Lessons Of Business Model Design By Walt Disney

I was reading an article about Business Model Scalability by Felix Hoffman, CEO of BMI Lab, with whom FourWeekMBA put together a list of business model patterns mostly used in business model innovation, and I stumbled upon an image from the Disney Archives that left me speechless:


1957 Walt Disney Productions Archive

This is a pure business model design in action. Back in 1957, Walt Disney had clear in mind how his business looked at a higher level.

He understood how each piece fit well together.

While Disney’s business model has changed substantially over the years, this design would remain its core business model for decades to come. 

This draw by Walt Disney was the engine of its business and – I argue – the most critical inheritance he left as a businessman.

I’ve been looking at it for hours, and there are a few key elements to notice.

At the center of the business, there were the theatrical films, where it all started. The Studios was the place where creative talent could be sourced and where original content could be created. This content would spur everything else.

From Music, TV, Publications, Merchandise, and where the success of Amusement Parks would depend on.

In this model, a flywheel made each piece fit into each other and reinforce each other. Indeed, as you can see from Walt Disney’s drawing, TV would plug movies into the studios.

At the same time, the studios would feed films through TV, which would pay them off via commercials.

At the same time, the Studios also provided an “interchange of stars” to TV, which in turn made it more valuable.

The TV side of the business would then be used to record materials and publicize music products.

The Music side would “keep films in mind when they were out of circulation.” Studios fed tunes and talents to the Music side of the business.

Other sides of the business also plugged movies into the Studios, while the Studios allowed the publications of books and comic books and allowed the publications of the Walt Disney Magazine.

Other parts, like Disneyland, which might have seemed at first sight disconnected from other parts of the business, were a crucial element in Disney’s flywheel success.

Indeed, the Studios plugged parks, rides, and creative ideas.

At the same time, Disneyland could provide ideas to the Music side of the business for new albums, source articles for the magazine, and have a tight interaction with the Merchandise Licensing business.

This holistic approach is at the core of business modeling. I believe that each business person trying to build a great business should have in mind a clear design and vision, of how the flywheel framework makes the business sustainable in the long run.

It doesn’t matter what methodology – if any – you’re using. What is your vision for your business? Do you have one? If not what is missing? How is each part fitting into each others? How do they help each other grow? Is the process scalable?

Asking those questions might allow you to find the proper answers to build a lasting and sustainable business model.

Airbnb’s business model took inspiration from Disney’s business model

Airbnb is a platform business model making money by charging guests a service fee between 5% and 15% of the reservation, while the commission from hosts is generally 3%. For instance, on a $100 booking per night set by a host, Airbnb might make as much as $15, split between host and guest fees.
In 2021, Airbnb generated enabled $46.9 Billion in Gross Booking Value, and it generated $6 Billion in service fee revenues. In 2021, there were $300.6 Million Nights and Experiences Booked, ad an average service fee of 12.78%, at an Average Value per Booking, of $155.94.
Airbnb follows a holacracy model, or a sort of flat organizational structure, where teams are organized for projects, to move quickly and iterate fast, thus keeping a lean and flexible approach. Airbnb also moved to a hybrid model where employees can work from anywhere and meet on a quarterly basis to plan ahead, and connect to each other.

Other resources: 

Case studies:

Related Case Studies

Innovation Theory

The innovation loop is a methodology/framework derived from the Bell Labs, which produced innovation at scale throughout the 20th century. They learned how to leverage a hybrid innovation management model based on science, invention, engineering, and manufacturing at scale. By leveraging individual genius, creativity, and small/large groups.

Business Competition

In a business world driven by technology and digitalization, competition is much more fluid, as innovation becomes a bottom-up approach that can come from anywhere. Thus, making it much harder to define the boundaries of existing markets. Therefore, a proper business competition analysis looks at customer, technology, distribution, and financial model overlaps. While at the same time looking at future potential intersections among industries that in the short-term seem unrelated.

Business Scaling

Business scaling is the process of transformation of a business as the product is validated by wider and wider market segments. Business scaling is about creating traction for a product that fits a small market segment. As the product is validated it becomes critical to build a viable business model. And as the product is offered at wider and wider market segments, it’s important to align product, business model, and organizational design, to enable wider and wider scale.

Disruptive Innovation

Disruptive innovation as a term was first described by Clayton M. Christensen, an American academic and business consultant whom The Economist called “the most influential management thinker of his time.” Disruptive innovation describes the process by which a product or service takes hold at the bottom of a market and eventually displaces established competitors, products, firms, or alliances.

Innovation Funnel

An innovation funnel is a tool or process ensuring only the best ideas are executed. In a metaphorical sense, the funnel screens innovative ideas for viability so that only the best products, processes, or business models are launched to the market. An innovation funnel provides a framework for the screening and testing of innovative ideas for viability.

Four-Step Innovation Process

A four-step innovation process is a simple tool that businesses can use to drive consistent innovation. The four-step innovation process was created by David Weiss and Claude Legrand as a means of encouraging sustainable innovation within an organization. The process helps businesses solve complex problems with creative ideas instead of relying on low-impact, quick-fix solutions.

History of Innovation

Innovation in the modern sense is about coming up with solutions to defined or not defined problems that can create a new world. Breakthrough innovations might try to solve in whole new way, well-defined problems. Business innovation might start by finding solutions to well-defined problems by continuously improving on them.

Read also: Business Strategy, Examples, Case Studies, And Tools

Read Next: Lean CanvasAgile Project ManagementScrumMVPVTDF.

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