From LATimes.com:

Seeing parallels in Disney, P&G

The media giant's new chairman says both companies have global aspirations and are committed to their respective missions.

By Joseph Menn, Times Staff Writer
March 1, 2007

John Pepper lives outside Cincinnati, has few Hollywood connections and rarely speaks to the press.

That gives the new chairman of Walt Disney Co. something in common with Chief Executive Robert Iger: He prefers keeping a low profile.

But The Times recently spoke to Pepper about his early impressions of Disney and his forthcoming book from Yale University Press that provides lessons from his lauded career as chief executive of Procter & Gamble Co., the country's biggest consumer products enterprise.

The collegial Pepper may be best known for his work in expanding P&G internationally and for returning to the company as chairman for two years starting in 2000 after it stumbled. He is now CEO of the National Underground Railroad Freedom Center, a museum celebrating the fight against slavery.

An early draft of his book, "What Really Matters: Service, Leadership, People and Values," provides a glimpse of one of Disney's most dramatic moments as a public company: the contentious board decision to buy Pixar Animation for $7.4 billion in stock.

Pixar CEO Steve Jobs had clashed with Iger's predecessor, Michael Eisner, and had explored moving the distribution of Pixar films to rival studios. But to all outward appearances, the rancor evaporated after Iger ascended.

But the account in Pepper's book of his first board meeting suggests that despite the thaw in relations, Pixar was threatening to take its business elsewhere if Disney didn't buy it outright.

"Disney had had a productive, long-term relationship with Pixar, but in one way or another, that was about to end either with Pixar's acquisition, or with Pixar going its own way," wrote Pepper, 68.

Disney did not return several phone calls Wednesday seeking comment.

But Pepper elaborated on Pixar and other matters in an interview, excerpted below.

You said the relationship with Pixar was going to end one way or another. That might have taken the form of a distribution deal with another studio, or someone else buying Pixar, not definitively one thing or another?

It wasn't definitive. What was in my mind, because of what Bob had said, is that we needed the creativity of Pixar, and the way for us to be sure that we could get it was to make the acquisition.

Why did you pick Disney, and why the additional commitment as board chair a year later?

I was getting off boards, not getting on them, and I was invited to consider this by a good friend, [National Basketball Assn. Commissioner] David Stern. I said I'd think about it and meet Bob Iger, and I really liked Bob. He's the real deal. I had no idea it would be suggested that I be chairman.

You write about ethics and the importance of doing the right thing, but you don't talk much about how boards should conduct themselves. What are your thoughts?

My first thought is the overwhelming importance of the right CEO. It's so obvious but one must mention it. It's terribly important there be real, open communication between the board members and the CEO and chairman, that there be that kind of opportunity for tension, with respect. It's critical to be sure that there is a strategy for long-term growth that's realistic, that's robust. And lastly, I would say that there be a real succession plan. Where I've seen companies get in trouble it's usually because of a CEO-succession miss.

What are the similarities between P&G and Disney?

The biggest similarity would be in the commitment that's deep, deep in the company to the mission. In P&G, this idea of improving consumers' lives, of making a difference in consumers' lives through our brands, is really deep. It drives pride, it drives a sense of accountability.

This sense of mission at Disney, whether it be in the park, where you're really going to make this family happy, or on ESPN, where you're going to make those guys and some gals love every show, it starts with something like "What we're doing is really worthwhile, and it's important and it can make a difference."

Then they both have global aspirations. P&G has been at that a lot longer. The Disney name is beautiful, it's out there. It's just the spread of the business is not there.

You devoted an entire chapter to diversity. How do you assess Disney?

Disney has a huge commitment to it. We're going to have the first review I've had at the board level of diversity.

Bob Iger would be the first to say there's still a lot to be done. There's enormous diversity in gender and enormous diversity in thinking style. There's still more to be done in terms of race.

One of the more striking things to me in your book's recounting of international efforts was P&G's willingness to come up with entirely new business models when necessary. Is that something that Disney is doing or might need to do more of?

In China, we needed to adapt for the local culture, local desires. Disney will certainly need to do that. When people leave for vacations in China is different than in the U.S. One is going to have to adapt to the different habits and practices, to look for attractions that have themes that relate to the history of China.

Another parallel is the issue of cannibalization. Is that something you think about regarding new ways of delivering content?

Consumers are going to go wherever they want to go. You either meet the need or someone else is going to meet the need. If we're going to let people download movies over iTunes, you ask, is that going to cannibalize what is happening in selling DVDs through Wal-Mart or Target? You have to ask the question. But the worst thing is to freeze.

You write about the importance of letting the consumer decide. Does Disney do more of that than people realize?

The comment I could make on this would be mainly limited to the parks, and there, the amount of research that's done is phenomenal. They're getting reactions to every ride, getting reactions to the overall experience. They're learning from it.

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