Disney’s forward-looking business model innovation
Disney’s recent decision to restrict products advertised on its child-focused media properties might not appear to be business model innovation in the classic sense. But it is. With that one decision, Disney is redefining how, where, and why they will do business with other companies, and offering a leading-edge value promise to consumers. In reading societal tea leaves correctly and taking bold action, Disney will advance its financial and social value.
Starting in 2015 Disney will restrict advertising on its child-focused TV channels, website and other media properties to brands that meet a strict new set of federal nutritional standards. The decision will reduce Disney advertising revenue from brands like Capri Sun™ drinks and Kraft Lunchables™, foods that may be fun to eat but not good nutrition.
Concurrently, Disney will reduce the salt content of meals served at its theme parks and engage in messaging to encourage kids to be more physically active and eat more nutritious foods. It will also extend its Disney-licensed fruit and vegetable servings business by adding “Mickey Check” on licensed products in grocery store aisles that limit saturated fat, calories, sodium and sugar. A Mickey Mouse ears logo and a check mark on packaging promises, “Good For You — Fun Too!”
Disney’s business model innovation is changing the scope of its business from “fun experiences” to “fun and healthy experiences.” Some might see Disney’s move as defensive, an effort to protect itself from lawsuits rising from rampant childhood obesity. I see it as a smart move.
First, brand loyalty will increase. Parents and health care payers are distraught over how overweight kids have become – so distraught that preventing childhood obesity is a major focus of US First Lady Michele Obama. Parents are seeking brands they can trust and Disney’s new business concept shouts, “You can trust us.”
Second, revenue will grow. While narrowing its concept with the “healthy” qualifier will cost Disney advertising revenue in the short term, the fun and healthy concept expands the categories Disney can enter and grow: Disney summer camps, Disney parent/child exercise Apps, a Disney healthy fast-food chain, and numerous other licensing opportunities are now open.
Third, Disney will win the war for talent. Disney recognizes that today’s young talents, more than previous generations, seek to work in organizations that are making a positive difference in the world.
Fourth, by moving first (before regulations might restrict advertising), Disney differentiates its brand in a memorable way. The only organizations with price premiums are those with differentiated offerings.
Finally, the move reinforces Disney’s position as the world’s third most trusted company, as recently reported by Forbes. Disney ranks #1 on citizenship and sits among the top ten brands in every other category that collectively shape a company’s reputation.
Expanding or narrowing your business scope to embrace a social or environmental problem is smart business today. IBM is doing this with its “Advancing a Smarter Planet” business concept. Aetna and United Health Care, two leading health insurers, are redefining their business as “improving health” versus “providing healthcare benefits.” No less an authority than Harvard Business School’s Michael Porter advises companies to advance social and business value.
The integrated approach to corporate social responsibility is far better for the bottom line than the philanthropy, volunteer work and cause marketing approaches used in the past. Making the leadership team responsible for advancing social value beyond income generation leads teams to find the both-and spaces (like Disney’s food licensing business) that create better profits and a better world.
There’s a second lesson in the Disney example. What you do and how you do it defines what your brand is all about. And every element about your business enters customers’ value equation. In the past, consumers only knew product features and price. In today’s increasingly transparent world, they know far more.
In this regard, I disagree with Wall Street Journal’s Kimberly Strassel who expresses anger at efforts, in particular those of the Center for Political Accountability, to force public companies to disclose their contributions to political groups. Customers and investors have every right to know what their dollars – including those that drop to the bottom line – are used for. Smart publicly traded companies will be transparent and focus their spending on efforts that advance their brand promise and unite their employees and customers around a shared purpose. Disney models the way.