. 622). The advantage for this in Disney-Pixar is that attention is focused not on systems or guidelines, but on the task at hand, the process or work itself. In this intervention, the team (comprised of Disney and Pixar) work together as colleagues and discuss the process with an impartial body of experts. This reduces friction that may be caused by personal loyalties to one or the other group, but instead create an atmosphere where the work is the important thing, the need to create something wonderful and entertaining and lasting, and in the process to set aside issues that are not really important in getting the job done. The change process to be proposed to CEO Bob Iger would therefore include strategic change intervention through the built-to-change organization approach; technostructural change intervention through the high involvement organization approach; and human process change through the process consultation approach. References Catmull, E., 2008. How Pixar Fosters Collective Creativity. Harvard Business Review, Sep2008, Vol. 86 Issue 9, p64-72. Cumming, T. G. & Worley, C. G., 2009. Organization Development and Change. 9th edition. South-Western Cengage Learning, Mason, OH. Grover, R., 2007. How Bob Iger Unchained Disney. BusinessWeek, 2/5/2007, Issue 4020, p74-79. Ingols, C., Cawsey, T. F. & Deszca, G., 2011. Organizational Change: An Action-Oriented Toolkit. 2nd edition. Sage Publications, Inc., London. Jones, B. B., Brazzel, M., ITL Institute for Applied Behavioural Science, 2006. The NTL Handbook of Organization Development and Change: Principles, Practices, and Perspectives. Pfeiffer, A Wiley Imprint, San Francisco, CA. Landy, F. J. & Conte, J. M., 2007. Work in the 21st Century: Introduction to Industrial and Organizational Psychology, 2nd edition. Blackwell Publishing, Malden, MA. Lawler, E. E. III, 2008. Talent: Making People Your Competitive Advantage. Jossey-Bass, a John Wiley Imprint, San Francisco, CA. Siklos, R., 2009. Bob Iger Rocks Disney. Fortune, 1/19/2009, Vol. 159 Issue 1, p80-86. Appendix Types of interventions According to Cummings and Worley (2009), the major organization change methods used in OD today are the following (p. 157): Primary Organization Level Affected INTERVENTIONS INDIVIDUAL GROUP ORGANIZATION Human process Process consultation Third-party interventions Team building Organization confrontation meeting Intergroup relations interventions Large-group interventions X X X X X X X X X Technostructural Structural design Downsizing Reengineering Parallel structures Total quality management High-involvement organizations Work design X X X X X X X X X X X X X Human resources management Goal setting Performance appraisal Reward systems Coaching and mentoring Career planning and development interventions Management and leadership development Workforce diversity interventions Employee stress and wellness interventions X X X X X X X X X X X X X X Strategic Integrated strategic change Organization design Culture change Self-designing organizations Organization learning and knowledge management Built to change Merger and acquisition integration Strategic alliance interventions Network interventions X X X X X X X X X X X Read More