Walt Disney’s Perspective on Money, Risk, and Business Strategy

© 2024, Barry L. Linetsky. All Rights Reserved.

Walt Disney was an exceptional business leaders and integrative thinker. I present in detail Walt Disney’s exceptional entrepreneurial career in my book The Business of Walt Disney and the Nine Principles of His Success.

When Peter Drucker wrote in 1986 that “To satisfy the customer is the mission and purpose of every business…[and] any serious attempt to state ‘what our business is’ must start with the customer, his realities, his situation, his behavior, his expectations, and his values,” Walt Disney and the legacy of the company he built had already been creating value and making customers happy for 63 years. Drucker could have been writing directly about Disney himself, who could have been the poster boy for the application of Drucker’s ‘Marketing Concept.’ Walt Disney saw everything he did to create value through the lens of making customers happy. For Walt, making people happy was the only honest and ethical path to profits.

Read more: Walt Disney’s Perspective on Money, Risk, and Business Strategy

What follows is an excerpt from the third principle of Walt’s success: “Money is a Means, Not an End,” from The Business of Walt Disney and the Nine Principles of His Success (2017, Reissued Edition, 2023: paperback, 439-440).

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As a strategic thinker and business leader, Walt often thought about his endeavors holistically and synergistically, especially in the years of rebuilding the studio’s capabilities following World War II. He was able to look beyond the immediate value and return on investment of any single idea in isolation, to how it could support and contribute to the larger business system. 

An incident related by Imagineer Marty Sklar (later president of Walt Disney Imagineering) provides insight into Walt’s integrative approach to thinking: 

[I]n the late 1950s, it cost 24 cents to purchase and merchandise the Disneyland souvenir guide, which sold for 25 cents. The company was only making a penny on it and the merchandising people wanted to raise the price. So they went to Walt and made their pitch and he said, no. They were in shock. 

“Look,” he said. “You don’t get it. I don’t care about making money on this. What I want is as many of these souvenir guides as possible on people’s coffee tables. I want others to see what Disneyland is all about and come for a visit. We’ll make money when they actually come to Disneyland and buy tickets and souvenirs. I don’t care about making money on every single item. I want people to visit Disneyland!” Walt was looking at the big picture all the time.

At times when cash flow was problematic, Walt and Roy would come at issues from different contexts with Roy protecting the more immediate financial needs of the business and Walt focusing on creating value for the future. Because both shared the same high-level values and goals, they were always able to find an agreeable solution. Both recognized that it was only by doing what was best for the customer that they could at the same time do what was best for the business. The key for Walt was to prevent the more seductive ease of short-term convenience from slamming the door on more promising longer-term opportunities. A good early example was his refusal to sign away television rights in 1936 during contract negotiations with film distributor United Artists, precisely because he didn’t understand their importance. 

A widely accepted practice today is for business leaders to focus on immediate short-term results, leading them to micro-manage most aspects of the business as isolated profit centers, with extreme lack of regard for the fact that a business is an integrated production system that converts inputs into outputs to profitably produce something customers value. Without profits to fund its ongoing and future operations, a business will eventually run out of cash and be forced to cease functioning. When that happens, unproductive resources and inventories are freed up for reallocation to producers and consumers. 

It is via the pricing mechanism, the profit motive, and consumer sovereignty in acquiring and exchanging values that consumers and producers decide over an appropriate time frame what will be produced and who will earn and benefit from profits. Profits are an outcome of effective economic and commercial activity, and are a guide to business leaders to adjust their efforts at satisfying consumers. 

Peter Drucker, whom the Los Angeles Times designated the “founding father of the science of management,” was one of the early management thinkers and educators to apply his knowledge of economics and finance to the understanding and teaching of business management and organizational effectiveness. Having no knowledge as to whether Drucker and Walt Disney ever met, many of Drucker’s key observations about business purpose and customer alignment are such that they could have emanated from the study of Walt’s business philosophy and practices. 

Drucker warned organizational leaders that if they ignore the important role customers play in their business success, they do so at their own peril. He articulated more fully what Walt understood more simply and directly, writing in his 1986 book The Practice of Management: 

It is the customer who determines what a business is. For it is the customer, and he alone, who through being willing to pay for a good or for a service, converts economic resources into wealth, things into goods. What the business thinks it produces is not of the first importance—especially not to the future of the business and to its success. What the customer thinks he is buying, what he considers “value,” is decisive—it determines what a business is, what it produces and whether it will prosper.

Drucker wrote elsewhere, “To satisfy the customer is the mission and purpose of every business…[and] any serious attempt to state ‘what our business is’ must start with the customer, his realities, his situation, his behavior, his expectations, and his values.” Harvard University marketing professor Theodore Levitt succinctly summarized Drucker’s insight by stating: “The first business of every business is to get and keep customers.” 

While this seems to be an obvious truth, many of Walt’s partners and competitors through the years rejected this customer-centric approach to doing business. 

Walt lived by this knowledge. 

© 2024, Barry L. Linetsky. All Rights Reserved. 

Barry Linetsky is a senior-level strategic advisor and enabler, writer, researcher, and photographer. His thought-leadership and research has been published by Rotman Magazine and Ivey Business Journal [https://iveybusinessjournal.com/?s=linetsky]. He is the author of the acclaimed and best-selling book The Business of Walt Disney and the Nine Principles of His Success, and Understanding and Creating Vision and Mission Statements. He blogs on strategic business issues at www.barrylinetsky.com. His current interests pertain to the application of new knowledge and skills to master value-creation under current and emerging conditions of increasing socio-technical complexity.