Two Ways to Run a Castle

When one person runs everything, everyone panics

00:00Bill Gallagher: Have you ever had a week when you're completely slammed, but somehow nothing actually moved? Is this one of those weeks? That's not really a time problem. It's a busyness habit problem. My new book, Busy Is Broken, Do Less, Scale More, is all about growing by doing less, not more. Read or listen to a sample chapter over at busyisbroken.com. That's busyisbroken.com. It's also on Amazon and other booksellers.

00:31Bill Gallagher: When Michael Eisner needed emergency heart surgery, Wall Street panicked because nobody else could run Disney. Can anybody else run your company? That's what we're talking about today.

00:46Bill Gallagher: Hey, everybody. I'm Bill Gallagher, scaling coach and host of the Scaling Up Business Podcast. Our show comes to you every week, and lately we're talking about this book I've got coming out later this year. Busy Is Broken is the title of the book, and it's all about looking at the negative impacts of our addiction to busyness, our veneration, our worshiping of being busy, our uncomfortableness of not being busy, and where our work as CEOs and leaders gets in the way of not only our own lives, but of the company. You'll find our workshops, our Q20 Growth Diagnostic for free, and so much more at scalingcoach.com. Scalingcoach.com is our website, the place to go. Of course, you can like, subscribe, turn on your notifications wherever you're getting the show right now, and we'll bring our show to you every week. We've done more than, I don't know, nearly 700 by the time you hear this. So find those and more at scalingcoach.com or wherever you're getting this right now.

How Eisner rebuilt Disney through micromanagement

01:47Bill Gallagher: I've been talking about this story more and more because it's such a great case study about two leaders of the same company running the same company back to back, literally one after another, two very different approaches. Both of them have some real merit to them, and yet they produce some very different outcomes, very different styles. So really a great case study and very well known. We're talking about Michael Eisner versus Bob Iger running Walt Disney, running Disney as a company.

02:22Bill Gallagher: Michael Eisner takes over Disney in 1984. The company was vulnerable at the time. It was underperforming. It was bait for takeover. It was drifting, and he turns it around spectacularly. He brought renaissance to animation, theme parks. He did a cruise line, made TV awesome. All these things are great under Michael Eisner, and he's arguably the most successful CEO in entertainment for at least a decade. He does it with extraordinary personal involvement. He can recite every scene, scene direction at least, if not the actual lines. Probably could do quite a few lines too. He evaluated merchandise plans. He even weighed in on hotel lamp fixtures, famously, without checking his notes. He knew things at the top of his mind. He weighed in on things at two in the morning in those days by fax, back and forth, in messages and phone calls and things like that. World class instincts.

03:29Bill Gallagher: But the model had a real structural flaw, and it only became visible as the company grew and got bigger and bigger. Already a pretty big company, but just got bigger under him. But everything ran through him. He's editing. He's calling, making changes to the lamps in a new hotel property in the middle of the night. The organization then learned something. When we run the organization like that, they learn a destructive lesson: bring things to the boss, risk less, wait for direction. Ownership migrates upward.

Organizations learn to wait for the boss

04:03Bill Gallagher: I coached another company like this some years ago, and everybody waited to see what the CEO would say. He was the founder, the CEO, the majority owner of the company. And if you got too far along and then he took issue with it later, he's going to torpedo your stuff. So why do that? Throw out your ideas tentatively early, wait to see what he says, and then just go bring his vision to life. That's not an empowered team, and the same thing was happening at Disney.

04:33Bill Gallagher: By 1994, Jeffrey Katzenberg departs in a bitter dispute and produces a lawsuit that drags on for years. And that same year, Michael Eisner has a cardiac event requiring emergency quadruple bypass surgery. Wall Street panics. Everything is on hold when the one person who runs everything is on the operating table. Think about that. They know. His reputation is clear. He is the iron fist through which everything happens at the castle of Disney, and it's a real problem. Wall Street freaks out. The stock is hit.

05:12Bill Gallagher: By the early 2000s, ABC is in fourth place. Steve Jobs takes the unbelievably successful Pixar company and walks away from renewal talks because Eisner's a tyrant. Roy Disney launches a Save Disney campaign, and by February, 43% of shareholders withhold votes at the annual meeting. A year later, Eisner finally leaves. He's replaced by Bob Iger.

How Iger restored relationships and empowered leaders

05:37Bill Gallagher: Bob Iger runs things really, really differently. His first act is to call up Steve Jobs and say, we've been the problem, not Pixar. He restores the relationship with Pixar overnight and sets the stage for a $7.4 billion acquisition. The money, but really an important company that creates the picture of who Disney is today. Then Marvel, then Lucasfilm. Three big bets. He says no to all kinds of other things. He brings focus to the company and focus on relationships. He starts to run things really differently. To both the acquired leaders as well as the existing managers, he gives them a great deal of autonomy. He listens to what they have to say, their plans. He gives them counsel. He gives them support, but he doesn't get in. He isn't picking lampshades in a hotel property. He has a small priority list. He has empowered leaders, and he makes it home for dinner most of the time.

06:35Bill Gallagher: Now he works long hours. He gets up very early in the morning, but he gets up and he doesn't just tear right into work. He does read his things, but he also gets some exercise. He likes to get in early and be really prepared for the meeting, but then he listens to what other people have to say without just jumping all over them. He does his thing. He makes it home in time for dinner. He has more time for his wife and family, and he even has time to do some sailing on the weekends. Different set of priorities. He manages his whole well-being, including his health, his relationships, his family, his fun, that kind of thing. He's an intense worker, but he's more focused on building the team and building the whole ecosystem with it than the individual parts of it and having his hand in things.

07:30Bill Gallagher: So same castle, different approaches, different approaches to running those meetings. Same conference room table, different leader, different design, different outcomes. A significant growth in the valuation of the company and a more lasting change in impact. Michael Eisner was very successful for a while, but it all runs through him. And it's a very, very fragile thing, but it burns out people and relationships. So it's not sustainable. It's not going to live without him. And people panic when they realize he might not live forever. We're all not going to live forever. Nobody gets out alive so far anyway.

Same castle, completely different approach to meetings

08:09Bill Gallagher: The habits that saved Disney in 1984 nearly killed it by 2004. As companies grow, our approach to leadership has to grow and has to change and that kind of thing. And that's really what we're talking about here. Are you solving problems, like business problems? Are you building solutions and things like that, or are you building the team that solves problems? It's a different focus. Am I solving the direct value of the company, or am I building a team and an organization that solves those problems? When you start in the beginning with an idea for a company, with an idea for a product or a service, you are specifically solving something and you get some helpers around you. That's fine. But as you scale…

08:58Bill Gallagher: Then having people who really take the baton, who take the torch, who carry it onward, is diminished if you're still trying to help them, if you're still micromanaging them. So the critical thing is to shift your focus from the initial thing that helped you start a company, especially if you're a founder, and then start to be more of the person who carries it on. Now, this isn't a phenomenon just limited to founders, because I'll talk about this in the next episode, a leader who came and took over things but also had micromanagement, perfectionist instincts, and really cost the company a great deal of money and time. So that'll be in our next episode.

09:40Bill Gallagher: But for this one, I think it's really useful to think about, are you building up people and relationships, partnerships, and people accountable for things? Are you passing the baton, or are you involved in all the different decisions and parts of the company? Which model are you running right now, and which part of the business are you doing, and which one is it that the company needs you to get out of? Are you being like Eisner, or are you being like Iger? Which approach, and where are you at in your development, in your evolution as a leader, as an executive in the business?

Find your lamp decision and hand it over

10:20Bill Gallagher: When you're small, you need to be more like Michael Eisner. You have to be in it. But it becomes a real problem. It requires superhuman effort. And even if you're good at it, like Eisner was, it starts to have issues. It has issues and impacts on the people and their engagement and their longevity, their contribution, and it definitely burns out partnerships and so on. So as your company grows, you've got to be more focused on building up the organization and the team that's going to solve the problems, not being the one who solves the problems itself. It shouldn't be about your brilliance anymore after you pick it up.

10:58Bill Gallagher: So I have an invitation for you, a thing to focus on maybe in the week ahead. Pick one thing that you're still approving on the regular that somebody else could own. Give one thing away this next couple weeks or month. Find your lamp decision and hand it over completely. Give people not only the doing of it, and this is really critical, don't just give people the task of doing something. Give them the outcome. Hey, I want you to take care of that. This needs to be a great thing. It's up to you. Let me know how your plans are going. Keep me posted, but this is your baby to run with it. Get counsel from me or other people as you need. You make the decisions here. You run it. So you want to hand it off fully.

11:34Bill Gallagher: Now, like passing the baton, I want to fully know that you're ready for it. I want to see that you're carrying it. I want to do it. That's different than micromanaging, though. Micromanaging is too much control in there, where I'm actually not giving you coaching or feedback on how you're doing things or giving you counsel or advisory on it. I'm actually telling you specifically what and how to do. So find something to give away and give up something the next two weeks.

12:11Bill Gallagher: So that's your challenge for the week ahead. Give up something, delegate something, give it away fully, and give away both the doingness of it and the outcomes of it so that it's fully, fully delegated and out there. That's your challenge should you choose to accept it.

12:27Bill Gallagher: So in the next week, we'll be talking about a story that will probably make a lot of us uncomfortable. I've touched on it earlier. I'll talk about a person who, a new leader, a new CEO who took over a company, but then had perfectionist micromanagement tendencies and really held the company back, cost the company a lot of money, a lot of satisfaction with the team over time.

12:52Bill Gallagher: That's our show for this week. A big thanks to Wanda and Anna who produce our show, and to my friend and mentor Verne Harnish who created the whole Scaling Up framework. Like, subscribe, turn on your notifications. Go to scalingcoach.com if you want to attend one of our workshops, or if you like my feedback with our Q20 diagnostic, totally free to you. Go to scalingcoach.com. Anyway, until next time, keep scaling.

13:20Bill Gallagher: Thanks for listening today. One last thing. If anything in this episode hit home, my book digs into it further. Busy Is Broken: Do Less, Scale More. It's all about how to stop drowning in work and build a business and a team that scales without you. Available right now with content samples at busyisbroken.com. Go grab it. Be less busy.