"If it is indeed true that they are laying off more Imagineers and no longer doing any unique research, all I can say, "Ugh." This is so wrong, for two reasons:
One of my objections is on a gut level. Without WDIs research into creating unique ride systems, we wouldnt have the Omnimover (DoomBuggies in the Haunted Mansion, as well as Buzz Lightyear and Spaceship Earth in Florida), the PeopleMover, the Indiana Jones and Dinosaur EMVs, the Test Track cars, rollercoaster cars with soundtracks, the monorails as we know them, the Subs, heck, even the Autopia cars have their origins as original Disney designs. What would Disney theme parks be like without them? That doesnt even count the hundreds, if not thousands, of small innovations that we dont see, that give us better show effects and smoother park operations.
My other objection is strictly analytical. Sure, slashing WDI some more saves a bunch of money from the budget. But without Research creating new things unique to Disney, every future innovation will have to come from outside ride developers. These firms sell to anybody who has the money, so what will make the Disney parks different from the competition? I guess Disney figures that the difference will be that whats left of WDI will gussy these off-the-shelf ride systems up (a la DCAs Paradise Pier section) and make them look nicer than the competition. Is making things look real pretty a sustainable Competitive Advantage that will keep them ahead of their rivals over long haul? I just dont believe it is.
And to make matters worse, guess where a lot of those talented Disney- trained Imagineers will end up? Many will go to those outside design companies, which means anything they come up will be sold to everybody. Which is why, for example, "Mad Mouse" coasters are proliferating like, well, mad mice. Anybody with the cash can buy one, so a Mad Mouse at California Adventure wont be particularly unique. Even worse, if one of Disneys competitors has any brains and some deeper pockets, theyll hire those ex-Imagineers and wind up making attractions that are unique to the competition and better than Disneys off-the-shelf rides.
So now lets some throw marketing strategy theory around this: There are two basic ways you can compete. One way is on price alone that is, the customer buys based on price, and cheapest product always wins. Lowest price certainly isnt Disneys strategy. The other way to compete is called "Differentiation" in other words, make your product unique in some way so that customers want to buy yours instead of the competitions. So if Disney moves more and more to off-the-shelf ride systems, they lose some of their differentiation. And as the theme park business becomes more and more competitive, you should be differentiating more not less.
All- in- all, this looks just plain dangerous. Any company that guts its research capability is resigning itself to innovative stagnation and eventually slow growth and creative death. Unfortunately, Ive seen this happen in other companies, first hand.
Or to put it in a historical context, the amusements and boardwalks of the past which all used the same off- the- shelf rides were done in by a highly innovative competitor who ran off with a lot of their business. Thats right, Disneyland.
Dont think it cant happen here, Michael.
(SNIP)
Walt Disney World Hotel Service Cutbacks
This one hits something we studied just the other week in Marketing Strategy. And even though the idea of giving the same level of service and amenities to customers staying in the $500 a night Grand Floridian room as those given to the guests in the $100 per All- Star hotels seems like a no-brainer that doesnt require an MBA to figure out, lets apply a little marketing theory to see where this might take Disney.
One theory is called "The Commodity Magnet." It analyzes any product or service on two dimensions: Price to the customer and Cost to serve those customers. This becomes a 2x2 matrix (we MBAs love classifying everything into 2x2 matrices) like this:
This will give you four quadrants:
(DIAGRAMS DID NOT COPY ON COPY/PASTE) if you want to see the diagrams go to: http://www.mouseplanet.com/dan/comments.htm
all references to diagrams below are not here
Augmented High Price, High Cost; a premium product with unique features and a high price to match.
Specialty High Price, Low Cost; a fairly unique product that serves a particular need that doesnt have much competition. Hence, you can charge a lot for product or service that isnt too expensive to produce.
Core Low Price, Low Cost; Now theres competition, so prices are driven down and customers are buying on price rather than features.
Commodity Low Price, High Cost; this is the worst place to be the customers are demanding a low price and fierce competition between competing companies raises the cost to produce the product as each company tries to outdo the others.
Lets say, for the sake of argument, that Disneys premium hotels right now are in the Augmented quadrant yes, a high price but with a high (read "costly") level of service. By cutting back on the service / amenity level, they are trying to move in the Specialty quadrant like this:
At first glance, this looks like a great place to be: customers giving you lots of money for something that doesnt cost all that much to produce, which equals more profit! One big problem, though the theory says that this position is inherently untenable. Why? Because all that profit attracts other competitors and your customers eventually get wise. They decide they dont like paying so much to get so little and either move down to lower- priced but equal featured competitors in the Core quadrant or across to Augmented quadrant where they pay the same price but get more for their money.
Either way, they dont buy the Specialty product once competition arrives. You are forced move to a more stable quadrant: either back to Augmented (which is expensive to get back to) or down to Core (where its much more competitive and you are likely to be drawn into the very unprofitable Commodity quadrant).
In fact, thats where the name comes from because as markets mature and competition heats up, products tend to be drawn down towards becoming commodities.
So moving from Augmented to Specialty is where Disney is going with these changes at the WDW high- end hotels to an unstable and ultimately unprofitable strategic position, in exchange for a short- term increase in profits. There are a lot of really bright MBAs working for Disney doesnt anybody see this happening? Is nobody thinking strategically at Team Disney?"
