Bob Iger wanted approval. It was February 2011, and the Walt Disney Co. CEO gathered his board of directors inside an intimate theater at the company’s Team Disney headquarters in Burbank, California. There, just the night before, Iger held an early screening for the board of Captain America: The First Avenger months prior to its release. The soon-to-be blockbuster served as another sign that Iger’s bet on reinvigorating Disney’s movie business through his acquisitions of Marvel and Pixar was paying off big.
Now, with his directors reassembled and sitting in the first few rows of the theater, Iger set his sights on his next gamble, his boldest yet: to reinvent the brand’s most beloved asset, Disney’s iconic parks.
Iger planned to pump nearly $1 billion into this venture, called MyMagic+, a sweeping plan to overhaul the digital infrastructure of Disney’s theme parks, which would upend how they operated and connected with consumers. At the core of the project was the MagicBand, an electronic wristband that Iger envisioned guests would use to gain entry to Disney World and access attractions; make purchases at restaurants; and unlock their hotel room doors. It would push the boundaries of experience design and wearable computing, and impact everything from Disney’s retail operations and data-mining capabilities to its hospitality and transportation services.
Iger, who joined Disney when it acquired ABC in 1996 and survived the tumult of the late-era Michael Eisner reign to become CEO in 2005, knew MyMagic+ represented a huge risk. Privacy concerns aside, the project could prove a logistical nightmare, or worse, after years of investment, be rejected by visitors, who might not want technology intruding on such a traditional vacation experience. That’s why, on this sunny afternoon, Iger now sought the full support of his board, an intimidating group that included Facebook COO Sheryl Sandberg, the former CEOs of Starbucks and P&G, as well as the current head of BlackBerry and chair of Estée Lauder. (Apple CEO Steve Jobs, also a board member, was then too sick to attend, though he would play a role in MyMagic+’s development.)
For the pitch itself, Iger turned to Tom Staggs, the chairman of Disney’s Parks and Resorts division, who had overseen the MyMagic+ initiative for the last year. Staggs gave opening remarks about the program. His deputy on the project, executive vice president Nick Franklin, then took over, walking the board through the finer points of MyMagic+ while showing off prototypes of the MagicBand. They had a black display case, emblazoned with the words “Choose a Flavor,” that contained 24 colorful MagicBand models, neatly arranged like a box of chocolates.
The board, which had been provided materials breaking down the program’s costs, gave positive feedback throughout the presentation. Sandberg interjected at one point to ask whether MyMagic+ could be used to track her kids at the park, since she always worries about losing them in the crowds. “Sheryl, first of all, we don’t lose anybody’s kids,” Franklin responded, wryly, as he recounts for me in a recent conversation. “And I can promise that we’ll never lose your kids.”
The room erupted with laughter, and the rest of the presentation went off without a hitch. The board decided to back the project unanimously, and the room swelled with palpable excitement for what this historic decision could mean for Disney’s future. Iger himself talked about how important MyMagic+ will be for the company, according to people familiar with the meeting—how it will change the fundamental nature of Disney’s park experiences and have implications for the company’s broader businesses.
The board broke into applause, and the meeting came to its close. The directors were chatting and readying to leave when Iger, aware of the challenges still ahead for MyMagic+, regained the attention of the small room. He looked directly at Staggs. “This better work,” he said, bluntly and sternly. “This better work.”
The theater was quiet, the elation gone. Iger repeated, “This better work.”
This is the story of what it took to deliver on those three simple words. It is not the story Disney wants you to hear, although the company did make certain key figures, like Staggs, accessible. It’s based on extensive interviews with dozens of current and former executives, employees, and outside partners involved with the development of MyMagic+. Most would speak only on the condition of anonymity due to non-disclosure agreements, and also because, as one source explains, “You don’t mess with the Mouse.” It is a tale of corporate politics, personal feuds, and turf wars. But it also the story of a success, even though the project didn’t fully deliver on its massive ambitions. This is what happens when a huge corporation tries to reinvent itself. This is what you have to do when you better make it work.
Carousel of Progress
Any effort to reimagine Disney World would need to be monumental, almost by definition. Disney World isn’t an amusement park: It’s a metropolis. Sprawled across 25,000 acres of central Florida, it contains four theme parks, nearly 140 attractions, 300 dining locations, and 36 resort hotels. Its monorail system zips along 15 miles of track, with a daily ridership of more than 150,000. The parks have their own power plant and security force, plus some of the world’s largest laundry facilities, cleaning 280,000 pounds of linen each day as well as dry-cleaning 30,000 cast member garments.
The theme parks play an essential role in Disney’s effort to cement its company, characters, and products into the lives of families around the world. The more Disney movies, TV shows, and characters permeate our culture, the more people go to the theme parks; the more traffic the parks get, the more demand is created for toys, apparel, DVDs, and sequels. The cycle works in both directions: Disneyland’s Pirates of the Caribbean ride opened in 1967, and inspired the movie franchise that since 2003 has generated $3.7 billion in global box-office receipts. The divisions connected by this roundelay—Parks, Studio Entertainment, and Consumer Products—account for more than half of Disney’s revenues and profits.
This virtuous circle of brand consumption has helped the company grow to be a $48 billion global media conglomerate. Not only is the Parks and Resorts division (which we’ll call Parks from here on) lucrative, it is also more reliable than the company’s efforts in movies, which are susceptible to creative failure and audience indifference. Parks’ footprint is global and diverse, with destinations in Anaheim, Orlando, Hong Kong, Paris, and Tokyo (a massive Shanghai expansion is set to open in 2016); a fleet of cruise lines; time-share properties; packaged vacation tours; golf courses; and luxury hotels. “The sun never sets on Disney,” one employee tells me.
In the mid-2000s, however, Disney executives had reason to worry about the future of the business. Disney World, Parks’ crown jewel, seemed to be losing its luster. According to multiple sources, certain key metrics, including guests’ “intent to return,” were dropping; around half of first-time attendees signaled they likely would not come back because of long lines, high ticket costs, and other park pain points.
Simultaneously, the stunningly fast adoption of social media and smartphones threatened the relevance of the parks. If Disney wanted these more tech-oriented generations to love it as much as their parents, who had grown up with fewer entertainment alternatives, had, it would have to embrace change now. “We were failing to recognize key consumer trends that were starting to influence how people interacted with brands,” says one former executive. Inside the company, Disney World became known as a “burning platform.” As the former executive explains, “If we miss out on that next generation of guests, suddenly our burning platform is fully on fire—panic mode.”
In 2008, the Parks division officially kicked off what became known as the Next Generation Experience project. Spurred by Jay Rasulo, who was then chairman of the division, Parks president Al Weiss and Disney World president Meg Crofton formed an exploratory team, following an initial round of technology research and financial modeling in 2007.
The “founding five” were technology SVP Andy Schwalb, Imagineering executives Eric Jacobson and Kevin Rice, Parks VP Jim MacPhee, and business development VP John Padgett. By Valentine’s Day 2008, Rasulo and Weiss had gathered the team in strict secrecy, and told them, in so many words, to “reinvent the vacation experience—and keep [Disney World] relevant,” recalls Schwalb.
While most observers view Disney’s parks as kingdoms of escapism, Neal Gabler, in his definitive biography of Walt Disney, argues that their success actually derives from “crafting a better reality than the one outside,” with a reassuring “control and order” where all is “harmonious.”
But in the ensuing weeks, working from a trailer behind Epcot, the founding five started digging into the problems that made the reality of Disney World something less than “harmonious.” There were the endless lines for rides, food, and bathrooms; parents juggling maps, hotel keys, baby carriages, and bottles of SPF 75; and kids pulling families on long treks to try to visit every attraction. The park was filled with complications, such as a tiered ticketing system with wonky rules.
Given Disney World’s ticket prices, families felt obligated to “divide and conquer,” says MacPhee. The team created diagrams illustrating how families, seeking to maximize their time, would crisscross Cinderella Castle, the center of the park, as often as 20 times a day. Worse yet: the swarms of people. On average, 8,000 to 10,000 guests flow through the park’s main entrance every hour. “On the surface, we had super happy guests, but in reality, we were making them go through so much hassle at the park that down the road, they would simply say, ‘No más!’ ” says one former longtime Disney manager.
As MacPhee, who has the look of a Division II offensive coordinator, admits, Disney World was on the verge of becoming “dangerously complex and transactional.” The team soon presented its ideas to Rasulo. He gave them the go-ahead to rethink everything, including turnstile entrances and paper ticketing. That’s when the project got its code name, Next Generation Experience, or NGE. The founding five soon found themselves on a perpetual shuttle between Burbank and Orlando.
On one early flight, Padgett, who looks as open and eager as the Toy Story character Woody, had a breakthrough. Flipping through a SkyMall catalog, he landed on a page featuring the Trion:Z, a magnetic wristband that promised to reduce muscle soreness while simultaneously improving one’s golf swing. The team started to consider whether Disney could create an electronic band that could digitally carry everything a guest might need—park tickets, photos, coupons, even money. It would give guests entry to Disney World, pay for goods at retail shops, and unlock their hotel room doors. It would be a virtual key to the Magic Kingdom.
First Appeared on FastCompany. Click here to read the full article.