CEO Coaching: Mickey Mouse Management

A client recently recommended the book “The Ride of a Lifetime” by Robert Iger, the CEO of The Walt Disney Company. It’s a fascinating story with some good lessons.

One interesting subplot occurs during his tenure as COO, working for longtime CEO Michael Eisner. Eisner built a “strategic planning group” (called Strat Planning) that reported to him and originally helped evaluate strategic capital decisions for Eisner. It grew to be 65 people! At this point, I’ll let Iger tell the story…

…I recognized the value of their contributions, but I could also see, with each passing year, that they were growing too large and too powerful, and that the more influence they wielded, the more disempowered the people who were running our individual business became.”

 “…All of our senior business leaders knew that strategy decisions about the divisions they ran—Parks and Resorts, consumer products, Walt Disney Studios, and so on—weren’t actually theirs to make.”

 I’ve seen this movie too many times and experienced it as an executive many years ago. When P&L leaders don’t actually own the P&L (i.e., the decisions), confusion creeps in (Who’s in charge here?), resentment grows, and performance suffers.

 Lack of clarity around who owns what is dangerous. Matrix organizations only work when there’s extreme alignment around goals and rewards, high levels of trust, and a lot of effort on keeping the team focused. Even then they cause problems. 

If there’s no clear answer to the question “Who owns the P&L?” then the CEO owns it.

CEOs don’t intend to build a Mickey Mouse organization (you knew I had to work that one in!)—it just happens over time. Shared services keep G&A costs lower, but they also diminish clarity and accountability. Centralized technical expertise saves cost and brings synergy, but it also diminishes clarity and accountability. Strong HR, sales, and marketing at headquarters may bring in high levels of talent, but it also diminishes clarity and accountability in the business units. 

CEOs who fully understand the trade-offs can make matrix organizations function well, but many others are flummoxed that trust, ownership, and accountability don’t naturally happen. It takes a lot of work—from the CEO!

If you’re a CEO and your board decided that resources outside of your company would develop IT and manage HR, marketing, sales, and perhaps product development while still holding you accountable for growth and profitability, how would you feel? A bit Goofy?

If you’re going to run a matrix organization, allocate half of your time to coordinating, building clarity, breaking ties in decision-making, and fostering trust among your executives. Don’t put your head in the sand and wonder why we all can’t just get along!

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