At Walt Disney these days, the drama is on the screen—and not in the boardroom. Shareholders can thank Bob Iger for that. In a sector of oversized egos, the humble but high-performing CEO continued to model his unconventionally low-key leadership style through his succession plan, announced yesterday.
Under that plan, Bob Chapek, who runs Disney’s theme park business, will take over as CEO. Iger will stick around as executive chairman—with a focus on the creative side of the business—until the end of 2021.
I talked with Iger about the plan just hours after his announcement. “With assets in place, people and strategy it’s now on to the creative side,” he said. Having reached a performance peak with enterprise stability and triumphant innovation, Iger told me that this as the ideal time for a transition. “We’ve known [Chapek] for almost 30 years and knows us. He is decisive and very authentic with great internal reviews.”
Iger’s ambassadorial—rather than monarchial—approach to transition will likely prove to be the right one. Decades back I authored the first book on CEO exit challenges entitled The Hero’s Farewell (Oxford University Press). Sumner Redstone is emblematic of a type I’ve labeled “monarchs.” They only exit feet first — through a palace revolt or dying in office — and are commonly found in personality-infused businesses such as fashion, technology, media and, of course, Hollywood. Monarchs represent 5 to 6 percent of CEOs across all sectors, but in creative businesses and dynastic family enterprises, they’re closer to 25 percent.
Redstone occupied the throne at Viacom into his mid-90s. Louis B. Mayer (who also started with a New England theater chain) co-founded and lead MGM studios for nearly three decades—before being forced out in 1951. CBS visionary William Paley ran his media empire for more than 50 years and remained involved until his death (at age 89!) in 1990. Lew Wasserman built up MCA Universal out of a talent agency and ran it for roughly fifty years, until sidelined at age 82 by new owner Edgar Bronfman Jr. IMG founder Mark McCormack died at 72, with no clear successor.
The big problem with monarchs is they regularly dispense with those in the succession pipeline whom they see as threats. The palace intrigue that follows their exit imperils their primary mission — an immortal legacy.
That’s why others, such as Bill Gates of Microsoft and Andy Grove of Intel, have opted for the “ambassadorial” departure style, and built empires that outlive them. It isn’t easy—especially for creative founders. Ralph Lauren, Martha Stewart, Phil Knight of Nike, and initially Howard Schultz of Starbucks each left, but returned to battle when their successors slipped.
That seems unlikely with Iger, who already put off succession starting in 2016 to tackle a spate of game-changing moves to remake the company for a digital century. Late this fall, Disney’s stock surged to record highs with the staggeringly successful launch of Disney+, their own entry into the direct-to-consumer world of online streaming. They revealed 10 million immediate subscribers, blunting threats from Netflix and Amazon.
Iger’s purchase and smooth integration of 21st Century Fox followed his earlier acquisition and smooth integration of Lucasfilm, Pixar and Marvel—all while reviving Disney’s own legendary studio and theme parks. Eleven of last year’s top 12 films were Disney’s. The Avengers’ $1 billion opening broke attendance record in 18 countries.
Total shareholder return during Iger’s tenure is 578 percent, compared with 140 percent for the S&P 500. All this while adding 70,000 jobs.
Now, says Iger, it’s time to try something new as executive chairman (“I am a great teacher and will have Chapek by my side for the big creative decisions”) and then, sometime in 2021, he’ll be “liberated.” His model for an exit was not a fellow media mogul, but baseball star Sandy Koufax. As for travel plans, that’s easy: “Disneyland.” And some other things.