Pixar: A Winner
Pixar has been highly effective at aligning its business and operating models to drive success. Founded 1986, Pixar has produced 16 feature animated films which together have grossed almost $4 billion at the box office (1). Critically acclaimed projects include: Toy Story, The Incredibles, Ratatouille, Up, and Finding Nemo. Disney took notice of Pixar’s ability to churn out blockbusters, and acquired them in 2006 (2). This ability seems to be driven by Pixar’s unique model of organization, production, and talent retention.
Pixar makes money by unifying art and technology to produce original animated films that motivate audiences to buy movie tickets, DVDs, digital copies, and merchandise. These films are marketed towards children, but have the emotional depth and production quality to appeal to adults. Pixar’s key market differentiator is its focus on quality. Instead of throwing out a portfolio of movies every year and hoping that a few become blockbusters, Pixar makes big bets on a fewer number of films, producing one film every four to five years. It minimizes risk by ensuring the quality of these films via a highly monitored production process.
Pixar has a very unique operating model compared to other film studios. In other studios, new creative teams are formed around new film concepts and then disbanded once the films are complete. Pixar takes a drastically different approach and retains creative talent as long-term employees. This allows teams to improve their skills and operating processes over time with increased repetition (3). Pixar leaders believe that the initial idea matters a lot less than the people who actually iterate and brainstorm around that idea throughout the production process (4). Other key elements of Pixar’s successful operating model include:
Incubator Teams: When concepts are still nascent, small teams of directors, writers, and artists serve as incubators that work together to improve and expand on the initial ideas. This tests the idea, but also serves as a way for teams to feel out their strengths and weaknesses and learn how they should work together moving forward (4).
Shared Dailies: Every day, directors and producers must show their daily work to everyone (instead of just a small team like at other studios). All members of the crew are encouraged to offer suggestions for improvement. Dailies serve as a great way to share information with the entire team and break down departmental barriers (4).
Creative Brain Trust: This is a committee of creative leaders in the company that directors/producers can access to help solve production problems. An important and unique dynamic of this group is that, unlike traditional studio development executives, the advisors of this committee have no authority. Instead, they are peers whose purpose is solely to offer creative input and advice (5).
Postmortems: These are meetings that occur after a film is finished and discuss the successes and failures of the process. This is critical for the growth of the teams (as they will largely remain together to work on the next Pixar film) and helps improve work output and processes for the future (4).
Pixar University: The company offers classes across disciplines to foster communication between departments and emphasize the idea of “learning and growing together” (3).
Pixar Campus: The campus has an open plan that maximizes interaction among colleagues during the workday to stimulate conversation and free flow of ideas (3).
Business and Operating Model Alignment
The business and operating models are both aligned on Pixar’s key competitive advantages: creativity and quality. Pixar has become a consumer-facing brand associated with a high level of creativity and quality — and they want to sustain this brand identity to retain loyal audiences. To ensure that this production value is being provided to customers, the production process is highly detail-oriented and based on constant iteration, refinement, and team growth and learning. A Harvard Business Review article even likened Pixar’s continuous improvement model to that of Toyota’s “Kaizen” philosophy (6). The operating model also supports the business model and decreases the risk of a very expensive film failure by subjecting the work in process to constant quality control checks. High levels of cooperation and sharing throughout the production process allows for errors in storyline, dialogue, or visual effects to be caught early and often — before the process is too far along for these problems to be fixed (4). Though this increases the cycle time of the process (often only 2 seconds of a film is worked on each day!), Pixar’s box office performance has shown that the value gained from this process in quality and creativity added has definitely paid off (7).