Create limitless experiences with former Disney innovator
Podcast episode 53
How does a CSP better monetize their huge investments? By taking a page from the playbook of the Masters of Monetization. 30-year veteran Disney executive Duncan Wardle shares his insight into how The House of Mouse achieves such a high ROI and what a mouse can teach the telecom industry about being a lion in its space.
Below is a transcript of this podcast. Some parts have been edited for clarity.
Michael Hainsworth: The Magic Kingdom knows how to cast a spell over the consumer's wallet. The Walt Disney Corporation is a master of monetization that goes back as far as Walt himself. And for 30 years, Duncan Wardle helped the media, amusement park, and movie machine in its task of getting the most out of its assets.
In his life after The House of Mouse, Wardle has challenged his clients to claim their own creativity, create a culture of innovation, and change their focus from profit to purpose. Is there a lesson to be learned by the telecommunications industry? Absolutely. Wardle tells me that, "Despite Disney's expertise in this, money was always the last thing on Walt's mind."
Duncan Wardle: Walt understood it. And it's amazing that, here we are in the year 2021, and most companies still don't. And here we are about to enter the experience economy where Generation Z and young millennials will not buy houses and cars because they seek experiences. And yet, most of corporate America is judged by quarterly results, not by experiences, and therefore they have to drive sales. But Walt understood it was an experience before sales. And so when he built and designed Disneyland, it was built on creating an amazing, immersive experience. (singing)
Hank Weaver: How do you do, everyone? This is Hank Weaver. For the past year, this signature has announced the opening of Disneyland, the show. Now, it announces the opening of Disneyland, the place. The people and eyes around the world are focused on these 160 acres here in Anaheim, California. This afternoon, Disneyland, the world's most fabulous kingdom, will be unveiled before an invitational world premiere, and you are guests.
DW: Now you may say, "Well, that must have cost him a lot of money." Well, it did. But yet, if you would now fast forward to the year 2021, if I were to ask you to name some of the top, single-most successful shopping malls in retail per square foot, anywhere on the planet, producing theme parks around the world would very much be in that top 10, because Walt put experience first.
Now, fast forward now. And so, okay. What does that mean in today's real terms? Well, up until about 20 years ago, Universal Studios were the hard steel ride guys. That was their brand. And the Disney parks were the immersive entertainment experiences, which allowed them to charge more for a ticket price, more for merchandise, et cetera. And then Universal Studios, about 20 years ago, bought the Harry Potter franchise and created amazing immersive experiences in Hogsmeade and Diagon Alley.
Up until they did that, the average Coca Cola at Universal Studios was 75 cents a glass. Today, it's $8.50 plus tax, because it's called, a butter beer, not a Coca-Cola. And if you'd like it in a souvenir mug, that’s $16. Have a nice day. And so, Walt just understood this.
And I think that... where I think 5G will enable us to go, and we'll get onto it in a bit more detail as we go through, is, to create amazing immersive experiences inside capital infrastructure, such as museums, retail malls, et cetera, that we can't create today because it would cost too much money.
MH: So if Generation Z is more focused on purpose than profit, and this demographic is eclipsing the baby boomers to become the most influential economic cohort in the world, how does a monetization strategy evolve to accommodate that?
DW: You have to reverse the question. Disney's magic band. In 2011, if the company had asked the question, "How might we make more money?" That's easy. You put the gate price up by 3% and we make our quarterly results and you all come. If you know the answer, you're iterating. And in a post pandemic world, you don't get to iterate anymore because none of us are going back to business as usual. We're going back to business as unusual, and we have to reinvent the way we go to market. Why do we have to do that? Well, 12 months ago, we used to go to restaurants. Now we can use Uber Eats. We used to go to supermarkets, now we use Instacart. Used to go to gyms, now we use Peloton. You used to go to the office, now we use Zoom. Used to go to the movie theaters, now we use Disney+.
If we believe we're going back, yes, we are, and the frequency with which we used to, not a chance. And so, the world has changed very quickly, and the move and the shift to virtual is going to come quicker than most people think. A, because technology is enabling it on one half. But if you look at the other half, look at the last 15 years since 2005, the world has had Ebola, Bird Flu, H1N1, SARS, and COVID-19. That would suggest even to the people who aren't scientists amongst us, such as myself, that somewhere in the next three to five years, somewhere in the world there will be another pandemic. And when that hits, even if it's just regional, it's going to send the world into a total viral spin of moving virtual.
But the challenge for most of us is, because we've been successful for the last 30 years, 40 years, 50 years, asking how might we make more money, we assume we can continue to ask that question. Generation Z is going to turn that on its head. Why? Because they believe more in purpose than profit.
I was asked recently to give a talk to the world's most successful tool manufacturer. They make more hammers, chisels, and saws than anybody else. And I thought, "Gosh, I don't know much about this industry, and I don't know much about their consumer. How can I find out?" I thought, "Well, I'm going to go down to Home Depot and Lowe's and hang out in the aisles, like some creepy dude for a couple of days. And I'm just going to watch and listen to the Generation Z at the point of purchase."
And I went back to the brand and I said, "Listen, this generation has never heard of your brand. They don't talk about your brand. They're not talking about the price point. They're not even talking about your products, the hammers, the chisels, the saws. What they're talking about, is what's important to them. We're going to remodel our dream house, our dream bathroom, our dream kitchen." I said, "Your purpose, if you choose to create a why, is you could be the brand who helps people build their dreams." And you could see the look on their face, like, "Don't be ridiculous. How's that going to help us drive our quarterly results?"
Their definition... And I said, "Well, here's how. If you're the brand who can help people build their dreams, could you be in insurance? Yes. Could you be in telecommunications? Yes. Could you be in sports? Yes. Hospitality? Yes. Entertainment? Yes. You could be in any line of business you want." They're like, "No, no. We make tools and we're really good at it." I was like, "Yeah. And our definition of innovation isn’t iteration."
"We're going to expand into Mexico and India. They have a growing middle class. They will buy our tools." Um, no, they won't. If we can build a house in Houston, Texas today in less than a week for the price of an iPhone on a 3D printer, what would you be able to print in your living room 15 years from today? I put it to you, that if you didn't have touch screen technology, 15 years ago, that 15 years from today, a third of what you purchase online, you will print in your living room at home. The small table, the chair, if I can print anything I want on demand, 15 years from today, what will I use a hammer, a chisel, or a saw for? No, I won't. They'll be in a museum. But because they have no purpose, and no, why, they have no appeal to this Generation Z. That will be their biggest challenge.
MH: Another big challenge though, that you've written about is, you actually challenge everyone to claim their own creativity in that, by doing so, one creates this culture of innovation that was never before possible. How can the communication service provider foster creativity in a way that creates a culture of monetization?
DW: Well, there were... We tried four models at Disney. Model number one, I hired IDEO and said, "Make me look good." They're considered one of the gurus of innovation. They came in, they run a project. They're very good at what they do. They're there for three or four months, but they're not going to show you how they do what they do, otherwise you wouldn't hire them again. See, okay. That gets us X of the way there. And I thought, "Gosh, we're creating the innovation team."
The challenge with creating an innovation team is, outside of your legal team, sales team, marketing team, operations team, nobody does legal, marketing, sales, or operations. So when you create an innovation team, you've inadvertently told everybody else in the organization, "Oh, we've got an innovation team. You just keep doing business as usual."
Model number three, we tried an accelerator program where we'd bring in some young tech startups that had an interesting piece of technology that we were very interested in. What they didn't know how to do, was to scale it and bring it to market, and obviously Disney knows how to do that quite well. But in all three models we realized we had actually failed in our overall objective was, how might we embed a culture of innovation into everybody's DNA?
And so, we set out to create essentially, a toolkit, a toolkit that makes innovation less intimidating and easier, a toolkit that makes creativity tangible for people who hate gray, and a toolkit that is fun to use. Why is it fun? People don't like the word, fun. It doesn't imply quarterly results. You can't change culture by talking about it. I keep hearing C-suite saying, "You must innovate. You must think differently. We must be brave. You must take risks." And all of their employees are saying, "Well, how?" And we're not showing people how.
And so after 30 years at Disney, 10 as head of innovation and creativity, I left. And most of my work now is actually showing people and giving them workshops and masterclass. You can inspire and motivate people in the keynote, but you can't help them. If the objective is to embed a culture of innovation into everybody's DNA, it's about letting people use the tools, because that's how people learn. Create a toolkit that makes innovation easy, creativity tangible, and the process fun. One that all of your employees choose to use when you're not around. That is culture change.
MH: The buzz word in the nineties was, synergies. How did Michael Eisner at Disney, break down the silos within ESPN, ABC, Pixar, and others, to get these divisions to work together? Everybody spends so much time building their own little personal fiefdoms, they don't want to lower the drawbridge.
DW: No. Michael was very good. He created a team called, The Synergy Team, and their job was to bring everybody together. And then when I came on board later on, as head of innovation and creativity, my task was to give us a toolkit that gave us a common language. Because, Pixar had their innovation and creativity process. Lucasfilms had theirs, ABC, ESPN, Disney Parks. We were all heading in a different direction.
And so, it was about creating some commonality and giving people some common language, some common behaviors, and common tools that we could all use at the same time to tackle challenges. And it creates an amazing ecosystem where, for example, Disney movies are a place where, prior to COVID, obviously, people might engage with a Disney movie or Pixar, Lucasfilms, four or five times a year. Disney, back in the day, people would go into the consumer product stores once or twice a year, and they'd visit the theme parks three to five... every three to five years.
And so what you are doing, you're building a sort of an ecosystem where people can touch and feel and play with the brand at different points. They can see it in the movies. They can experience it to a certain extent, in the stores. But then the fully immersive experience where people can come and touch and play with the brand, is in the parks. Why is that so important, as you're building franchises and intellectual property?
Well, if you think about most of the cartoon characters that you and I grew up with, most of them, when was the last time you saw or heard of them? A very long time ago. They've gone away. So why is Mickey still around when all the others went away? Because Mickey and Walt created a place where people could come and touch and feel and play with the brand in a physical environment. But again, we'll get into this more in the talk and later today, the opportunity in 5G and with AR, going past VR, to create these fully immersive experiences anywhere, is going to be amazing for the next few years.
MH: It sounds like, you're super excited about the prospect of augmented reality in the role that 5G will play in that, not just as the signal from the glasses to the world around it, but also up into the cloud and all that kind of stuff. What are you thinking about, when it comes to AR?
DW: Everything. It's so exciting. So, it all started a few years ago. I was in a museum in Belgium, an art gallery. And a little boy, let's say, he was three, he walked up to a painting in front of me and he tried to swipe it because he thought he could. I was like, "Oh my God, I feel old." And then I thought, "Well, wait a minute, art galleries are interesting and the paintings are stunning, but yet, they're static. Nothing... Where's the fully immersive experience?"
Well... in order for you create one, you'd have to spend millions, if not billions, of dollars. Well, no. Now, Oculus, Facebook Oculus, Microsoft HoloLens, and Google Glasses all said that big, bulky VR headset will be a pair of lenses, a pair of glasses in less than two years. What would that enable us to do? That would enable Vincent van Gogh to pop out of the painting, rip his ear off, and tell the little boy why he took his ear off.
I gave a talk not so long ago to one of the NFL's top teams. And they told me that 90% of their fans will never afford to go to the stadium. And I said, "Do you market to that 90%?" They said, "No." You thought, "Well, hang on a minute, with 5G and AR, now in less than two years from now, if a kid in Nairobi wants to sit in the stadium of an NFL team, in seat 37 A, he will be able to do that from his living room. And if he wants to sit next to Joe Namath and Babe Ruth, I probably got that wrong, but for an upcharge, he can.
Think about where Pokemon Go took us on our phones a few years ago. But now, think about what that's going to do an augmented reality. For most... For a supermarket, a restaurant, a shopping mall, they can't afford to create a fully immersive experience in terms of physical structure. But with 5G and AR, they will be able to create amazing experiences inside their physical assets, which will draw... And again, if you don't create an experience and you're a physical asset in the next three to five years, Amazon has your lunch.
There was no reason to come to a supermarket. I love Instacart because I don't have to walk down an aisle I didn't want to walk down to pick up a product I didn't want to buy because you move it every three months. That is not consumer centric, that is product centric. However, if this supermarket could create an amazing and immersive experience to give me a reason to visit... And again, I'm not Generation Z by any stretch of the imagination, but young millennials and Generation Z are looking for experiences. VR is a very insular experience. You've got this giant headset on and can't see around it.
But AR, my goodness. I'll be able to walk down the street, and let's say, I'm walking past a restaurant. I'll turn, I'll have my lenses on, and I'll be able to read the menu and I'll be able to see, they have the item I want, which I didn't think they did have, and it's still in stock. I'm going to walk into that restaurant and sit down and have dinner.
It's about taking... It's also about creating fun experiences. I think, most of the static world is quite boring, but think about what we will be able to do. And the great thing about augmented reality is, everybody can experience it at the same time. So for example, Disney just did a deal with Snapchat, where, if I'm walking through Disneyland today and I'm wearing my little Snapchat lenses, little animated Mickey could walk right up next to me and say, "Happy birthday, Duncan, have a nice day." Wow, what fun?
MH: But this isn't the kind of experience that a CSP is going to create. This is something that requires partnerships. If you were an AR company, how would a partnership with a CSP look to you?
DW: Well, they're the ones that enable it. Here's the thing, before 5G, 4G, 3G, wherever we were, there was only a limited amounts of spaces where I could create that experience for my consumers. But now what 5G is going to enable brands to do... Let's say, I'm Starbucks. Right? I have X amount of locations, but you've got to come find me. Oh, but I don't want to come find you. I'm a consumer. I want you to come to me, but you can't today. Well, you can with 5G, because I can create a partnership with, I say Starbucks again, but maybe that's not the right example. But now, 5G will enable that brand by partnering with the CSPs to actually come out and touch and feel, and play with their consumers wherever they...
So, for example, if I want to meet Mickey Mouse today, I've got to go to Disneyland. I'll bet you within three or five years, using augmented reality and partnering with CSP and 5G, if I want Mickey to come into my living room and wish my son or daughter happy birthday through AR, 5G will enable that. And that is a monstrous opportunity for brands, and a monstrous opportunity for CSP.
But, stop asking the question, how might we make more money? How might we enable the greatest consumer experience? Build that. And if you create the greatest consumer experience using 5G in partnerships with companies that could bring intellectual property and AR into the living room of their consumers, you will enable brands to touch consumers 365 days a year. That is a monstrous monetization opportunity. But don't think of it that way. Ask yourself, how might we create the most amazing consumer experience? If you start there, the money will follow.
MH: What are some of those stumbling blocks on the road to success when you partner with any given organization on creating that ultimate experience? What are some of the things that a CSP needs to be aware of, when they start building these partnerships that they previously never did?
DW: I think... Well, I'll reverse the analogy. When we used to have ideation sessions on behalf of all our partners, we used to sit there and have ideas for other big brands. And then we would go in and pitch them to the other brands. And the other brand would say, "But that doesn't work for me." You're like, "Hmm, let's invite them into the brainstorm." Why not? Why not have the brainstorm with these partners at the table. You don't know where the answers are. They don't know where the answers are, but together, you can create some amazing ideas.
But I think it's just this, my idea, type stuff. It's got to be our idea. When you're inside a big organization with lots of hierarchy, lots of approval levels, lots of constituents, lots of new partners to bring on board, the moment you can transform that power of, my idea, to, our idea, is the moment you accelerate its opportunity to get done. There is a tool from the world of improv that is amazing in terms of just transferring that power of mine to ours. And I think by, I suppose, long story short, bringing your partners in much earlier in the process, will be a good place to start.
MH: It's interesting, you bring up the world of improv. And one of the most important tenets of a successful improv moment, is when someone throws you an idea, you don't say, "No." You say, "Yes." But you don't just say, "Yes.", you say, "Yes, and."
MH: For some within the industry, that's not a muscle that they're accustomed to flexing.
DW: No, but here's the thing. Look, the post COVID world is... the changes that we've seen in our own lives in the last 12 months, and the changes we're going to see... We say the biggest barrier to innovation, is time to think. It isn't. The biggest barrier to innovation, is our own river of thinking, our own area of expertise, our own experience. And my role, certainly in the last few years, has been to enable organizations to stop thinking the way they always do and give them permission to think different.
MH: How difficult has that been in the past for you? Tell me about that experience of giving people the tools and the power necessary to innovate, when these were not tools that they ever had before?
DW: Yeah, but it's... No, they didn't have them before, and that's why they welcome them now, because we're all being told to innovate. We're all being told to think differently, but we don't know how. And it's about giving people a set of simple tools they can use to stop thinking the way they always do and give them permission to think differently.
If you think about the next decade ahead, we haven't touched on artificial intelligence yet. The editor of Wired Magazine stood up at a conference next to me, just before COVID, and estimated 30% of the jobs in North America will be eliminated by AI in the next decade. Hmm. So how will you or I compete with that? Well, believe it or not, with the very things with which you were born. You were born a child. You didn't play with a toy, you played with a box, until you went to school and the teacher told you to stop... to color in between the lines. And they were challenging your creativity from a very early age.
You used to ask, "Why? Why? Why? Why? Why?" Then you went to school, the number one killer of curiosity, and you were told to stop asking why, because there's only one right answer. Believe it or not, the insight for innovation comes on the fourth or fifth, why, and not the first, why. And today, our data only goes as deep as the first, why.
We're all born with amazing intuition. You have a hundred billion neurons in our first brain, we have a hundred million neurons in our second brain, which as consumers, we make most of our decisions when we say, we went with our gut. And we all have an amazing imagination. My dream every night that England will win a football game on penalties, but that's not going to happen anytime soon.
I believe creativity, intuition, curiosity, and imagination will be some of the most employed skillsets in the next decade, simply because they will be the hardest and last to be programmed. They are in each within all of us. It's just about giving people the tools to remind them that they are far more creative than they thought they were, and giving them the tools to think creatively again.
MH: You said, "Innovation happens at the fifth, why, not the first, why." How so?
DW: Because the insight for innovation comes on the fourth or fifth, why, not the first one. If I were to run a data survey today and ask everybody listening to this call, why they go to Disney World on holiday? The number one answer I'll get is, "I go for the new attractions and the new rides." Oh, well that tells me to spend a couple of hundred million dollars on capital investment strategy then. Let's go.
"Well, hang on a minute. Why do you go for the new rides?" "Well, I don't actually. I actually go for Small World." "Why on earth do you go for a Small World?" "Well, I remember the music." "Why the music?" "Well, it reminds me, every summer we used to go with our mum." "Why is that significant to you? 20 years later." "Oh, I take my daughter now." Boom. There's your insight for innovation. It's got nothing to do with a capital investment strategy whatsoever, and everything to do with that person's personal memory and nostalgia.
But if you stopped at the first why, you'd have spent 200 million dollars on something that person didn't want in the first place. And that is all about spending time with your consumer, and not just relying on your data. Because believe it or not, your competition has exactly the same data as you do, word for word, line for line. So how are you going to find that one insight for innovation? By actually looking where your competition isn't. And more often than that, that is in the living room of one of your consumers.
MH: So if monetization follows innovation, Disney maximizes its return on investment. How does it squeeze every possible penny out of the consumer, once it's taken that innovation approach?
DW: Well, I'm not very comfortable with squeezing every penny, but-
MH: How would you describe it?
DW: I would describe it as, fully immersive entertainment experiences. Now, but let me... So no, it's a fair question. Look, if I had asked the... If July 17th, 1955 at 9:01 AM, when Walt opened the doors to Disneyland, he said, "We won't have any customers. We'll only have guests." Now, think about how you feel when you're treated as a customer. Think about how you feel when you're treated as a guest. He said, "We won't have any employees. We'll only have cast members. They'll be cast for a role in the show. They'll wear a costume, not a uniform. They'll work on stage, not backstage."
Well, with that simple re-expression of the relationship between the employee and the customer, as the cast member and the guest, Walt had created a level of hospitality that's never, ever, ever been replicated since. If you entertain me, if you create fully immersive entertainment experiences, your revenues will rocket, and you will monetize. But if you only worry about your quarterly results, you will only iterate. And in a post pandemic world, companies that iterate are going away. And I think it's time for companies to rethink, "Are we a telecommunications business?" No, you're not. You're in the entertainment industry. Get on with it.