What do YOU believe?

Belief – An opinion or judgment in which a person is fully persuaded.00

Did you know that there are 41,000 different Christian denominations or ‘sects’ that can be categorized into five major ‘families’ of churches?

  • Catholic Church [50%]
  • Protestant and Anglican churches [18%]
  • Eastern Churches [12%]
  • Pentecostal churches [12%]
  • Evangelical (non-Pentecostal) [8%]

Besides these researchers have identified that more than 2/3rd’s of the rest of the world that have faith in non-Christian religions: Screen Shot 2015-04-13 at 3.19.20 PM

And within each of these non-Christian religions are numerous sects and segments. 3

Sometimes I smile when I receive a social media post or response from someone claiming that they do not believe in religious fables whatsoever, but only in science. Did you know that “science” too could be categorized as a “religion” in terms of its foundational beliefs or underlying reliance, confidence or credence? This particular religion is called “Secular Humanism” and is defined as “the philosophy or life stance that embraces human reason, ethics, and philosophical naturalism while specifically rejecting religious dogma, supernaturalism, pseudoscience, and superstition as the basis of morality and decision making.”4

Of the roughly 7 billion people in the world, the number of combinations and permutations of specific sects or sub-sets of any faith must be well over a million. So when someone says “I believe in God,” I always think of the (Bible) Scripture (James 2:19) that says, “You believe that there is one God? Good! Even the demons believe that — and shudder.” Belief in God, or an alleged belief in God may start an interesting conversation, but that is all, it is only a start, not an understanding.6

Social media is full of vitriol when it comes to subjects such as politics and religion. I am guilty myself. A Muslim friend of mine stated, “I believe Jesus was a good man and a prophet.” I responded by saying, “Impossible – if you read His claims He was either a liar, insane, or the Son of God; but ‘good man’ or ‘prophet’ is inconsistent with everything He said about Himself.

I was immediately ashamed of my insensitive response and began to reflect upon what I today consider an acceptable way to engage people in what we, and they, believe. Here is what I have concluded:

  • If someone asks about your faith, answer him or her politely and with respect.
  • If someone asks you about the “why” of your faith, answer him or her with your reasons, but don’t go into too much detail or send them a link to your favorite faith site.
  • If someone shares their faith with you, respect them, because after all, they may turn out to be right and we may turn out to be wrong!
  • If someone clubs you over the head with the “science” of evolution and the futility and insanity of “religion,” treat them with dignity and offer friendship. They may someday convert you, or you may convert them, but that should never be the primary reason for friendship. Friendship should be based upon the fact that you both like one another.
  • Do not debate. Debate has as its engine arrogance and pride. The reactions you will get are more and different questions, further debate that begins to ‘rathole,’ anger, intolerance or ridicule, none of which you set out to receive in the first place.
  • If you believe in God, love your neighbor as yourself, and if they reject your faith, what do you do next? Pray. And then continue to pray.7

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Did Jesus Claim That He is God?

Did Jesus Claim That He is God?

0Only God can forgive sin. When Jesus did so the religious rulers were incensed. Yet He pointed out it would be easier to heal the lame man on mat than to forgive sins. He said this because He knew the suffering, humiliation, agony and death that would be required to forgive men their sins. (Mark 2:5). No man has ever raised someone from the dead as Jesus did when Lazarus had been dead several days and ensconced in his tomb (John 5:25-29). More importantly, directly and to the point, He claimed to be honored as God (John 5:18, 23) as well as to be equal with the Father (John 10:30).

John 8:58 states, “Jesus said to them, ‘Truly, truly, I say to you, before Abraham was, I am.'” This “I Am” reference is made in connection with Exodus 3:14 when God revealed His name to Moses at the burning bush as “I Am.” Jesus’ statement is a claim for the deity of Christ.

1Jesus claimed to be Yahweh God, the same God of Israel from the Old Testament. This included His claim to have eternal glory with the Father (John 17:5), His claim to be the first and the last (Revelation 1:17), His claim to be judge of all humanity (John 5:27), His claim to be the Good Shepherd (John 10:11), His claim to be the Bridegroom (Matthew 25:1; Isaiah 62:5), and His claim to be the light of the world (John 8:12; Psalm 27:1).

Jesus also claimed to be the Messiah God. This is evident in many of the titles attributed to Him in the Old Testament that are referred to in the New Testament. These include reference to Jesus as God (Psalm 45:6 and Hebrews 1:8), Lord (Psalm 110:1 and Matthew 22:43-44), Ancient of Days (Daniel 7:9 and Mark 14:61-64), and as Messiah (John 4:26). These references affirm the biblical deity of Christ.

2Further, Jesus accepted worship as God. Though the Old Testament commanded not to worship anyone but God alone, Jesus accepted worship on many occasions. Some of these included the healed leper who worshipped Him (Matthew 8:2), the ruler who knelt before Jesus after his son had been healed (Matthew 9:18), the Canaanite woman (Matthew 15:25), the mother of James and John (Matthew 20:20), and a demon-possessed man (Mark 5:6). The disciples even prayed to Jesus (Acts 7:59) and in His name (John 14:6; 15:7).

And lastly, Jesus’ followers recognized Jesus as God. They called Him God on multiple occasions (John 20:28; Colossians 2:9), referred to Jesus by other names used only of deity, such as Savior of the world (John 4:42), and prayed to or worshiped Jesus as part of the Godhead (Matthew 28:19; 2 Corinthians 13:14). John taught He was with God in the beginning as “the word” and that “the word was God” (John 1:1).

3While the New Testament never makes the direct statement “Jesus is God,” it is clear that He is referred to as deity in a variety of ways. Colossians 2:9 confirms, “For in him the whole fullness of deity dwells bodily.” (See also Philippians 2:6). Those who claim Jesus never referred to Himself as God deny many clear statements in Scripture (such as John 14:6). The deity of Jesus is biblical. Jesus is God, the second person of the Triune Godhead, consisting of Father, Son, and Holy Spirit.

If you have a red letter Bible, indicating Jesus speaking, make note of the following if you’re not yet convinced that Jesus is indeed God:

4“Your father Abraham rejoiced as he looked forward to my coming. He saw it and was glad.” The people said, “You aren’t even fifty years old. How can you say you have seen Abraham?” Jesus answered, “I tell you the truth, before Abraham was even born, I Am!”

Jesus shouted to the crowds, “If you trust me, you are trusting not only me, but also God who sent me. For when you see me, you are seeing the one who sent me. I have come as a light to shine in this dark world, so that all who put their trust in me will no longer remain in the dark.”

“No one can come to the Father except through me. If you had really known me, you would know who my Father is. From now on, you do know him and have seen him!” Philip said, “Lord, show us the Father, and we will be satisfied.”Jesus replied, “Have I been with you all this time, Philip, and yet you still don’t know who I am? Anyone who has seen me has seen the Father! So why are you asking me to show him to you?”

5“…that you may know that the Son of Man has authority on earth to forgive sins”–he then said to the paralytic–“Rise, pick up your bed and go home.” And he rose and went home. When the crowds saw it, they were afraid, and they glorified God…”

He said to them, “You are from below; I am from above. You are of this world; I am not of this world. I told you that you would die in your sins, for unless you believe that I am he you will die in your sins.”

“For as the Father raises the dead and gives them life, so also the Son gives life to whom he will. The Father judges no one, but has given all judgment to the Son, that all may honor the Son, just as they honor the Father.”

Jesus said to her, “I am the resurrection and the life. Whoever believes in me, though he die, yet shall he live.”

“My sheep hear my voice, and I know them, and they follow me. I give them eternal life, and they will never perish, and no one will snatch them out of my hand.”

“For it is my Father’s will that all who see his Son and believe in him should have eternal life. I will raise them up at the last day.”

“The Father and I are one.” Once again the people picked up stones to kill him. Jesus said, “At my Father’s direction I have done many good works. For which one are you going to stone me?” They replied, “We’re stoning you not for any good work, but for blasphemy! You, a mere man, claim to be God.

Jesus replied, “I am the bread of life. Whoever comes to me will never be hungry again. Whoever believes in me will never be thirsty.”

Jesus said to him, “I am the way, the truth, and the life. No one can come to the Father except through me.”

“I am the light of the world. Whoever follows me will not walk in darkness, but will have the light of life.”

“If you abide in my word, you are truly my disciples, and you will know the truth, and the truth will set you free.”

“I came that they may have life and have it abundantly. I am the good shepherd….My sheep hear my voice, and I know them, and they follow me. I give them eternal life, and they will never perish, and no one will snatch them out of my hand.”

“…he who loves me will be loved by my Father, and I will love him and manifest myself to him…. If anyone loves me, he will keep my word, and my Father will love him, and we will come to him and make our home with him.”

“…behold, I am with you always, to the end of the age.”

6Even though you will not find certain words in the Bible (trinity, rapture), nor certain unequivocal claims, you must take the preponderance of evidence to determine what is meant when you compare Scripture upon Scripture and examine the totality of the book from Genesis through Revelation. There is indeed a triune God, three distinct persons in the Godhead. When Jesus was being baptized, the Holy Spirit descended upon Him as a dove while His Father spoke from heaven, “this is my beloved Son in whom I am well pleased.” The evidence is persuasive and can be summed up in this: “I have come in the volume of the Book as it is written…even so Lord Jesus, come quickly…I am the Alpha & Omega, the Beginning and the End. Our King of Kings and Lord of Lords will soon be returning and will rule and reign for 1,000 years on earth from Jerusalem.

Piling on President Obama

Economy.

RecessionWhen President Barack H. Obama first took office in January 2009, the financial markets were poised for a monumental collapse. The first to go – and indeed the federal government let them go- was Lehman Brothers, at the time the 4th largest investment bank in the United States. Two years earlier price-earnings (PE) ratios for the overall stock market were 25 times, compared to an historical average of about 16 times. By March 2009, that same PE would sink to 13 times, about half the value of the stock market was wiped out and within a few more months unemployment would rocket to 10%. This was not the internet bubble that popped in 2000, this was far more pervasive, before it would be over the world’s financial markets, especially liquidity, willingness to borrow and regulatory scrutiny, would mark one of the most painful economic periods since the Great Depression.

During World War II, the French were famous for blaming all sorts of inefficiencies and shortages on the war with the all-purpose excuse “C’est la guerre.” Obama’s version of that is “C’est le Bush Administration. He became President, not King, so his ability to either bring good or harm to the problems he faced in 2009 were limited to a) Ability to formulate effective, affordable, durable policy that hopefully could be implemented and impacting quickly, and b) Ability to cobble and compromise in a bi-partisan nature with Congress, while ensuring whatever plans got developed they could stand up to Judicial scrutiny. He tackled the first with fervor, but the second requirement was left undone and only became worse. Rather than building consensus, President Obama chose the unfortunate posture of scolding. He scolded the banks. He scolded Congress. He scolded businesses and others saw all of his scolding as pontificating and alienating.

Unemployment TrendIn 2009 the national debt stood at approximately $12 trillion, representing 83% of GDP. But 2012 the national debt would become approximately 100% of GDP and remain there to the present day, a staggering $18 trillion in national debt. Most of the increase was attributable to the recession and the decrease in income tax receipts, however, in 2012 Obama agree to almost $1 trillion in defense spending. Rather than cutting back on spending both the Federal Reserve (Fed) and the Federal Government ratcheted up financial stimulus to hopefully stave off a worsening economic recession. Somewhat like pushing on a string liquidity remained intransigent, creating an unwillingness of banks to lend without the most pristine of credit history and collateral.

As long as unemployment remained high and manufacturing capacity utilization remained low, there was no inflation impact to flooding the money supply, a point where economists – throughout the years – disagreed sharply. Now that unemployment is closer to historical averages and manufacturing capacity utilization likewise, continued government and Fed tinkering will likely and finally create inflation. Indeed the 30-year Bull Run on long-term bonds appears potentially catastrophic once interest rates are finally left alone to float with the market. This sets up a conundrum from a policy standpoint, that is, how to unwind the combination of trillions in assets on the government balance sheet and also allow interest rates to rise without a new albeit somewhat different economic collapse.

Health Care.

ACAThe Affordable Care Act (ACA) of 2010 has enabled 11.7 million Americans to obtain medical insurance, three-quarters of them on the federal exchange, which finally seems to be working reasonably well. The Congressional Budget Office forecasts that by 2022 fully 33 million will be insured via the ACA process. On the face of it a good thing since prior to insurance these people would avoid going to the doctor until so sick they would show up at the emergency rooms of hospitals. Unable to pay such an expensive bill, the bad debt would find its way into the overall costs for everyone who was buying health insurance.

For those signing up on the federal exchange, healthcare.gov, some 87 percent received federal subsidies to help them afford the monthly premiums. The subsidies totaled $263 a month, on average, leaving consumers to pay $101. These subsidies are at the heart of the next battle for the administration. The Supreme Court is currently deciding whether those signing up on the federal exchange are eligible for subsidies.

Insurance companies can no longer discriminate on the basis of “pre-existing conditions.” In addition, insurers must spend 80-85% of every dollar they receive on medical care (instead of advertising, administration, etc.). The law is expected to spend a bit over $1 trillion in the next 10 years. The law’s spending cuts — many of which fall on Medicare — and tax increases — are expected to either save or raise a bit more than that, which is why the Congressional Budget Office estimates that it will slightly reduce the deficit.

War.

WarThe wars begun in 2001 have been tremendously painful for millions of people in Afghanistan, Iraq, and Pakistan, and the United States, and economically costly as well. Each additional month and year of war adds to that toll. According to the Watson Institute for International Studies, some of that toll can be summarized as follows:

  • 350,000 people have died due to direct war violence, and many more indirectly in addition to indirect deaths from the wars, including those related to malnutrition, damaged health infrastructure, and environmental degradation
  • New disability claims continue to pour into the VA, with 970,000 disability claims registered as of March 31, 2014. Many deaths and injuries among US contractors have not been identified.
  • 7 million people have been displaced indefinitely
  • Erosions in civil liberties at home and human rights violations abroad have accompanied the wars.
  • The human and economic costs of these wars will continue for decades, some costs not peaking until mid-century.
  • The US federal price tag for the Iraq war — including an estimate for veterans’ medical and disability costs into the future — is about $2.2 trillion dollars. The cost for both Iraq and Afghanistan/Pakistan is going to be close to $4.4 trillion, not including future interest costs on borrowing for the wars.
  • While it was promised that the US invasions would bring democracy to Afghanistan and Iraq, both continue to rank extremely low in global rankings of political freedom, with warlords continuing to hold power in Afghanistan with US support, and Iraqi communities more segregated today than before by gender and ethnicity as a result of the war.

direct-deaths-multiPresident Obama has not only ended these two wars, though some say too quickly, but has steadfastly refused to take America headlong into new wars. This has led some to conclude that the U.S. is no longer viewed as a leader and a superpower. Yet it has also had the effect of getting other countries to begin to step up with their resources rather than always expecting the United States to save the day. For far too long, most countries have enjoyed national savings resulting from an artificial underinvestment in military capability. The unvarnished truth is that if China decided to take Taiwan tomorrow the United States would not go to war with China. This new reality changes nations’ policies toward armament as well as treaties and economic ties, rather than expecting the United States to protect them as was the case with Kuwait and Desert Shield.

Religion and Terrorism

ISISTerrorism has been around a very long time. As a little boy watching the 1972 Olympics I was shocked to see the terrorist attack on athletes from Israel. Terror can be organized abroad, it can also be localized; it can be large and well-funded groups and also lone wolf attacks almost no one can anticipate. Generally, though not always, terrorists claim their motivation is religious, that is, God has determined that they must kill in order to bring about change that God desires. This can result in generalizations from the terrorists to larger religions, turning neighbor against neighbor in fear and outrage. When the Japanese struck Pearl Harbor, setting off U.S. involvement in World War II, we set up “internment camps” for the Japanese Americans, primarily arising from this type of fear.

Although Obama has presided over the killing thousands of terrorists, most notably Osama bin Laden, many in the United States demand that he take a more definitive and strong stance against Islam, claiming jihadist ideology is an inherent doctrine in the Koran, Islam’s holy book. The President has resisted, seeking to differentiate peaceful Muslims from the perverted ideological claims made by groups such as ISIS. The extreme reaction to the President’s view has been to accuse him of “hating America,” “sympathizing with Muslim terrorists,” and perhaps even being a closet Muslim himself. Some in Congress have even gone on record making these sorts of accusations. The combination of Obama’s resistance to new wars in far-flung places, along with his desire to allow Muslim’s in the U.S. and the world to freely practice their religion unfettered, has had the effect of creating a divisive nation at home, with very strong opinions on both sides of the issue.

Summary.

Report CardWhile this summary assessment is concerned with President Obama, much could be written about the inability of the Congress to be effective and productive as well. That is a subject for another paper. Overall the President has done poorly in terms of building consensus, coalitions, compromise and goodwill among federal government and the general population. In terms of the economy, it appears the Keynesians were right about the so-called “liquidity trap.” As Germany demands austerity (in Greece for example), Europe remains mired in recession even though the example of stimulus in the United States appears to have cut our economic suffering short and shallow. How to unwind the tinkering that has been done will be a daunting challenge; indeed as interest rates finally rise we should expect economic repercussions from asset devaluation (long-term bonds) to high interest payment on our burgeoning national debt, severely impacting the productive use of government income tax receipts.

The ACA had a difficult start and will almost certainly require modifications. Getting millions insured has been accomplished, likely a good thing in the long run. But the jury remains out in terms of overall long-term impact on health care costs and freedom each person had to choose their health care providers. Several more years will be needed before any conclusions regarding efficacy can be written with reliable facts and figures.

The cessation of the wars and the resistance to enter new wars has certainly saved lives, disabilities and dollars. The somewhat new policy has also had the effect of getting other countries to step up their resource commitments toward defending their own interests, certainly an important step in the right direction. But increased investment on weaponry all around the world can also mean another inevitable result: we can expect more wars.

Every president has had a mixed record of accomplishments and failures. No president is ever able to take full credit for great accomplishments, nor should he take full blame for failures. Far too many variables outside his control impact what happens to the United States and the rest of the world. Given all of what President Barack Obama has managed to do, however, it would be unfair to grade him as severely as many are prone to do today. To say he hates the country, supports terrorists, is a racist and a socialist is to overstate the true picture. To say he worked hard and made some progress while doing a poor job at building consensus is a more even-handed approach in terms of grading his performance. The world is a dangerous and violent place, how we navigate the future will require consensus but it will also require tolerance and compassion, of which we seem to have less and less of lately. compassionRodd signature

Time to give up on Christianity  

1I know you dearly want to hold on to your fairy tale, mainly because it just sounds nice. But there is no God, and there is no Savior. Worse, the Christians are the main source of all of the problems in the world today. From the corruption in the church to the Crusades, the only things Christians have managed to do in their imposition of their unreasonable and unscientific worldview is to wreck havoc on the rest of us. But I won’t leave you alone; I won’t orphan you so that you have no security blanket. I am here to offer you several excellent and acceptable alternative worldviews that can be embraced; all having far more merit and credence than does Christianity.

2First, and probably the best choice, is to reject the notion of a celestial dictator altogether. The brightest among us, scientists and philosophers alike, are learned and intelligent enough to have determined that no God could possibly exist, especially the God of the Bible. Beyond a shadow of a doubt, science has proven that as a fact. The Bible is full of errors, inconsistencies, and fables such as Jonah being swallowed by a large fish, prophets calling down fire, a worldwide flood, the Red Sea being parted, and the craziest notion of all: that God would become a man and leave His so-called celestial throne only to be humiliated, taunted, tortured and executed. What kind of King would allow such a thing as that? Is that your idea of an all-powerful God? It is certainly not mine.

3But if you are weak and atheism is not your cup of tea, there are several reasonable religions from which to choose. If I were a weaker vessel as you may be, I would adhere to Islam. The main reason is that people are fighting for a cause, and that always brings out the heroic in men. If you are brave enough and strong enough to annihilate the enemies of your God, all of your friends and family, indeed the world will see you as a man’s man, someone willing to stand up to evil without fear of death. But if Islam doesn’t quite fit your idea of a religion you can endorse, then I can recommend several other good ones: Hinduism. At least Karma you can control. Your good works can outweigh the bad stuff you may have accidentally done, right? Or any numbers of groups that are not foolish enough to think that an eternal Son of God would become a man in order to save us…save us from what exactly?

4Lastly, if your parents are putting pressure on you – to attend their Christian church — and you love them too much to hurt their feelings – you can certainly go to your church, I can’t stop you. But don’t keep calling things that are good – evil, when in fact it is the reverse. Same sex marriage is as right and acceptable as marriage between a man and a woman. Stop discriminating! Aborting an unborn child is the right of every woman to have her say and control over her own possession: her body. And stop – please stop – dangling people over the pit of some fictitious place called hell. Do you really think a loving God, if He did exist (which I personally declare unequivocally that He does not exist)… would He send people to a place of eternal suffering? Do I look stupid to you?

6So get your life in order. You do not need God. You need you — and you alone. Stand strong, be positive and optimistic. Motivate yourself to become all that you know you can be if only you will conquer your fears and step out, never accepting defeat, never quitting. Be the master over your own destiny, be a man! The fact of the matter is this – and I leave you with this one thought to ponder – if there really is a God, guess who He is? He is you my friend, yes YOU!

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Sincerely yours,

 

Lucifer, Son of the Morning, Anointed Cherub, Prince of the Air.

The REAL reason Sony canceled the release of the movie “The Interview”

The REAL reason Sony canceled the release of the movie “The Interview”

1When Sony’s decision was aired throughout the media yesterday most people thought it was a result of a fear of fomenting terrorist acts. Japan, as well as South Korea and other regional nations well know that the capability of North Korea carrying out terrorist acts on U.S. soil is remote. The regime can make a lot of noise and boastful claims but since 1953 has this country ever been responsible for terrorism in other parts of the world? They are an insular, backward, starving country that will someday see regime change without a shot being fired. South Korea well knows that the threat posed consists mostly of empty rhetoric, oft-repeated claims of setting nations on fire or worse. It never happens. It never will. They are over 60 years past battle-hardened testing, and although hacking might be a hobby for some there, war is not going to be there strong point.

2So just why then did Sony pull this film – a move that will likely cost them at least $90 million in an unfavorable impact to their bottom line? The reason is a bit more subtle. In the past 10 years Japanese companies have been battered by lawsuits originating in the United States. Take a look at a few of the lawsuits that have originated in the United States that were aimed at Japanese companies:

  1. Norman v. Honda

The parents of Karen Norman sued Honda when their daughter died from not being able to escape from her Civic after backing into Galveston Bay. At first, the case sounds somewhat legitimate, until you learn the rest of the facts. For example, the Normans sued Honda because their daughter was unable to hit the emergency release button on the seatbelt. However, she failed to hit the button most likely because she had a blood-alcohol level of 0.17 and shouldn’t have been driving in the first place. The incident happened at 2 a.m. with passenger Josel Woods in the passenger seat. Woods was able to swim to safety. Here’s the kicker: the jury actually awarded the parents with just 25% of the damages considered contributorily negligent. Thus, the Normans basically sued and won against Honda in spite of their daughter’s obvious irresponsibility for driving under the influence. (See more at: http://www.businessinsurance.org/10-ridiculously-frivolous-lawsuits-against-big-businesses/#sthash.f0tZxVuk.dpuf).

  1. The feds reached a $1.2 billion settlement with Toyota Motor Corp. after a four-year criminal probe into the giant Japanese automaker’s handling of a spate of sudden accelerations in its vehicles. The investigation focused on whether Toyota was honest in reporting problems related to the unintended-acceleration troubles, which led to multiple accidents and fatalities. Toyota faces hundreds of lawsuits over the acceleration problems, which gained public attention after the deaths of a California highway patrolman and his family that were reportedly caused by the unintended acceleration of his Lexus, which is made by Toyota.

Starting in 2009, Toyota issued recalls for more than 10 million vehicles for various problems, including faulty brakes, gas pedals and floor mats. From 2010 through 2012, Toyota paid fines totaling more than $66 million for delays in reporting unintended-acceleration problems.

The National Highway Traffic Safety Administration never found defects in electronics or software in Toyota cars, which had been targeted as a possible cause by many, including some experts.

  1. Takata Prepares To Take $440 Million Hit From Airbag Recall

Reuters reported that Takata airbags, which found their way into 4 million Hondas, Toyotas, BMWs and other cars worldwide, will likely result in a major loss for the company going forward. This one is just the latest.

3There are many more examples of U.S. based lawsuits against Japanese companies that in spite of flimsy, scant and even highly questionable evidence, have resulted in monumental judgments the Japanese companies have had to pay in order to continue to do business in the United States. Japan is a country lacking natural resources, unlike North America, Africa, China and South America. They must export in order to survive. So pay they will.

If “The Interview” was released into U.S. theaters on Christmas Day, and so much as an unrelated incident of harm occurred to any movie-goer, Sony would be sued and sued for a lot of money. The plaintiffs would likely prevail given the fact that Sony had duly been provided ample warning that such a terrible outcome could be expected.

4The U.S. is a litigious society. If you are scalded by hot coffee you purchased from McDonald’s you can make a lot of money by suing. In fact, Americans spend more on civil litigation than any other industrialized country, according to a study in the Economic Journal – and twice as much on litigation as on new automobiles.

So just why did Sony pull their upcoming film “The Interview?” Had they not, they anticipated far greater than $90 million worth of settlements from lawsuits blaming them for anything even remotely connected to someone getting hurt in a U.S. movie theater while watching this particular movie. The decision was based upon a cost-benefit model, and the business decision was probably a good one.

Is Education to Blame for the STEM Skills Gap?

1Up until about 2014 virtually all of the research related to STEM skills shortages (especially) in technology companies was done quantitatively, with the instrument of choice the survey method and the respondents that were selected employers, businesses, technology firms. The research was conducted by government organizations, business associations and all of the large consulting firms. Pick any one of these studies and you will find consistent agreement in the methodology (quantitative), the instrument (survey) and the respondents chosen (employers). Some of the studies were conducted by Accenture (2012), Boston Consulting Group (2013), Congressional Budget Office (2011), Deloitte (2011), Manpower (2012), McKinsey (2012), President’s Council of Advisors on Science and Technology (2012), Price Waterhouse Coopers (2012), and the US Chamber of Commerce (2006). The conclusions were all the same, that is, that the education system was failing to provide STEM-qualified job applicants to industries that needed these skills in order to grow and innovate.

2Along with the survey conclusions, all of which contained high Cronbach’s (alpha) that measure internal consistency, recommendations for how to retool the education system to better inculcate STEM skills in students desiring to enter the workforce were suggested, explained and elaborated upon. Quantitative methods such as these are universally considered scientific; indeed evidence-based, positivist methodologies are only re-examined to the extent that the samples taken were (preferably) random, and sufficiently large enough to yield confidence to at least two standard deviations each side of the mean (95%). The researchers dutifully reported their survey results, along with every confirming statistic to support the validity of their conclusions. Consulting houses piled on to mimic their competitor studies and they all came to the same conclusions. Therein lies the rub.

3The bias lies not in the survey purpose, sample size, or design. The flaw is in the respondents chosen. Although it may seem intuitive to select employers as the respondents – after all, who better to judge the STEM skills it takes to be successful on the job? The qualitative studies that followed these methods have debunked, demystified and completely derailed the validity of the quantitative survey conclusions. Research question: What if employers had an incentive to blame education and the root cause of the problem was actually in the domain and under the control of the employers themselves? How would a researcher conduct a study to determine whether validity exists for such a theory and hypothesis?

4Dr. Peter Cappelli (2014) wrote his dissertation based upon all of these studies, plus a lot of tangential (tertiary) research, mixed in with data from government (Department of Labor for example), education, and industry. Rather than cross-sectional and quantitative, Dr. Cappelli approached the business problem with an historical lens to see how technology companies went from no STEM skills gap to an alleged STEM skills gap over a period of time (longitudinal). Qualitative researchers are criticized for lacking an evidence-based approach. Lacking experimental methodologies, randomized samples well-controlled and quantitative metrics, it is difficult for the interpretative researcher to garner the respect of colleagues in the peer-review process. Research methods have not matured yet to the point of comparability regarding credibility (internal validity), evidence, transferability (external validity), confirmability (objectivity) and reliability (dependability). Yet qualitative research methodologies in the interpretivist tradition, provide far more latitude when many nuanced exogenous variables, changing over the course of time, can bring a “best” persuasive description and explanation for what is going on with the business problem at hand based upon thorough exploratory research.

5The skills gaps surveys utilized skill classifications. Dr. Cappelli, in his research approach asked questions, developed strong inductive and logical support through case examples to answer these questions, then bundled the entire package to illustrate and portray an entirely different set of dynamics that accounted for the alleged STEM skills gaps. Coincident and following his initial research, others (Charette, 2013) have approached the problem with similar tools and questions, the outcome of which has buttressed Dr. Cappelli’s seminal work, laid the ground for new theory, and consequently and likely qualifies Dr. Cappelli’s work as seminal in nature. In simple terms Dr. Cappelli searched the literature and found that problems largely caused by employers themselves were at the root of the STEM skills gap.

Case after case, data upon data, and analysis over time yielded the following results, all well supported by the careful sifting and interpretation of the evidence:

  1. Employers are unwilling to pay market-clearing wages for STEM skilled workers.
  2. Employers have largely abandoned their internal company training programs that were aimed at preparing new recruits for success on the job.
  3. Employers have increased their hurdle rates in terms of inflated educational and experience requirements for jobs that used to be performed by less educated, less skilled workers.
  4. Employers have a vested interest, an incentive to continue their practices above and to push the responsibility and problem solving unto the educational system. For example, these employer claims have the effect of cajoling the government toward a policy of increasing the number of H1-B visas granted so lower compensated STEM skilled recruit can be found in other countries.

References

Accenture. 2012. “Solving the Skills Paradox: Seven Ways to Solve Your Critical Skills Gap.”

http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture-Solving-the-

Skills-Paradox.pdf.

Boston Consulting Group. 2013. “The U.S. Skills Gap: Could it Threaten the U.S.

Manufacturing Renaissance?” https://www.bcgperspectives.com/content/articles/lean_manufacturing_us_skills_gap_co uld_threaten_manufacturing_renaissance/.

Cappelli, Peter. 1995. “Rethinking the ‘Skills Gap’.” California Management Review 37(4): 108- 124.
Cappelli, Peter. 1999. The New Deal at Work: Managing the Market-Driven Workplace. Boston: Harvard Business School Press.

Cappelli, Peter. 2003 “Will There Really Be a Labor Shortage?.”Organizational Dynamic 32(3): 221-233.

Cappelli, Peter. 2012. That Pesky Skill Shortage in Manufacturing. HR Executive. http://www.hreonline.com/HRE/view/story.jhtml?id=534354686.

Cappelli, P. (2014, August). Skill Gaps, Skill Shortages and Skill Mismatches: Evidence for the US. Retrieved from http://www.nber.org/papers/w20382

CBO. 2011. “CBO’s Labor Force Projections Through 2021.” Congressional Budget Office.

http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/120xx/doc12052/03-22- laborforceprojections.pdf.
CVTS 2013. Continuing Vocational Training Statistics. Brussels: European Commission. Http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Continuing_vocational_tr aining_statistics

Charette, R. N. (2013). The STEM crisis is a myth. IEEE Spectrum. Retrieved from http://www.k12accountability.org/resources/STEM-Education/The_STEM_Crisis_Is_a_Myth.pdf

Deloitte. 2011. “Boiling Point? The Skills Gap in U.S. Manufacturing.” Manufacturing Institute. http://www.themanufacturinginstitute.org/~/media/A07730B2A798437D98501E798C2E 13AA.ashx.

Manpower 2012. The Talent Shortage Survey. http://www.manpowergroup.us/campaigns/talent- shortage-2012/pdf/2012_Talent_Shortage_Survey_Results_US_FINALFINAL.pdf

McKinsey. 2012. “The World at Work: Jobs, Pay and Skills for 3.5 Billion People.” McKinsey Global Institute.

http://www.mckinsey.com/insights/employment_and_growth/the_world_at_work.

President’s Council of Advisors on Science and Technology. 2012.

http://www.whitehouse.gov/sites/default/files/microsites/ostp/pcast-engage-to-excel-final_2-25-12.pdf.

PWC. 2012. “Facing the Talent Challenge: Global CEO Survey.”

http://www.pwc.com/gx/en/ceosurvey/2012/key-findings/hr-talent-strategies.jhtml.

U.S. Chamber of Commerce. 2006. “The State of American Business 2006.” Washington D.C.

Employers Blame Educators for a Shortage of Skills Needed

6Peter Cappelli (2014) has been writing about a business dilemma that has faced US businesses at least since this generation and it goes like this: ‘The educational system is simply not teaching students the skills they will need to be successful in their careers.’ This management dilemma gives rise to a business problem of significant magnitude: ‘How do US businesses attract and retain skilled workers who possess the requisite education to assure a successful execution of company roles and responsibilities?’

1The implications of this business problem are far-reaching. If employers cannot acquire US skilled workers, they will need the government to expand the number of H1-B visas granted so that skills can be found within other countries. And the converse is this: for every person hired in the US from another country that is one less job available to be filled by an American. Further, whoever bears the greatest fault or responsibility for creating this problem that is where to examine the root cause that must be addressed and rectified. Is the root cause with employers, educators, the economy, rapid technological change or even perhaps all of these potentially exogenous variables, along with even more modifying variables?

2First, Dr. Cappelli frames the problem, no easy task given all of the opinions and “conventional wisdom” surrounding this topic. The claim of a “skills gap,” for example, is different than the claim of a “skills shortage.” There is also the claim, a dynamic one, that at any given time the supply of “skills” differs markedly from the demand for certain “skills.” He moves through his research problem conceptually. Historically employers have taken it upon themselves to train workers who show up with largely generalized educations. But more recently, that model has apparently changed, according to the research. All of these concepts must find their way into constructs with carefully crafted definitions. Just what, exactly, is a “skills gap?” And is the alleged “gap” valid or it non-existent if perhaps more reasonable job requirements were specified?

3Which is the best model to frame the problem? A supply-chain model would suit the economic construct that a given supply of labor at market-clearing wages would intersect a given demand for labor. Another quantitative model idea is to start with ‘job requirements’ as the exogenous variable. But what if modifying variables such as ‘inflated job requirements’ or ‘unrealistic and excessive posted requirements’ must be considered? If an honest (valid) set of job requirements could be posted and an employee matching those requirements could be found, then there is no problem.

4Another possible variable that must be considered is the notion of ‘market-clearing wages.’ Economic theory would tell us that at the right price, the right worker could be found and hired. There is some empirical evidence that employers tend to increase wages in times of labor market shortages and to lower wages in environments of plentiful workers (Brenčič, 2012).

5Dr. Cappelli’s research ultimately led him down a quantitative and a qualitative path. His mixed methods approach cited numerous government studies. One example is the Carnegie-funded National Center on Education and the Economy, America’s Choice: High Skills or Low Wages? (1990). Dr. Cappelli examined objective government reports, education reports, consulting studies, and reports from business associations, from which he built a formidably strong inductive and persuasive collection of evidence in support of the conclusion that the fault lies primarily at the doorstep of employers. Employers have significantly reduced training, according to the evidence. Employers are not providing market-clearing wages in many cases, the data suggests. Employers are seeking an inflated set of skills that are not necessarily correlated to success on the job. Indeed Dr. Cappelli concluded that applicants, if anything, are more educated, skilled and prepared than they have been historically.

The nature of the research fits into the category of “explanatory.” The work summarizes a daunting treasure trove of data, attempts to describe what the data says to the reader, then goes on to explain why these things are so and how they work this way. The theories that are built from the constructs meld ontology, particularly, with axiology. The dynamics of the business problem introduce another variable to be contended with; for example, companies used to train a lot more in the past than they do today. Another dynamic is wages have been suppressed since the beginning of the so-called “Great Depression” in 2008. These dynamics are ‘confounding’ variables in a quantitative, longitudinal study since apparently discrete model changes have been introduced over time.

Dr. Cappelli does not argue ‘cause and effect,’ neither has he developed a model purported to be predictive. But he does make a strong case, based upon the evidence, that the conventional wisdom, the paradigm that says education is to blame, is simply unsupportable. His conclusions are persuasive and compelling, that employers need to re-examine and buttress their training programs, re-tool their compensation levels to get closer to market, and re-think the skills they must have for the applicant to have a high probability of success on the job.

References

Brenčič, V. (2012). Wage posting: evidence from job ads. Canadian Journal of Economics/Revue canadienne d’économique, 45(4), 1529-1559.

Cappelli, P. (2014). Skill gaps, skill shortages and skill mismatches: evidence for the US (No. W20382). National Bureau of Economic Research.

Cooper, D. (2013). Business Research Methods [VitalSouce bookshelf version]. Retrieved from http://online.vitalsource.com/books/0073521507/id/P3-464

National Center on Education and the Economy. 1990. “America’s Choice: High Skills or Low Wages! The Report of the Commission on the Skills of the American Workforce.” Rochester, NY.

Big Four Audit Firms Under Pressure

 1

I have worked with the largest US audit firms for decades. Over time, as Sarbanes-Oxley and Dodd-Frank legislation took hold, along with the creation of the PCAOB, increased stress on audit firms has been the result. The Big Four are the most visible and prominent, and as such, appear to have had a challenging time adopting to the new post-Enron, post- Arthur Anderson normal.

Private company audit practice. Big Four audit firms have created a new niche they call, variously, “private company audit practice.” In fact, my recent experience at a large multinational company that was private, found that the Big Four auditors assigned to us had both private and public clients. The methodology and tests appeared no different than those applied at public companies, at least that was my assessment. Second tier firms, such as McGladrey, assigned only private company auditors to the engagement after we replaced our Big Four auditor.

Internal workload. I estimate that well over half of the work done internally by my finance team was in support of protecting the Big Four from liability. It used to be that the Management Representation Letter was sufficient. Now audit firms require extensive internal analyses, documented positions, and white papers that consume internal resources.

The Big Four appear to be getting more rigid and less flexible over time, as oversight and potential derogatory regulatory assessments are now more threatening than in the past. Several years ago I had an experience involving an accounting treatment dispute with a Big Four auditor that ultimately led to an extensive discussion since I felt quite strongly about our internal accounting treatment position. After numerous meetings we were told that we could not receive an “Except For,” relative to this issue, nor could we simply default to a “Qualified Opinion.” I was left with the impression that either the report would be issued clean or it simply would not get signed off. When I suggested perhaps I change our audit partners I was warned that even such a suggestion compromised “auditor independence” and could preclude getting to completion of a successful audit.

Auditing is a commodity. GAAS and GAAP are codified for all CPA’s. An audit is a highly structured project. You will not get a vastly superior audit by utilizing the Big Four compared to second tier audit firms, or even some smaller audit firms, though reference checking is strongly recommended.

But the Big Four are global. From a command and control standpoint, the Big Four do not impose decisions upon the other statutory audits for your company’s subsidiaries around the globe. Chartered accountants must make their own decisions, independently, else risk losing their certifications. On the other hand, affiliate audit structures, such as McGladrey, have vetted good audit firms, and consequently these firms will generally strive to keep their affiliate status by working hard on cooperation, communication and goodwill.

The Big Four can be pricey. A brand carries a premium. The infrastructure of a Big Four audit firm is extensive, including many more professions and functions in their firms than just auditors – lawyers are hired to protect the Big Four from liability for example.

The PCAOB has the Big Four on the defensive. In an October 8, 2014 Wall Street Journal article, auditors at the largest U.S. accounting firms failed to follow proper procedures in more than four in 10 audits, according to the latest inspections by the U.S. government’s audit watchdog. Another argument that you don’t necessarily get quality simply by paying more and buying the brand.

All Big Four and second tier audit firms have strengths and weaknesses without a doubt. But if you view your audit as a commodity, want to perhaps shop and reduce audit fees, and don’t feel compelled by stakeholders (banks, shareholders, board members and financial media) to go with a brand, give consideration to alternative audit firms that just might suit your company better.

Rodd Mann | DBA (candidate) | CPA | MBA | BBA | APICS CPIM | Six Sigma Hands on Champion | Author | Consultant

AOL: Three Decades of Turmoil

AOL: Three Decades of Turmoil2

Introduction

AOL has gone from fame and glory to hype to trying everything possible simply to survive. Started in 1983 as “Quantum Computer” (Agamawi, 2012), later renamed America Online, the company went public on the NASDAQ in 1992 and proceeded to grow 50,000% in just two year’s time. A genuine blue ocean – disruptive innovation story not unlike future iconoclasts Google, Apple and Tesla, in a 2007 USA Today survey AOL placed fourth behind the invention of the world-wide web, the creation of email, and the development of graphic user interfaces. AOL was also included in the “.com 25” list of influencers in Silicon Valley at the same time (“AOL – Wikipedia, the free encyclopedia,” n.d.).

For many years AOL was not considered a global company, indeed most of its focus, even at its peak, was within the United States. Growth came via membership fees to access an internet portal, enabling search, browsing, email and news. AOL developed partnerships with other media companies to enable their entre into the nascent digital/online mass media market. Two decades later, however, AOL (now Aol.) would describe itself as an American multinational company, developing brands and web sites, distributing digital content, and selling advertising. The pinnacle of AOL as measured by market capitalization came in January 2001, at the time of a controversial and historically the largest merger in corporate history, between AOL and Time Warner. At that point AOL had a market capitalization of $175 billion, higher than IBM, GM and Ford’s valuations combined.

In January 2001 AOL merged with what was widely considered a conservative media company called Time Warner, itself having been built largely through mergers and acquisitions. At the time of the merger, Time Warner was valued at $90 billion, compared to AOL’s $175 billion.5

Interestingly, Time Warner was generating revenue of $27 billion in revenue, was profitable, and had 70,000 employees, while AOL was generating revenue of $5 billion, lacked profitability and had only 15,000 employees, according to Agamawi (2002). AOL acquired Time Warner, recording the transaction as a “purchase” (Verrecchia, 2013). AOL equity was issued to Time Warner shareholders in the amount of $147 billion. Of this amount $127 billion, or 86% of the consideration provided, was recorded as “Goodwill.”

As a result of the dot-com bubble and in particular the high valuation attributable to AOL, much has been written critical of the valuation process as a whole, pointing to the AOL Time Warner merger as the poster child for a complete breakdown in the methodology and approach that should be practiced in order to get reasonable valuation assessments (Barbara & Pluchart, 2013). Other research has found that stock financed takeovers in general, common especially in technology mergers and acquisitions, generally result in significantly inflated assessments of purchase prices (Eckbo, Makaew & Thorburn, 2013).

Strategy

From the AOL side was needed a durable and profitable company with hard assets that was run well, in order to tackle the problem of their core business which was experiencing a significant decline in “dial up” service demand. From the Time Warner side, management believed they could benefit from access to the digital era through integration with the largest Internet media firm at the time. Both lacked key assets to prosecute their strategies, but believed the merger would solve for that problem. The combination was meant to “tie the knot” between old economy infrastructure and the open content of the new media business and economy (“Analysis of the AOL and Time Warner Merger,” n.d.). The long-term strategy for the merger was to provide users with cable broadband, as well as a wide range of other related broadband technologies. The merger was considered at the time to be the “Deal of the Century,” and advertised as AOL’s “rebranding.” It later would be called the worst deal ever by the erstwhile CEO of Time Warner.

Such was the strategy backdrop, but the global telecommunications industry was not cooperating. Blue ocean threats began to buffet the combined business almost from the outset. One upstart in particular, Google, would go on to all but monopolize user searches and advertising revenue.

Organization culture and leadership

The Time Warner and the AOL cultures have been characterized as “diametrically opposed” (“Analysis of the AOL and Time Warner Merger,” n.d.), their management styles sharply conflicting. Time Warner’s executive leaders were outnumbered by the senior executives from AOL who were young, precocious and seemed to be in a hurry at all times. The disproportionately higher equity in the new company went to AOL shareholders. Studies have shown that when mergers and acquisitions fail, they do so as a result of the poor handling of “change management” (Kansal & Chandani, 2014). Recommendations that researchers agree will help merge different corporate cultures, such as deep cultural learning at the front end (Lee Marks, Mirvis & Ashkenas, 2014), can help reduce future conflict and employee turnover. There is no mention in the literature that anything beyond perfunctory and superficial attention was paid to this important aspect during the AOL Time Warner merger.

One employee of the merged company described having three CEO’s during her AOL Time Warner tenure, each with his own vision, mission and 100-day plan. The “top team” du jour changed often, what was on top today suddenly lost status and a new team was highly esteemed. Her only certainty was that change would continue, change would be a constant, referring to “repetitive change syndrome,” the manifestation of which is “initiative overload” (Abrahamson, 2013).

From the beginning AOL began to show cracks in its business model and reputation, creating further disrespect within the Time Warner leadership ranks. Yamanoi and Sayama (2013) found that cultural integration predicated upon two very different central individuals, in this case Steve Case and Jerry Levin, can result in significantly higher individual turnover, organizational communication breakdowns, and interpersonal conflicts.

As a result of a government inspection, AOL was accused of overstating their 2000-2001 revenue by as much as $1 billion (“Complaint for violation of the securities act of 1933,” 2003) though the case was later settled at a fraction of that amount. The stress on the two Chief Executive Officers, Jerry Levin of Time Warner, and Steve Case of AOL, led both to leave the merged company in December 2001 and early 2003 respectively. Since that time the firm struggled to reduce its debt by selling assets including sports and cable television channels and a book publishing division. A decade later in an interview on CNBC, Jerry Levin admitted he made the “worst deal in a century,” and apologized for the results (Harrington, 2013).4

Competitive environment and market conditions

Global consolidation and the entry of foreign interlopers such as Deutsche Telecom (Germany), as well as Nippon Telephone & Telegraph (Japan) altered the entire industry. Yahoo and MSN began moving well beyond fast follower status into broadband, significantly increasing data transfer speeds, as well as creating unique and appealing home pages, email, news, search and browsing capabilities. The first movers were the telephone companies, all having tremendous in-place infrastructure that AOL initially had sorely lacked. DSL broadband brought to the telephone companies a blue ocean business, leaving “dial-up” and voice telephone calls in the rear-view mirror, and moving huge amounts of digital information through their networks to their installed base of customers.

Blue Ocean Google joined the contest for media content market share, along with MySpace, Fox Interactive Media and Facebook, each with a different primary focus but having in common both “content” and “delivery,” the revenue and profitability coming largely from online advertising. Broadband operators were competing with AOL for Internet subscribers. Internet magazines and new websites were striving with Time Warner’s online magazines such as Fortune and People (“Analysis of the AOL and Time Warner Merger,” n.d.). To make matters even worse, piracy of Time Warner video games, television and films was cannibalizing revenue and profits.

Current growth and new business strategies

On May 7, 2014 AOL announced disappointing financial results, profit slid 64% (Kaufman, 2014). AOL had been spun off as a separate public company (IPO) in 2009 (“AOL,” n.d.). The years from the merger to the spinoff were mostly disappointing. Since most of the consideration had come from an overvalued AOL, much of the strength of the leadership team relied upon AOL. Cultures were markedly different between the two firms. AOL executives, especially AOL CEO Steve Case, had been described as aggressive, wobbly, and moving very quickly (“Analysis of the AOL and Time Warner Merger,” n.d.), whereas Time Warner culture was more refined and cautious.

Tim Armstrong, AOL’s new CEO ever since the IPO, declared the new strategy for AOL would be to lead mechanized advertising sales (Kaufman, 2014). This new strategy included the purchase of Convertro for $100 million, basically an engine for analyzing the purchasing habits of users. In 2013 AOL bought Adap.tv, a company that had developed video advertising.   While this new strategy, along with growth through acquisitions, AOL was finally poised to increase revenue, though profitability would lag for some time. The competition was fierce, and companies such as Google and Facebook dominated the online advertising business by an order of magnitude. Mr. Armstrong said he would continue to the growth strategy, via more acquisitions, especially in the video space. The AOL market capitalization as of September 6, 2014 was approximately $3.8 billion, compared to the valuation of $175 at the time of the AOL merger 13 years ago, a decline of 98%.

Primary business model

Originally, prior to the ill-fated merger with Time Warner, AOL was known for its software suite, or browser, allowing customers to utilize AOL as an internet launching pad into email, search, news and other digital content. At AOL’s peak, membership topped at approximately 126 million worldwide (“AOL – Wikipedia, the free encyclopedia,” n.d.). Subscriptions averaged 25 months, and each subscription generated $350 in revenue for AOL. AOL operated a chat room that allowed groups of people having similar interests to meet online. “Private rooms” held up to 23 people, “conference rooms” and “auditoriums” more. AOL developed dozens of partnerships to increase their online offerings, including the American Federation of Teachers, Discovery Networks National Geographic, Highlights for Kids and many more (“AOL – Wikipedia, the free encyclopedia,” n.d.).

In 1996 AOL changed their hourly fee for chat rooms to a flat $20 per month. This led to a flood of demand that crippled the fledgling company’s computer infrastructure and network, resulting in annoying busy signals. The brand began to suffer and Steve Case himself spoke in a commercial asking for patience as “AOL was working day and night to fix the problems” (“AOL – Wikipedia, the free encyclopedia,” n.d.).

At the time of the merger in 2001 AOL, along with it Time Warner acquisition, sought to create an integrated communication and media company (Agamawi, 2012). Between the time of the merger and up until AOL was spun off as a separate public company May 28, 2009, AOL transitioned into a new phase of “re-branding,” while also experiencing a general decline in its business.

AOL added personalized greetings in 2004 as users accessed basic functions; one year later developed the capability to broadcast live concerts. They launched an anti-virus, anti-spyware, proprietary firewall bundle with McAfee and shortly thereafter began selling diagnostic tools to check security status. AOL began to offer free email accounts in 2006 (80% of members converted within a few months), and embarked on a cost reduction program.

They added many content-rich services such as news, videos and remote backup services. AOL transitioned out of the $26 per month dial up access to $10 per month broadband unlimited access. Beginning in 2007 they began a campaign to acquire several advertising dot-coms. But the decline continued, largely a result of fierce competition from Google, MSN and Yahoo, and near the end of 2007 AOL had a 40% layoff across the board. At the time of the layoff AOL’s subscriber base had diminished to 10 million, almost even with Yahoo and Comcast.

Tim Armstrong, fthe ormer Google executive, was named Chief Executive Officer in March 2009, and AOL was spun off as a separate public company. The AOL name and brand changed to Aol and commissioned artists superimposed the new log on canvas (“AOL – Wikipedia, the free encyclopedia,” n.d.). Mr. Armstrong then embarked on a series of acquisitions including Patch Media (community-specific news) and The Huffington Post. Partnerships with Yahoo and Microsoft were initiated so that each partner could sell the others’ inventory and the group could better compete with Google. A big advertising push was begun in 2012.

In February 2013, AOL announced quarterly revenue of almost $600 million; the first time revenue had grown in 8 years. Shortly after the quarterly earnings announcement more and significant layoffs began and Tim Armstrong’s Patch Media was spun off.

SWOT, Ability to leverage and execute growth strategies and resources

The AOL brand name represented, certainly for many years, a strong asset. The post merger management team, however, failed to execute its strategy and as was pointed out, the two key leaders left the company only a couple years after the merger. According to Friesner (2014), Time Warner remains a dominant media company throughout the world with 23 magazines and 50 websites. But what can be said about AOL in 2014?

Apart from an increase in revenue announced May 7, 2014, along with a decrease in profits of 64%, AOL’s revenues are in a slump. The decline is largely the result of a decrease in the number of domestic AOL brand subscriber’s along with the sale of their German access business in 2008.

The joint affiliations and partnerships AOL had formed held significant promise if leveraged and executed well. The multi-year alliance with Sesame Workshop, for example, allowed AOL to exclusively distribution the Sesame Street library beginning in late 2009.

The difficulty, or threat comes from firms such as Google, Yahoo and Microsoft’s fierce competition, along with Facebook and Fox Interactive Media. Broadband access providers also continue look to take market share from AOL.

Thompson (2014) recommends principal components of the Strategy Execution Process. Below are brief assessments of AOL’s strategy execution process:

  • Attract and retain employees with proven capability, and at the top proven execution skills. AOL has blundered at times when it comes to human resources management. On Friday, August 8, 2013, during a widely attended company conference call, CEO Tim Armstrong, becoming increasingly annoyed as one of his employees (Abel Lenz, formerly from Patch) walked about the conference room snapping photos, finally said, “Abel, put that camera down. You’re fired. Out.” The imbroglio went viral and Mr. Armstrong was compelled to release an “explanatory memo,” though he never hired back Mr. Lenz (Morrison, 2013). In addition, according to the New York Times (February 14, 2014), Mr. Armstrong changed the 401(k) company matching benefits to be paid lump sum at year-end, rather than evenly throughout the year, attributing the change in part to higher medical costs specifically resulting from the “distressed babies” in the families of two AOL employees. Mr. Armstrong later, under intense public pressure, rescinded the change (Kaufman, 2014). These are not the hallmarks of a compassionate leader but instead create insecurity and consternation throughout the organization.
  • The need to build capability that will enable strategy execution to be successful. In the 2010 to 2014 period, through a variety of acquisitions, AOL became more narrowly focused on digital online advertising targeting TV (video) market share, and appears to be poised to grow both revenue and profitability barring increasingly strong competition, especially from Google.
  • The organization must be structured consistent with the AOL strategy. Given CEO Tim Armstrong’s mercurial management style, along with recently laying off half of the employees from the Patch acquisition (Mr. Armstrong had earlier championed the Patch acquisition), along with a raft of new acquisitions to support the new digital online advertising strategy, it is reasonable to assume more people will need to be hired and that likely more will be fired in order to achieve organizational alignment with the new strategy.
  • The allocation of resources must support the execution of the strategy. The new acquisitions must by optimized and synergized into AOL circa 2009 and going forward. AOL is growing again, about 12% per quarter, and profitable (“Business, Investments, Stocks & Quotes – Yahoo Finance,” n.d.). Its balance sheet is in good shape with equity three time total liabilities, a current ratio of 1.2, and upwards of $300 million of cash flow per year. Barring any unforeseen large capital investments required in order to implement their new digital advertising platform, AOL appears well-resourced to execute its nascent strategy. Much will depend upon the retention of key managers in the Adap.tv and other future acquisitions, along with a productive partnership with AOL’s new alliances.
  • New policies and procedures (P&P) will have to be developed and digested given several disparate business recently coming together. Whenever you have new businesses you have new cultures. Management must integrate best practices from their new businesses and from the industry and do this without incurring the time delay and costs of change resistance and employee turnover. Technology companies are notorious for having weak, superficial P&P, knowing that change happens so quickly they cannot afford to be bound by archaic P&P that no longer suits their new business model.
  • Incentive awards are tied to a combination of adjusted net income along with the achievement of earlier established objectives (“Annual Incentive Plan for Executive Officers, by AOL Inc.,” 2014, p. 3). This is a somewhat common management incentive plan found in technology companies. Cash is used for acquisitions (as is stock), compensation and incentive bonuses; AOL does not pay its shareholders a dividend.
  • Instilling the corporate culture that it will take to compete with Google in a space relatively new for AOL, Mr. Armstrong will need to determine how he organizes his managers, what priorities are at the top of his list, what his objectives and strategies are, and he must ask each manager to come up with a list of their own tactical plans to meet the objectives they commit to deliver.
  • To take the strategy forward will necessitate aggressive competitive behavior, such as undercutting the ad pricing television offers, as well as connecting with as many potential customers as possible. The CEO must meet directly with the biggest of the potential customers to win them over to AOL.

Strategy map

 Slide11

Future opportunities for innovation

AOL is seeking to pursue a strategy to take more advertising market share from television (“AOL CEO Leads Charge to Pry Ad Dollars From TV,” 2013). So called “programmatic” ad buying, or essentially ads via automated exchanges. AOL signed new deals with several ad agencies that have made commitments to purchase online AOL-based ads beginning in 2014. This latest move on the part of AOL is part of a larger strategy to capture television dollars for online video and other platforms. AOL’s 2014 acquisition of Adap.tv for over $400 million was an integral part of this new strategy according to AOL’s CEO. The programmatic ad buying industry is expected to be perhaps as large as $100 billion in just a few years’ time. Advertisers can target the demographic they seek, pull together an audience online and across a variety of sites, and advertisers will have better, more targeted advertisements via the web versus TV.

Additionally, AOL allows advertisers to purchase ads using the same formula as the television industry to determine pricing. To make this work AOL announced in 2012 a partnership with Nielsen to determine overnight ratings that would allow comparison of AOL videos to TV. Last year digital video advertising grew 46% compared to only 6% with TV, though the absolute dollars are only $3 billion in digital video advertising compared to TV’s almost $65 billion.

AOL’s dominant competition is Google YouTube, with over 70 million viewers. At this stage AOL can adopt a fast-follower strategy since they are ranked only #6. Huffington Post, the AOL acquisition, can certainly help leverage this endeavor. Digital video advertising remains a nascent industry, a potential blue ocean that traditional television advertisers will find difficult to overcome. If AOL can focus on this niche, and compete effectively against a blue ocean Google YouTube, they stand to emerge a survivor, albeit a very small version of the size, reputation and market capitalization they held thirty years ago.

Conclusion

During the heady days of the dot-com bubble AOL was viewed as new media and Time Warner old media. A merger that gave 55% of the deal to AOL shareholders, including important operating management roles, began to almost immediately unravel. Over the course of the next several years Time Warner reasserted its dominant status, with its higher revenue and profitability, and spun off AOL in 2009 as a public company. The merger started as acquirer AOL purchased and acquired Time Warner. The reality of the business operations, and later the AOL public company spinoff, indicate Time Warner’s management turned the tables on the original deal and established and supplanted their goals and strategy in the face of inexperienced and impetuous young entrepreneurs. Not until the 2009 IPO and the hiring of Tim Armstrong as CEO did AOL get the chance to develop their own corporate vision and corporate strategy they have been pursuing for the past five years.

AOL was for a very long time in a state of virtually continuous decline, struggling to find a viable strategy through numerous acquisitions followed by almost as many divestitures. With Tim Armstrong at the helm, though still surprising Wall Street with unacceptable profitability and uneven revenue growth, it appears that AOL is beginning to find its footing. In the 2011 to 2013 timeframe AOL is far humbler than its beginnings. AOL generates about $2.5 billion in revenue and has a market capitalization of slightly under $4 billion. Return on assets is about 5 ½% and return on equity 3 ¼% (“Business, Investments, Stocks & Quotes – Yahoo Finance,” n.d.). With a newer, narrower focus and strategy toward digital advertising revenue AOL stands to remain viable. But with competitors like Google, Google YouTube and Facebook, the battle is far from over. The CEO’s challenges include building a secure and aligned team in the face of many acquisitions, some (Patch) ill-fated, overcoming and improving upon poor human resource management in order to attract and retain talented managers, and convincing TV advertisers AOL’s programmatic advertising on a digital platform is the new blue ocean strategy that they should embrace.

r_mannRodd Mann | BBA | MBA | DBA (candidate) | APICS CPIM | Six Sigma Hands-on-Champion

 

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Disney: A Wonderful World

1The “Wonderful World of Disney,” has been much written about, most people can reflect on the impact some product or aspect of Disney had on their childhood. “Make a Wish Foundation” seeks to honor a dying child’s final request by raising funds that will allow that child to visit Disneyland (Wasko, 2013). Behind this global corporation are strategies and value constraints that have generally worked well to increase revenue and profitability, though not always, especially so in the case of some of the overseas theme parks projects.

When Disney invests in theme parks, for example, it learns not only from what was done well, but what could have been done better. When Disney considered opening a new theme park outside Paris, it was determined to include within the park hotels – something that was neglected in the 1983 Tokyo theme park, much to the chagrin of management as they watched hotel entrepreneurs capitalizing on their newly built hotels near the Disney Tokyo theme park.

Less than 10 years after Tokyo, Disney opened “Euro Disney” outside Paris. Disney bought farmland for the new theme park and that is where the warning signs began. Effigies of Mickey and Minnie were hung on fence posts, indeed the French people with their unique culture were not at all enamored with this incursion, this interloper bearing contemporary Western entertainment that the French neither understood nor cared much for (Walker, Laurion, & Resler, 2013). Disney carefully crafted their global strategy, protecting corporate brand and values and essentially exporting the Disney theme park in situ without regard nor consideration for differing cultures, tastes and preferences.

Europeans found the Euro Disney food and hotels far too expensive. Euro Disney had to discontinue offering breakfasts because Europeans generally do not eat breakfast. The financial losses mounted to such an alarming level that the president was forced to structure a financial rescue plan to save the theme park from closing. The marketing plan, along with new strategy and tactics were developed to try to put things right. (Amine, 2011). The new strategy transitioned from global to transnational in terms of both “think” and “act” in accordance with the culture of the local market, not just the French, but Pan-European (Thompson, 2014). Disney remains intent on bringing their global brand to the entire world, but now makes room for local twists. Today, at France’s Epcot Center you can find not only French cuisine, but fine wines as well (“France Epcot,” n.d.), something that perhaps would cause Walt Disney to roll over in his grave.

Disney carefully chooses businesses to enter based upon their ability to cross-leverage each business in such a way that all or most of the Disney businesses will derive accretive benefit from each new project or acquisition. Disney invests in its own projects, parks and resorts for example, sometimes taking on other investment partners as is the case with their current project: Disney Shanghai (Disney is a 43% investor). Disney will acquire businesses to expand it global brand reach and footprint. An example of a recent acquisition was October 2012 when Disney acquired Lucasfilm, for which Disney paid $4 billion, half in cash, and half in stock. The “Star Wars” franchise alone was a top children’s brand that had generated over $4 billion in revenue for Lucasfilm (Mucha, 2012).

An alliance or partnership is a relationship between two or more entities to pursue a set of mutually agreed upon goals or to fulfill a critical business need while remaining independent organizations. Disney’s business growth is a function of organic growth of sustaining businesses (Disney’s theme parks in the United States), new projects (theme parks in other countries), acquisitions (studios such as Pixar and Lucasfilm) and many and various types of partnerships and alliances.

Hewlett-Packard and Disney maintain their long-standing alliance, beginning in 1938, when Disney bought several oscillators for their Fantasia sound design from HP founders Hewlett and Packard. Later, when Disney sought to develop a virtual attraction they referred to as “Mission: SPACE,” the so-called Disney Imagineers, along with the HP engineers, utilized HP architecture and HP computers to design Disney’s most advanced attraction (Je’ Czaja, n.d.).

While research has generally shown that alliances and partnerships often experience high failure rates (Kumar, 2012), Disney has been careful to keep these ventures within the industries they already perform well in, and to ensure the relationship will add to their competitive strength and market position overall.

Disney begins where its brand is most powerful – products for children. The five main Disney business groups all benefit from child-oriented investments:

  1. Studio entertainment (Pixar – Toy Story)
  2. Disney Consumer Products (Disney Stores – Woody)
  3. Walt Disney Parks and Resorts (Employee dressed as Woody, and Woody in various sizes in the park and resort stores)
  4. Disney Media Networks (Comic books featuring Woody via Marvel acquisition)
  5. Disney Interactive (LEGO is a licensee and has a Toy Story line of toys)

Disney cruise lines have imagery and characters from Toy Story’s Woody on their ships. Computer software, DVD’s, movie sequels, all leverage Toy Story and Woody. No Disney SBU is left out of the opportunity (Mashable, 2011).

The author examined the Disney “Nine-Cell Matrix,” (Thomson, 2014) as the various industries might be scored in terms of attractiveness and competitive strength/market position. The results show that the strongest Disney businesses are the studios and the theme parks / resorts. They generate by far the greatest amount of revenue and earnings, while some of the other businesses, while tangentially related and certainly can leverage the brand and the target markets (moms/children), they are either highly competitive (ESPN, media), or stray somewhat from core Disney competencies (Interactive, Playdom).

 

Table 1 Disney Nine-Cell Matrix (Thomson, 2014)

Slide1

 

James Rasulo, the Chief Financial Officer of Disney for the past five years discussed Disney’s global growth strategy, Disney brands, and their content pipeline (May, 2014). Disney has grown from $1.4 billion in revenue in 1985 to $50 billion by 2014. Today Disney is a global company in television (e.g. ESPN), movies, theme parks and more. The Chief Executive Officer, Bob Iger, charts strategy with his leadership team consisting of 12 direct reports.

Mr. Iger’s strategy for picking films is done through top leadership decision-making. Following the film picks, the studios pick up the projects (Marvell, Disney Studio, Pixar) and determine the creative side, the content, when to release, how much to spend, as well as the particulars involved in promotion, distribution and timing.

Two major tenets of the Disney strategy emerge. The first, “authenticity,” and the second, “corporate citizenship.” Authenticity refers to the deeply held family values that were in place when Walt and Roy Disney in Los Angeles first started the company in 1923. More than 90 years later the firm emphasizes that films must be “aspirational.” Disney won’t make films that are violent, dark, disturbing or at odds with their core value.

As a corporate citizen, Disney is concerned about the emissions from their cruise ships. They are deeply involved in the labor standards and environmental footprint in all of their locations around the world. Disney recognizes that their core customers are mothers and children. To help with childhood obesity, Disney requires 85% of their food products advertised must be healthy (the remaining 15% are for snacks – birthday parties and celebrations). This decision was a costly one for Disney, but their values required it nonetheless.

The basic capital deployment and allocation strategy is as follows:

  • 60% Business and content growth
  • 20% Stock buybacks and dividends
  • 20% Acquisitions

The company extols creativity and technology through the creation and distribution of their products. Acquisitions have included Pixar, Lucas films and smaller companies in places like India. Disney is not interested in hoarding their cash; they prefer instead to utilize excess cash for stock buybacks and the payment of dividends to shareholders.

After more than a dozen new theme parks, Disney is adept at forecasting how much a new park will cost and when it will be completed. The challenge and the focus of financial resources go instead toward opening day. Did the theme park live up to pro-forma expectations? Shanghai is the latest theme park under construction (Barlas, 2014), and is on budget, and on time. Disney has committed $5 billion for its 43% ownership in the Shanghai theme park.

Since Disney utilizes partnerships as it grows, Netflix is one of the more recent. The reason for the Netflix investment (Pomerantz, 2012) is that the total available market for content and libraries could be greatly expanded. Acquisitions such as the Marvell (Bedigian, 2012) investment leverage one of two possible integration strategies. Disney studies the user interface to determine which strategy is best, whether the interface is primarily employees, or primarily customers. Disney’s preference is to leave the new acquisition intact, don’t suffocate the business from Disney corporate, simply leave it in place as is (Latif, Ilyas, Saeed, et al, 2014).

Contrast this first strategy to acquisitions that are best leveraged through the Disney brand. Cable, movie business exhibitors, and licensing, are all advantaged, both in terms of scale and in terms of the capital financing markets by integration into the global Disney brand and corporation.

Below is a list of Disney’s businesses (“Columbia Journalism Review,” 2013). There is one question that immediately pops out of such a long list. How does Disney manage all of its acquisitions, alliances, joint ventures, stock investments and partnerships? Though research has shown that over 50% of weaker “alliances” and “joint ventures” fail (Kaplan, Norton, & Rugelsjoen, 2010), the large majority of Disney business investments and partnerships have been highly successful:

  • Film and Theater
  • Disneynature
  • Disney Theatrical Productions
  • Touchstone Pictures
  • Marvel Entertainment
  • LucasFilm
  • Walt Disney Pictures
  • DisneyToon Studios
  • Walt Disney Animation Studios
  • Pixar Animation Studios
  • Walt Disney Studios Motion Pictures International (Distribution)
  • Walt Disney Studios Home Entertainment
  • Music
  • Disney Music Group
  • Hollywood Records
  • Walt Disney Records
  • Television
  • ABC-Owned Television Stations Group
  • WLS (Chicago, IL)
  • KFSN (Fresno, CA)
  • KTRK (Houston, TX)
  • KABC (Los Angeles, CA)
  • WABC (New York, NY)
  • WPVI (Philadelphia, PA)
  • WTVD (Raleigh-Durham, NC)
  • KGO (San Francisco, CA)
  • Disney ABC Television Group
  • ABC Television Network (ABC Daytime, ABC Entertainment, and ABC News)
  • ABC Family
  • ABC Studios
  • A&E Television Networks (50%)
  • The Biography Channel (50%)
  • Disney ABC Domestic Television
  • Disney ABC International Television
  • Disney-ABC-ESPN Television
  • Disney Channel Worldwide (Disney XD, Playhouse Disney, Jetix, and ABC Kids)
  • History (formerly The History Channel) (50%)
  • H2 (50%)
  • Hungama
  • Lifetime Entertainment Services (50%)
  • SOAPnet
  • Disney Junior (Flanders and the Netherlands)
  • ESPN, Inc. (80%)
  • ESPN (and ESPN.com and ESPN360.com)
  • ESPN2
  • ESPN 3D
  • ESPN Classic
  • ESPN Deportes
  • ESPNEWS
  • ESPNU
  • ESPN Enterprises
  • ESPN Interactive
  • ESPN International
  • ESPN Mobile Properties
  • ESPN on Demand
  • ESPN PPV
  • ESPN Regional Television
  • Longhorn Network
  • Radio
  • WDDY AM (Albany, NY)
  • WDWD AM (Atlanta, GA)
  • WMKI AM (Boston, MA)
  • WGFY AM (Charlotte, NC)
  • WRDZ AM (Chicago, IL)
  • WWMK AM (Cleveland, OH)
  • KMKI AM (Dallas-Fort Worth, TX)
  • KDDZ AM (Denver, CO)
  • WFDF AM (Detroit, MI)
  • KMIC AM (Houston, TX)
  • WRDZ FM (Indianapolis, IN)
  • KPHN AM (Kansas City, MO)
  • KDIS FM (Little Rock, AR)
  • KDIS AM (Los Angeles, CA)
  • WMYM AM (Miami, FL)
  • WKSH AM (Milwaukee, WI)
  • KDIZ AM (Minneapolis, MN)
  • WQEW AM (New York, NY)
  • WDYZ AM (Orlando, FL)
  • WWJZ AM (Philadelphia, PA)
  • KMIK AM (Phoenix, AZ)
  • KDZR AM (Portland, OR)
  • WDZY AM (Richmond, VA)
  • KIID AM (Sacramento, CA)
  • KWDZ AM (Salt Lake City, UT)
  • KRDY AM (San Antonio, TX)
  • KMKY AM (San Francisco, CA)
  • KKDZ AM (Seattle, WA)
  • WSDZ AM (St. Louis, MO)
  • WWMI AM (Tampa, FL)
  • ESPN Radio
  • WMVP (Chicago, IL)
  • KESN (Dallas-Fort Worth, TX)
  • KSPN (Los Angeles, CA)
  • WEPN (New York, NY)
  • WDDZ AM (Pittsburgh, PA)
  • Publishing
  • Hyperion Books
  • ABC Daytime Press
  • Hyperion
  • Jump At The Sun
  • Mirimax Books
  • Voice
  • Disney Publishing Worldwide
  • Disney Digital Books
  • Disney English
  • Disney Global Book Group
  • Global Children’s Magazines
  • S. Magazines
  • ESPN The Magazine (50% with Hearst)
  • ESPN Books
  • Parks and Resorts
  • Adventures by Disney
  • Disney Cruise Line
  • Disneyland Resort
  • Disneyland Resort Paris (51%)
  • Disney Vacation Club
  • Hong Kong Disneyland (48%)
  • Shanghai Disney Resort (43%)
  • Tokyo Disney Resort (Owned and operated the Oriental Land Company)
  • Walt Disney Imagineering
  • Walt Disney World Resort
  • Other
  • The Baby Einstein Company
  • Club Penguin
  • Disney Consumer Products
  • The Disney Store
  • Disney Apparel
  • Disney Accessories & Footwear
  • Disney Fashion & Home
  • Disney Food
  • Disney Health & Beauty
  • Disney Stationery
  • Disney Toys
  • Disney Interactive Media Group
  • Disney Interactive Studios
  • Disney Online (Disney.com)
  • Disney Online Studios
  • Disney Mobile
  • El Capitan Theatre
  • The Muppets Studio
  • Playdom
  • Rocket Pack
  • UTV Software Communications

 

The basic business management model has remained the same for 75 years, since Walt Disney inculcated values that were referred to as “The Disney Way.” Walt Disney firmly believed that these values could underpin and drive the success of any business, not just the entertainment business. None of the films, products or services could be attributed to amazingly good fortune; all were carefully considered innovation and creativity, with a dogged adherence to a set of beliefs that survived for more than seven decades. Walt Disney himself created his company university (Disney Institute) to teach his management techniques, and he invented the use of storyboards and his approach to project management and problem-solving tools. All of Mr. Disney’s concepts and approaches to management evolved from four basic concepts or drivers: “Dream, believe, dare and do;” and these four drove his entire value chain that continued for all this time, along with a central course which was to provide the very finest in family entertainment (Capodagli & Rockhurst University, 2007).

Disney has calculated that each theme park visitor, on average, will translate into $62,000 in revenue throughout that person’s lifetime. The revenue generated from the Disney Institute continues to grow and is able to charge new students $9,600 to attend. Though you do not often hear much about their management and customer-service consulting, at least not to the degree of a McKinsey or a Deloitte, corporate clients pay to attend the institute to learn how to apply Disney’s time-tested management techniques to their own companies. Disney has a saying: “Green side up,” essentially “all hands on deck.” This is the culture driving every employee to contribute to every business in some way, and to require the success of any given business through the leveraging of the other Disney businesses to their full extent possible (Gray, 2012).

Disney’s global brand is powerful, and its reputation as “family entertainment” makes their corporate social responsibilities program a relatively easy one for people to understand and embrace. Over half the Disney revenues comes from films and product licensing. The licensing relates to all of its film and product intellectual property, on a pro-forma financial basis this revenue drops through the income statement with very little cost (Latif, et al, 2014). The merchandise it sells is considered a “vertical extension” of the Disney brand and logo. The films spur demand for the consumer products and vice versa, in a brilliant interconnectedness of all of the Disney businesses. Disney retains and protects its “cultural objects,” leverages them throughout all of their businesses, and thereby retains its customers for generations. The globalization of everything Disney is not always viewed in a favorable light, as was the case with Euro Disney (later Disney Paris), viewed by the Europeans not as globalization but more as “Americanization” (Robbins, 2014).

In summary, the highly ethical family entertainment business that Walt Disney created 75 years ago retains the original values of the founder, and has become among the most recognizable global brands in the world. The organization and management structure requires every Disney business to look to and tap into the other Disney businesses to leverage further growth and profitability. The management team carefully chooses ventures such as the next films, before handing these decisions off to the studios and other businesses to productize and prosecute. In very few cases (e.g. Disney Paris) has the Disney brand been perceived in a negative light that created strategic and financial problems for Disney taking considerable time and effort to correct.

 

References