For Disney and Pixar to be successful and to survive over the long term, it needs not to upgrade its resource and capability base. The critical management challenges experienced by Disney and Pixar are developing existing capabilities, and acquiring or creating the new ones. Mungenast (2007) says that Pixar had a competitive advantage, as it developed the industry standard rendering software RenderMan, which is used to generate high quality images. However, Disney did not have these capabilities, and therefore, an acquisition was paramount. It was noted that collaboration without the barriers that came from two different companies with two sets of shareholders enabled the companies to focus on the core business. Mungenast (2007) indicated that technology and human resources were the driving force for the merger, but the historical relationship between these two companies was equally important.
Situational Analysis and Evaluation
When Disney bought Pixar, the fear was that the communication style and culture of Disney would persist. The main issue was that Pixar’s immense creativity would be squelched by the bottom down style of Disney. The major difference between the two companies was that Pixar used organic organization structure, while Disney’s structure was characterized by mechanistic organization structure. Gitman & McDaniel (2008) say that Disney’s mechanistic structure was characterized by rigid departmentalization, rather high degree of job specialization, many-level management, and narrow spans of control. Pixar’s structure was characterized by decentralized decision-making, few levels of management encouraging innovation and short chain of command (Gitman & McDaniel 2008).
Because of its innovative strategy, Pixar needed the flexibility and fluid movement of information that an organic organization provides. Disney, therefore, was using the cost control strategy increasing the challenges of merging the two companies. Nuoffer (2010) says that instead of absorbing Pixar, they explicitly decided to let Pixar continue working as it worked before, and even provided the preservation of Pixar culture in their contract. The purchase of Pixar led to Disney’s resistance to collaboration, and change became increasingly prominent, as a result of the changing style of leadership, lacking communication and standard operating procedures.
According to Jung (2011), incompatible organizational cultures, and therefore, intercultural communication problems counted as major reason for their weakness of the merger between the Disney and Pixar. Therefore, the uncertainty of change was essential due to the fact that Disney did not set great value on implementing intercultural trainings for employees. It is important to note that the acquisition of Pixar by Disney created a clash of organizational philosophies and values, hence, creating a successful consolidation of two organizational structures necessitating a change management. Jung (2011) says that change management would determine, confine, and support the tasks and competencies of managers from both Pixar and Disney and business units, and define a common vision that is necessary in order to configure the process of integration on an optimal level (Jung 2011).
Robert Iger should note that the success of Pixar’s acquisition is dependent on the integration of all employees, prerequisite, therefore, is the efficient acquaintance with organizational structures differences in assumptions, values, and artefacts. Jung (2011) mentioned that if the structure and leadership of Pixar were a winning attribute to success, the structure and culture would rather be compounded than changed, for example, by ensuring that it has less hierarchical structures, more training and management support systems, less bureaucratic tendencies, and the culture that is externally oriented.
Another major weakness to the successful acquisition is the manager’s resistance towards change, due to insufficient communication about the changing status. Jung (2011) says that rapidly implemented changes without communicating honestly, in advance on an organization wide level might lead to negative outcomes. This, therefore, means that Disney’s CEO should note that rapid implementation of changes with lacking communication can lead to low readiness to change of employees and managers, which is combined with urgency of change.
Relatedness was a major opportunity of Disney and Pixar. Pablo & Javidan (2009) say that both Pixar and Disney had similar markets of the movie industry, products, and production. The greatest potential for combined organizations was often attributed to horizontal acquisition of Pixar that will unite competing entities with overlapping operations. Pablo & Javidan (2009) noted that “these overlapping operations often lead to redundancies which are trimmed from the newly combined organization” (p. 6). Robert Iger should, therefore, note that value is extracted from the combination through increased marginal outputs per marginal inputs, using the scale of economies. Pablo & Javidan (2009) further articulate that the CEO should consider vertical combinations between the supplier and customer firms, and market or product extension combinations, where Pixar adds new markets and products to Disney. In such complementary combinations, value is added, which increases the breadth and scope of total operation.
Co-competence integration approach would work well for Disney and Pixar. Pablo & Javidan (2009) say that this approach focuses on exploiting the competences of both firms. They further say that this can act as an opportunity because both Pixar and Disney will have equal competence in their areas of specialty. This approach avoids the pitfall of distributing control, based on company employees once belonged to, and focuses instead on combining the best, complementary competences from both (Pablo & Javidan 2009).
Recommendations for Change
Since the change is inevitable, Robert Iger should use the Lewin’s model of change. Sharma (2006) says that in this model of change, it entails the modification of those forces that keep the systems’ behaviour stable. The level of behaviour at any point of time is the resultant vectors of two vectors which include maintaining the status quo, and the other striving for change. Sharma (2006) indicated that “those two forces balance each other equally, the current behaviour is maintained” (p. 44). This model of change affects the three levels which include individual, structure, and systems level. Robert Iger should focus on these three critical steps of change, which include unfreezing, changing, or moving and refreezing.
Iger should sue unfreezing to reduce forces that maintain the organizations present behaviour. Sharma (2006) indicated that “this may be accomplished at the individual level disconfirming individual present behaviour” (p. 44). At the systems’ level, more effective and new designs, such as matrix management, might be demonstrated in order to initiate change. The aim of unfreezing in the Disney’s, Pixar’s acquisition is to raise the awareness of workers about discrepancies which currently prevail in their behaviour, the organizational and the system climate, and attune workers to the need for change.
- Identifying and exploiting existing stress or dissatisfaction
- Creating or introducing additional forces for change, for example tighter budget constraints, target, or schedules
- Reducing resistance to change by developing employee knowledge about markets, competitors, and initiating training about the need for change.
The second step in this type of change model that Iger should adopt is changing. Sharma (2006) says that “this refers to the shift in behaviour to a new level resulting in the development of new behaviours, values and attitudes in individuals through changes in the organizational structure and processes” (p. 45). The following changes must be perceived as the solutions to problems which were identified during the unfreezing stage.
- Establishing new patterns of behaviour
- Setting up new reporting relationships
- Creating new reward and incentive system
- Introducing a different style of management in Disney.
The third stage involves refreezing. Sharma (2006) says that this is the stage where the organization achieves the new state of preferred behaviour and equilibrium and stabilizes. Iger can accomplish this through the use of various mechanisms, all aimed at reinforcing the new Disney organizational state. It is important to note that the new state is made relatively secure against change, until the next cycle of changer is planned.
Likely Sources of Resistance
The CEO of Disney needs to know why people resist change, and what can be done about their resistance. Griffin (2008) says that one of the likely sources of resistance is uncertainty. This is because in the face of impending change, employees may become anxious and nervous. Griffin (2008) mentioned that “employees at Pixar may worry about their ability to meet new job demands and t\at the same time they may think that their job security is threatened” (p. 349). Another source of resistance is threatened self-interest. Griffin (2008) says that many impending changes threaten the self-interests of some managers within the organization. This implies that a change may diminish their power of influence within Disney, so they fight it.
The reason that people resist change is different perceptions. Robert Iger should decide and make recommendation for change on the basis of his own assessment of the situation. Griffin (2008) says that “the key players in an organization may resist change because they do not agree with the CEO’s assessment or perceive the situation differently” (p. 350). Because change involves altering work arrangement in ways that disrupt existing social network, people may feel loss. Since social relationships are important, most people resist change that might adversely affect those relationships (Griffin 2008).
Change Management Plan
The change management plan involves selecting and preparing a change management team (Hiatt & Creasey 2003). These team members are selected and trained prior to creating detailed change management plans. Managing change involves the design of the organizational change management plans and individual change management activities. This will involve planning and implementation of communication, coaching, training, and resistance management plans. Training plan will ensure that change management team members develop training requirements based on the skills, knowledge, and behaviours necessary to implement the change (Hiatt & Creasey 2003). Robert Iger and other executives should play the role of sponsors and help key business leaders to carry out these plans.
The change management plan will entail establishing the need for change. This involves articulating the need to change, so as to help people understand why changes are required. Sharma (2006) says that the rationale for change is, therefore, included along with the consequences of not changing. The change management plan includes developing and disseminating a vision of the change. Sharma (2006) says that this stage is important for establishing the organization picture as a consequence of a successful change process. The executives of Disney should be involved in developing the vision for change. The third important stage of change management plan is diagnosing and analysing the current situation at Disney. Sharma (2006) says that “at this stage the current processes of the company is analysed and diagnosed and observations are compared with the desired change as per vision” (p. 49).
Stage four of the change management plan includes generating change process recommendations. Sharma (2006) noted that at this stage, ideas are raised to improve, eliminate, combine, and develop new processes. The fifth stage involves detailing recommendations, and it should put into focus details, such as costs and training needs. The sixth step of the plan involves pilot testing, which helps in fine tuning improvements before making organization wide changes. The last stage in the change management plan involves rolling out the changes and measuring, reinforcing, and refining changes (Sharma 2006).
Evaluation and Critique of the Theories and Models
According to Blokdijk (2008), using the Lewin’s change model is an important step towards ensuring that Disney’s acquisition works towards gaining a competitive advantage. However, Blokdijk (2008) says that, as change management takes place in an organization, it should be clear that things as planned may not work well. During the change phase, a shift in procedure to implement change may arise. Kneer (2009) says that the Lewin’s model for change does not put sufficient communication during the involvement of employees. This applies the kind and frequency of communication, as well as responsibilities for communication measures.
The change model used in case of Disney and Pixar is goal-oriented. This is because the starting position of the organization and the reasons, which require change, are represented clearly and at the same time, the goals of the change and the individual associated changes are put into consideration in this model (Kneer, 2009). Using the Lewin’s change model, Kneer (2009) says that the opponents of the change can be convinced by comprehensive information about causes and objectives of the change. Therefore, resistance develops more rarely because employees of both Disney and Pixar will be included directly into the change process and receive rights of determination.