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.
Key Highlights
- Walt Disney’s Vision: In 1957, Walt Disney created a drawing that depicted the core business model of his company. This design remained the foundation of Disney’s business for decades.
- Central Elements: The drawing highlighted key elements at the center of the business: theatrical films and creative talent from the Studios.
- Interconnectedness: Disney’s business model had interconnected components, with each piece fitting together to reinforce the others. For instance, TV would plug movies into the Studios, and TV would pay for movies through commercials.
- Flywheel Concept: The business model acted like a flywheel, where each piece fed into and strengthened the others.
- Holistic Approach: Disney’s business model included various parts like music, TV, publications, merchandise, amusement parks, and more. Even seemingly disconnected elements like Disneyland contributed to the overall success.
- Importance of Vision: The holistic approach to business modeling is crucial. Business leaders should have a clear design and vision of how each part fits together to create a sustainable and lasting business.
- Inspiration for Others: Airbnb’s business model took inspiration from Disney’s approach. Airbnb created a platform business model charging guests a service fee and hosts a commission.
- Airbnb’s Business Model: Airbnb charges guests a service fee (5% to 15% of the reservation) and hosts a commission (generally 3%) for bookings. In 2021, Airbnb generated $6 billion in service fee revenues from $46.9 billion in Gross Booking Value.
- Airbnb’s Organizational Structure: Airbnb follows a holacracy model with a flat organizational structure. Teams are organized for projects, maintaining a lean and flexible approach.
- Takeaways:
- A clear vision of how components fit together is essential for business sustainability.
- Business model components should reinforce and support each other.
- Learning from successful models like Disney’s can inspire innovative business approaches.
Most Important Learnings
Walt Disney’s Vision:
- In 1957, Walt Disney created a comprehensive business model design that remained the core of Disney’s business for decades.
- This design emphasized the central elements of the business: theatrical films and creative talent from Disney Studios.
Interconnectedness:
- Disney’s business model exhibited interconnected components, where each part complemented and strengthened the others. For example, TV was integrated with the Studios, with TV promoting movies and paying for them through commercials.
- The Studios served as an “interchange of stars” for TV, enhancing its value.
- Various parts of the business, including music, TV, publications, merchandise, and amusement parks, were all integral to the success of the overall model.
- Even seemingly unrelated elements like Disneyland played a crucial role in Disney’s flywheel success by contributing ideas, content, and interactions with the Merchandise Licensing business.
Flywheel Concept:
- The business model acted like a flywheel, where each piece fed into and reinforced the others, creating a self-sustaining ecosystem.
Importance of Vision:
- Having a clear design and vision for how different components fit together is crucial for long-term business sustainability.
- Business leaders should ask questions about how each part of the business contributes to growth and supports other elements.
Inspiration for Others:
- Airbnb drew inspiration from Disney’s business model and applied it to its platform business model.
- Airbnb charges guests a service fee and hosts a commission, similar to how Disney’s various elements contributed to the overall business.
Airbnb’s Business Model:
- Airbnb’s revenue model involves charging guests a service fee (5% to 15% of the reservation) and hosts a commission (generally 3%) for bookings.
- In 2021, Airbnb generated significant revenue, with $6 billion from service fees and a Gross Booking Value of $46.9 billion.
Airbnb’s Organizational Structure:
- Airbnb follows a holacracy model, which is a flat organizational structure.
- Teams are organized for specific projects, allowing for agility and rapid iteration.
- Airbnb also adopted a hybrid work model, allowing employees to work from anywhere and meet quarterly to plan and connect.
Overall Insights:
- The holistic approach to business modeling, as demonstrated by Disney’s success, involves understanding how different elements of the business interact and support one another.
- Successful business models create self-reinforcing cycles (flywheels) that drive growth and sustainability.
- Learning from established models, such as Disney’s, can inspire innovative approaches to building and scaling businesses.
Other resources:
- Successful Types of Business Models You Need to Know
- What Is a Business Model Canvas? Business Model Canvas Explained
- Blitzscaling Business Model Innovation Canvas In A Nutshell
- What Is a Value Proposition? Value Proposition Canvas Explained
- What Is a Lean Startup Canvas? Lean Startup Canvas Explained
- How to Build a Great Business Plan According to Peter Thiel
- What Is The Most Profitable Business Model?
- How To Create A Business Model
- What Is Business Model Innovation And Why It Matters
- What Is Blitzscaling And Why It Matters
- Marketing vs. Sales: How to Use Sales Processes to Grow Your Business
Case studies:
- The Power of Google Business Model in a Nutshell
- How Does Google Make Money? It’s Not Just Advertising!
- How Does DuckDuckGo Make Money? DuckDuckGo Business Model Explained
- How Amazon Makes Money: Amazon Business Model in a Nutshell
- How Does Netflix Make Money? Netflix Business Model Explained
- How Does Spotify Make Money? Spotify Business Model In A Nutshell
- The Trillion Dollar Company: Apple Business Model In A Nutshell
- DuckDuckGo: The [Former] Solopreneur That Is Beating Google at Its Game
Read Next: Business Model Innovation, Business Models.