Disney’s plans for a huge cost-cutting initiative say at least two things about American businesses today:

Corporate Purpose Is A Sham

The company will fire 7,000 people, or about 3% of its workforce, as well as strive for $2.5 billion in annual savings from “non-content” operations…which is code for replacing more employees with technology while making those who remain work harder and/or longer (the euphemism is improving productivity).

These cuts will make it possible to reinstate paying a dividend to its investors by the end of the year.

So much for valuing people.

With all the blather about “corporate purpose” over the past few years, you’d think that any practical application of Disney’s lofty ideals would start with the people directly responsible for, and dependent upon, the company’s performance.

The tenets of purpose suggest that businesses have a responsibility to communities and the environment that transcends the outdated ideas of accounting and free market capitalism. Visit any big company website, including Disney’s, and you’ll find beautiful propaganda on its commitment to doing a bunch of things unrelated to making money.

Except when it comes time to walk the talk, investors come out on top. Its stock price shot up 7% on the news of its staff layoffs.

I’ve long believed that corporate purpose is a sham, and the fact that it lives mostly in the minds (and budgets) of marketers and PR people is a good indication of its true value. Keep an eye out for the day that a publicly listed company is rewarded for making less money because it kept people employed (or didn’t burn as much coal, or whatever). It’ll mean more than any glossy video or mind-numbingly dense and dishonest CSR report.

And it’ll never happen.

We Still Haven’t Nailed Marketing 

Philadelphia department store innovator John Wanamaker once said, “Half my advertising spend is wasted; the trouble is, I don’t know which half.”

It was the late 1800s.

These days, you’d think that digital tools had taken all of the guesswork out of marketing. Big data, targeting, and tracking, not to mention brain and behavioral science have closed the loop between customer awareness and repeat purchases. Engagement, share of voice, and other made-up metrics fill a robust, self-referencing methodology that is inarguably accurate and can only be improved by doing more of it.

Except Disney announced that it would slash $1 billion from its annual marketing budget. There’s no exact number for the budget overall but one estimate is that the cut represents about one fifth of its total spend. That’s a huge amount of money that is, to excuse the term, expendable.

Oh, and it intends to increase revenues from the content it produces (while cutting costs massively for producing said stuff).

What will get discarded is anyone’s guess, but my bet is that Disney’s bias will be toward marketing tools that have more direct and objectively real connections to actual customer actions that produce tangible revenue. Sure, advertising’s heyday involved lots of content that didn’t overtly close sales but nobody ever claimed that entertainment had a value in and of itself. As medieval ad sage David Ogilvie said:

“I don’t believe in tricky advertising. I don’t believe in cute advertising. I don’t believe in comic advertising. The people who perpetrate that kind of advertising never had to sell anything in their lives.” 

Maybe the physics of marketing science turns out to be more classical than quantum after all?

I’m all for Disney spending less to sell more and it’s well within its rights to do it with fewer people and more technology. Its announcement was quite refreshing, actually. 

It revealed two truths.

Categories: EssaysInnovation