Disney World (Part 2 of 2)

In the second post on the trip to Disney World, a look at some of the observations of Disney culture, and some of the technological innovations being put in place at the parks.

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So last week took a chronological overview of my trip to the Disney World resort and the Disney Institute. This week I thought I would explore some of the specific observations of the culture and practice of business by Disney, and attempt to distil it into generalised recommendations for business in general. Each of these observations are probably worth essays in themselves.

It sure is.

Culture by Design

First and foremost, a point that was repeated to us throughout our training was the notion of “culture by design”. By this it is meant a deliberate and considered approach to the way that people behave and how the business operates, that is pervasive across the entire organisation. Processes and systems are built from the ground up to enshrine and reinforce the core principles of the organisation, rather than trying to shoehorn these principles in after the fact.

A great example of this is the concept of “cast members” instead of staff. Whilst at first glance it seems a superficial renaming, the deliberate choice and its extension throughout the processes of the organisation (be it through calling their hiring office “central casting”, or the design of their backstage areas to be evocative of, well, backstage areas) reinforces this notion, which then translates into the interaction of cast members with visitors as a performance.

In your business, it is worth considering whether the culture that exists is the result of a deliberate approach, or merely the evolution of a culture over time. How often do we see an existing company come up with a new mission statement, and even then fail to follow through upon the principles enshrined in that statement. Building a culture from the ground up means integrating the core principles of an organisation in every decision. By doing this you are naturally following through on your principles.

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So far away... or is it?

Applied Psychology

Another aspect of the Disney approach that was observed throughout the park was the application of psychology and behavioural science in the park and their processes to improve safety, better enhance the customer experience, improve the look and feel of the park, and create more efficient processes. As a matter of fact, they do it so well that it was only when it was pointed out to us that we even noticed.

As an example, part of our initial assignment at the park was to undertake a study of people moving left or right at a fork in a path at the park. The aim was to illustrate the principle that people tend to move right rather than left at a fork (an example of a more rigorous study is here). Disney manage this (and the attendant safety ramifications due to overcrowding) by making paths on the right somewhat larger than on the left to smooth traffic flow (if you don’t believe me, look at this satellite image of the Magic Kingdom - note the width of the bridges between right and left).

Using the same principle, the shops on Main Street are allocated such that on the right hand side the shops sell goods you take into the park (e.g. food and drink), and on the left hand (or the right hand if you are leaving) there are goods you take out of the park (e.g. souvenirs).

Another example of applied psychology is the use of forced perspective to influence customer experience. Main Street is built (like many theatre sets) with forced perspective, such that it looks bigger entering the park and smaller on the way out. On the way in this helps generate a sense of anticipation, and on the way out it helps reduce the effect of fatigue by making the exit look nearer.

The key takeaway for other businesses is that developing an understanding of how people tend to behave can help you to develop services that better meet the needs of customers. Furthermore you can use these behaviours to influence how people interact with your organisation, for example through the careful design of services and interfaces you can influence user behaviour (for example, by limiting a product range, you can potentially generate larger uptake than through having a larger offering).

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Staff Numbers

Disney’s greatest expense as a line item is its cast. It’s hardly surprising – cast members are ubiquitous throughout the park, always ready to answer a question or help you out. To give you an idea, there is one cleaning staff member assigned for every two bathrooms in the park. They will clean one bathroom, then go over to the other and clean it, then return to the first. Overkill? Not when you have that much traffic, and not when you want your bathrooms to be some of the cleanest on the planet (incidentally, the cast members assigned to this duty take immense pride in their work, and are some of the friendliest people in the park). And I can assure you that the primary motivation is not the extrinsic use of high wages, but an intrinsic motivation built from the culture of the organisation.

What are the ramifications of this for other businesses (beyond the payroll effect on budgets)? There has been a great deal of discussion around the effects of increased automation of labour, and the shift of existing non-service labour to offshore markets. For better or for worse, it may be that Western economies will have to shift to a much more service intensive economy in order to maintain high levels of employment. Naturally in order to achieve this it will be possible that wages will suffer, so designing a culture in which the motivation to work is intrinsic to the worker (i.e. a pride and purpose in their work) and more dominant a motivation than extrinsic rewards will be necessary to mitigate such effects. These ideas run counter to decades of organisational practice, and the dogma that higher wages attract better employees. Disney, for its part, focuses on the intrinsic motivation as a means of generating performance, and in doing so overturns this dogma.

Honesty

I’m a big believer in honesty. The truth takes less effort, and the truth is a catalyst for recognising and solving problems.

One of the biggest revelations for me was seeing how Disney employees are honest about their work and about the organisation. The expectation going into this trip was that the company line would be a Pollyanna fantasy that everything is all happiness and sunshine, employees are perpetually performing at their peak, and that Disney never fails.

Wrong.

Disney and its employees are like any organisation, prone to mistakes and off days. Notably, the staff members that spoke to us were completely forthright with us about that fact. We learned as much about the failures of the organisation as its successes, and cast members would readily admit that not every day is a good day for them. Some days are harder than others.

What distinguishes Disney is how they acknowledge, accept and deal with these facts. A failure is seen as an opportunity for future success, and bad days are managed both by the manager and the cast member in an open and honest matter. In fact, they acknowledge that bad days happen from the first day of training, and give the cast members tools to deal with it, whether that’s through establishing open and honest relationships with managers, or through techniques and resources to manage performance. As a result, they have less off days and less failures.

I’ve been in organisations where admitting to having a bad day is frowned upon, telling the truth to a manager or a customer is forbidden, and where admitting failure leads to ostracisation by management. Not only is there a paucity of tools to deal with such issues, those environments have actually been some of the most toxic places I have ever worked.

A business culture that is built on honesty and acceptance works better in the long run.

Freedom

Another aspect of Disney’s business practices that stood out to me was the inherent trust placed in cast members, built up as a part of their cultural design. Cast members were not only permitted, but encouraged to do what was necessary to exceed expectations for the customer, whether that was giving a sticker to a crying child, or changing the setlist of a concert on the fly to include a song in sign language for a deaf audience member. The freedom for cast members to improvise and to make discretionary decisions also provides an endless resource for process improvement, given the proper frameworks (again, established from the outset as part of the Disney culture). If a cast member sees a way of doing something more safely, or with better customer service, or more efficiently, they are encouraged and championed for it.

How often is it that when we deal with businesses that we cannot get the outcomes we desire because employees are restricted in what they can do, or even worse, fail to use their discretion in a situation out of fear that it could have ramifications for their employment. A business should enable its staff to be able to think for themselves, to act with the best interests of the customer in mind, and to continually improve the way that they do their work.

Pin Trading

Now of course, Disney is a for profit organisation, and so it’s always looking for ways to generate revenue – after all you can have the best corporate culture in the world, but if you’re bankrupt then that culture is of no use to anyone. The above observations that I’ve illustrated, even if some of them appear counterintuitive, generate a lot of profit for Disney through repeat business, differentation over the competition, and process efficiencies.

Some aspects of their profit-making, however, are a little more overt, and one that I observed was the business of pin trading.

The premise is simple – you buy a set of “starter” pins, and you collect pins by either buying more from one of the tens of pin-trading specific stores around the parks, or by trading with cast members wearing pins on lanyards. As a policy, cast members on request must trade their pins with anyone who asks. As an incentive, the cast members are usually wearing “special” limited edition pins that can’t be bought in the stores. There are literally hundreds of pin designs in circulation, a collector’s dream.

From a customer service perspective, the system of trading promotes interaction between cast members and customers, which in itself is good for business and for the culture of the organisation. It also improves customer interaction with the brand and brand visibility in and outside of the parks. But it also creates a lucrative revenue stream for Disney.

Based on some rough estimates, at sales prices of around $15 for a starter set of four or five pins, and upwards of $7 per individual pin, Disney are running gross margins of at least a few hundred percent (mass production of pins being extremely cheap). And that’s assuming that pins traded out of the system are merely disposed of after use – recycling could increase those margins even further. And that’s before you consider the added effect of the pins being a great souvenir and gift item in the absence of a collectible trading system.

Now collectibles as a profit centre is not a Disney idea nor is it a Disney monopoly. However, they have managed to tie the process in with their customer service approach by making cast members an active part of the pin trading and collection process. It’s clever, and by my (very rough, back of the napkin) estimate generates a gross profit of over $50 million a year.

For other businesses, it is worth noting that pin trading is not a core business for Disney, it sits alongside the parks. And yet, it would appear to be providing a good return on investment for the organisation, both in terms of its finances, its brand, and in terms of improving customer service (an interaction for trading a pin being a means to facilitate customer engagement). Businesses can benefit from looking at ways to improve customer service that may also pay for themselves in terms of revenue.

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The iPhone App and Free WiFi

Moving to some of the technology that I saw in use in the parks, the first tool that we used in the parks (even ahead of the visit) was the official iOS application. The parks have free wireless access, allowing people to use their devices to freely upload pictures to social media, and to use the iOS app to check details of their visit. The app itself integrates a custom Google maps layer (in Disney art style) for the park, showing rides and attractions, along with waiting times and opening hours. Users can plan their visit to the parks, find out which characters will be where in the park and at what time (no more blindly hunting for Mickey) and book both their ride times using the FastPass+ system and make reservations in the restaurants.

The app is still in early stages of development, and there are some features we would have loved to see (like being able to form ad hoc groups for FastPass+ bookings). But overall it’s a great example of app design, and how a business can improve the customer experience.

Fingerprint Authentication

The parks have now switched to a two-step method of entry, combining the RFID enabled entry pass with fingerprint authentication. On your first visit to one of the parks, you are required to scan one of your fingers in as a secondary layer of security (I am assured by Disney that the fingerprint data are deleted once the pass expires). If your pass is lost or stolen, nobody can use it to get into the parks as subsequent entries require you to scan your finger to match the original scan.

Of course, if your pass is stolen prior to you first using it in the parks, you’re at a loss, but in general, given that a five day park pass for Disney World is upwards of $300 (more if you want to visit the water parks or go between different parks in the same day), having an extra layer of security beyond the ticket itself is not a bad thing.

The MagicBand

The last piece of tech that I’ll talk about before finishing up is the MagicBand. These have just been rolled out in the parks and hotels, and represent an innovation in the way park visits are managed. The devices are a wristband comprising two RFID chips with a unique ID code that is linked to your account with Disney. You order your band ahead of your visit, and they ship it to you customised with your name and choice of colour.

The bands work both as your entry pass to the parks and as your FastPass+ pass, allowing you to use the priority queues for rides by booking ahead. You simply scan your wristband at the checkpoints and it lets you through.

The band also can be linked up with your hotel account, so that it acts as your room key. By linking the band to your hotel account, you are also able to make purchases on the wristband anywhere in the parks (you select a PIN on checking into the hotel). Obviously this is going to lead to more purchasing in the parks, since people will be thinking less about the cost of what they’ve bought because it’s so convenient and easy to use the bands (a phenomenon from psychology called the pain of paying). 

I used it throughout the parks and it worked without issue, and whilst I stayed within my budget, I can easily see people racking up a lot of charges on it.

Another, less discussed feature of the MagicBand system is the use of a longer range Bluetooth RFID chip. This allows tracking units set up through the park to track the bands as they move through the park. At this stage, the actual applications of this feature have been speculative, ranging from simple flow monitoring (i.e. how much traffic is going through certain areas of the park) to more personalised analytics (providing information to cast members on guests so as to enhance the customer experience).

I’m a bit more cynical about the latter scenarios, since managing the boundary between a nicely personalised experience (e.g. cast member knows my name) and a creepy one (e.g. cast member knows I had a hot dog for lunch followed by a trip on Splash Mountain) is still difficult to achieve in practice, and can have serious negative PR risks if done badly (see for example, Target).

However, there are potential positive applications at the individual level. One example is in the case of “lost parents” (Disney do not use the term “lost children”, since, as they told us, the easiest way to get a kid to start crying is to ask whether they are lost). The long range wristbands, coupled with a description of the parents (from the child), would facilitate localisation of the lost parents to a particular area, whereby cast members in that area can be alerted.

Disney have certainly thought this technology through. Even though the MagicBand technology is just rolling out, it is already integrated with some of the rides to provide a customised experience for the user. They’ve also though about how to carry on its use after leaving the parks, with one of the Disney video games having an unlockable character activated by linking the band with the game console. They have also managed to monetise the bands through customisation – while the bands themselves are provided at no cost to the user, the user can buy accessories for the bands including covers and attachments that turn it into a bracelet and fashion accessory.

I myself am wondering what I can do with it now that I’ve come back home, given that NFC and Bluetooth are reasonably common, though beyond an Arduino-controlled locking mechanism I haven’t come up with much. If there was an accelerometer in there it would be an instant competitor for the wearable fitness devices on the market (and besides, who wouldn’t want to know how many G’s they pulled on Space Mountain?).

The lesson for business here is to not be afraid of integrating new technology into their customer offering, and being creative about how a new technology can be applied and used by customers. RFID passes are almost universal now, but the multitude of applications of the MagicBand shows that there is still scope for benefits and differentiation.

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Conclusions

So that concludes my posts on Disney World. There’s a lot of other observations that I didn’t get to mention, and a lot of things that even now I am still thinking about. My holiday reading has been the Bob Thomas biography of Walt Disney, and whilst I don’t normally read biographies, this one has been compelling. It is clear that many of the points raised above about culture and innovation have their genesis in the pioneering work of Walt Disney.

The opportunity to spend a week at Disney World really taught me a lot about how businesses can be run, and about where businesses may be heading. As we move into a world where the technological playing field is more level, where there are more choices than ever for customers, and where differentiation will come through customer service in concert with intelligent analytics, the Disney model provides insights into how to create longevity, but also how to create the next success stories.