Terms of Endearment

Walt Disney once said, “It’s kind of fun to do the impossible. ” When Walt and Roy founded Disney Brothers Cartoon Studio back in 1923, they never dreamed of the countless lives their company would touch. Sisodia, Sheth, and Wolfe discuss that one of the core attributes of Disney is the company’s desire to make people happy. They address the four values that have shaped why Disney has become this successful “Firm of Endearment”: Education, Organizational Support, Innovation, and Entertainment (Sisodia, Sheth, Wolfe, 2014, p. 234). Disney employees take pride in fulfilling the company mission of making others happy. Throughout the years the Walt Disney Company has established an effective leadership model amongst employees that has led to the powerhouse entertainment company we see today. When comparing their values and methods to those cited by Colquitt, LePine, & Wesson (2017), the theory/model most applicable to Disney is The Life Cycle Theory of Leadership. This theory, which is sometimes also referred to as the situational model of leadership, is predicated on the idea that peak structure and consideration in the workplace is dependent on the readiness of employees. In order for employees to perform at optimal readiness, the theory states that the company must guide employees through four stages: Telling, Selling, Participating, and Delegating. These four stages of the theory relate directly to the four values that Sisodia, Sheth, and Wolfe identify in their book, making this model applicable to the Walt Disney Company.

The first stage in the theory is Telling. This stage focuses on a very structured and monitored time for employees when leaders watch their performance closely to ensure responsibilities are clearly defined. This correlates to the first Disney value of Education. Disney has all theme park employees, also known as Cast Members, attend Disney University before they interact with guests. Judi Daley, the manager of the Disney University program in 1997 stated, “We don't say, `Here's how you might do it. ' It isn't just theory; it's theory in practice. Hear, see, and scrutinize how we do it. " (Allerton 1997). Through a closely supervised and regimented educational program, Cast Members are infused into the culture and practices of the Walt Disney Company. By learning to, “keep the park clean, create happiness, and do your job” (Allerton 1997), Cast Members are successfully honing the Telling stage of The Life Cycle Theory of Leadership.

Stage two of the theory is Selling. In this second stage, focus is centered on leaders providing support and encouragement now that employees have learned the fundamental responsibilities and values of their organization. For the Walt Disney Company this comes in the form of Organizational Support. One of the aspects that makes Disney University unique is instead of utilizing professional trainers, all lessons come from current Cast Members. This allows for new Cast Members to relate to real-life examples which are shared in a safe classroom environment(Allerton 1997). Disney also ensures that as new Cast Members go through the onboarding process, they feel supported by combining business programs with personal fulfillment courses. Things like allowing family members to come along to business workshops help support a positive work-life balance (Allerton 1997). These small touches that Disney makes as their new Cast Members start to become more integrated with the company, provide the Organizational Support for their future success. These touches also tap into the Selling component of the Life Cycle Theory of Leadership by continuing the support and development that confirms Personal Organizational Fit for these new Cast Members.

As employees become comfortable in their workplace leaders embrace the third stage of the Life Cycle Theory of Leadership, Participating. This is where leaders are able to give more freedom and responsibility to employees as they start to grow in their roles. For Cast Members this is a reflection of the Innovation value of the Walt Disney Company. Disney refers to park attendees as “guests” in order help guests feel at home while in a Disney park (McGough 1992). The guest experience is paramount to Disney, and they task their employees to ensure guests feel comfortable. That means empowering employees to err on the side of the guest if unsure, take the time to listen to guests rather than doing the bulk of the talking, and to make sure to personally answer questions rather than respond, “it’s not my job” (McGough 1992). This empowerment leaves guests satisfied and allows Cast Members the ability to go out of their way to make guests happy. Due to the Innovation value, Disney Cast Leaders have more opportunity to take a step back as newer employees are participating more.

The final stage in the Life Cycle Theory of Leadership is Delegating. In this final stage leaders are able to turn over key responsibilities to their employees, forming a sense of trust. For Disney this is where the final value of Entertainment comes into play. At a Disney park when Cast Members who come into contact with guests are referred to as being “On Stage” (McGough 1992). They are part of the magic that is being created at the Disney parks and it is the Cast Member’s role to provide the optimal guest experience. It is for this reason that all Disney Cast Members, no matter the role, have to spend at least one afternoon as a Disney character at a park (Allerton 1997). The Walt Disney World Company wants their Cast Members to feel that they are representing the “Disney Experience” when they step foot in their parks and are empowered to do whatever it takes for guests to have a magical time. It is this philosophy that makes Disney so successful in delegating to their Cast Members.

A study back in 1997 found that 70% of Disney theme park guests are repeat guests (Allerton 1997). This is due to exceptional customer service experience that Disney provides to their guests. Sisodia, Sheth, and Wolfe discuss that due to Education, Organizational Support, Innovation, and Entertainment, Disney has become a successful company worthy of the title “Firm of Endearment”. These same values go directly in line with the Life Cycle Theory of Leadership that is discussed by Colquitt, LePine, & Wesson (2017). Disney’s ability to channel this theory directly into their values sets their Cast Members up for success and makes them a force to be reckoned with in the customer service industry.

Question 3. Firms of Endearment (FoE) discussed multiple companies, all with distinguishing factors regarding how they manage and how they continue to be successful in today’s business world. One FoE company that stood out was Costco due to their culture and presence around the world. Costco has been continuously growing ever since they opened their first warehouse in Seattle, Washington on September of 1983 (About Us. , 2018). As of September 2017, Costco’s fiscal year end, there were 741 stores in 10 different countries with total sales of $126 billion (Smith, 2018).

The main question though is how do they continue to strive and remain top industry leaders? This question can be answered by looking at their organizational culture, which can be described using the Competing Values Framework (CVF). Within the CVF there are four competing values; Clan, Adhocracy, Hierarchy, and Market. Of these four values, Costco most identifies with the Clan value. Clan is known for collaboration, good morale, people development, communication, and many more characteristics (Lavine, 2014). These attributes that fall into Clan are exactly what Costco embodies. “Costco’s organizational culture is a major success factor for the business, especially by way of employee morale, satisfaction and performance. The following are the main characteristics of Costco’s organizational culture:

1. Common goal of excellence
2. Positive attitude
3. High energy and fast pace
4. Service orientation
5. Teamwork(Meyer, 2017).

These main characteristics of Costco’s culture tie perfectly back to the Competing Values Framework, and with these characteristics, Costco can provide a great customer experience due to their employees’ passion for service (Meyer, 2017).

This passion for customer service leads into another value which Costco strongly embodies, Market. In the Competing Value Framework, a four-quadrant diagram, Market and Clan are diagonal to each other. In the article Paradoxical Leadership and the Competing Values Framework Lavine states “The quadrants diagonally across from one another represent the greatest opposing differences. Therefore… in the upper left quadrant (Clan/Collaborate) is in greatest opposition to external competition and market focused result on the lower right (Market/Compete) …Therefore the CVF allows leaders to see that strong action in one domain carries a particular and specific risk of comparatively less action in the diametrically opposing quadrant” (Lavine, 2014). Lavine’s statement is inconsistent with what Costco has been able to accomplish. Costco is primarily dominant in Clan but they also have a strong presence in Market. Costco values customer service, profitability, and competition. In a small company biography of Costco in Firms of Endearment they state that Costco “…enjoys very high customer trust and loyalty, with a no question asked return policy and a policy of limiting its markup on all products” (Sisodia, Sheth, Wolfe, 2014, p. 227). Costco’s low cost and limiting markup has made them a competitive retailer and the second largest retailer in the world next to Walmart (McCarthy, 2017). This inconsistency in what Lavine has stated and what Costco has done makes sense though. These two values, Clan and Market, can complement each other if a company creates a collaborative and empowering culture that leads to great customer service. This complement of values has been seen in companies other than Costco as well, such as Whole Foods, Jordan’s Furniture, Nordstrom, etc. (Sisodia, Sheth, Wolfe, 2014).

Costco is a company that has balanced all the values in the CVF, and by doing this, they have been able to grow to the company they are today. Lavine mentioned that values which are diagonal from each other in the framework “can appear to be at conflict,” but Costco has found a way to make these values work in harmony instead (Lavine, 2014). Costco proves every day and every year that they can create a culture that involves all the values of the Competing Value Framework, and by embracing all the values, especially Clan, they have become a company in which people want to work for. Just last year Forbes and Statista stated that “After two years in the top 5, Costco was named America's Best Large Employer for 2017…” (McCarthy, 2017). When a company embraces the values of Clan, Market, Adhocracy, and Hierarchy it will enable the company to be successful and outperform its competitors which is what Sisodia, Sheth, and Wolfe show in Firms of Endearments – How World Class Companies Profit from Passion and Purpose.