Manage Innovation the Pixar Way

The real creativity leader during the late 1990s and early 2000s was Pixar.

August 18, 2010

During the late 1990s, a new company emerged that redefined innovation: Pixar Animation Studios.

Author and consultant Bill Capodagli took notice and researched how the company provides a working environment that encourages imagination, inventiveness, and collaboration.

Subscribe to Credit Union MagazineThe result was “Innovate the Pixar Way: Business Lessons From the World’s Most Creative Corporate Playground.”

Capodagli tells Credit Union Magazine how Pixar’s approach to innovation may apply to credit unions.

CU Mag: What inspired you to study Pixar and its approach to managing employees?

Capodagli: Pixar came on our radar screen around 1995 when we were researching our book, “The Disney Way."

We watched this rather obscure boutique studio that first appeared to be just a technical subcontractor to The Walt Disney Co. but, in the late '90s and early 2000s seemed to virtually replace Disney Animation. It was ultimately purchased by Disney in 2006 for $7.4 billion.

As we looked at this company, we found that many of its principles were more like the original principles of Walt Disney than [Disney's] had become.

CU Mag: So you think Disney lost its way?

Capodagli: Michael Eisner, Disney CEO, did a lot of creative things for the first half of his tenure. But during the second half of his tenure he lost his way, looking at new creative outlets and long-term vision.

Walt Disney created an organization based on mutual respect and trust. These concepts were lost during the late '90s, and Disney started making formulaic movies: Cinderella II, The Lion King II, The Lion King 1½. What was that all about?

As we started looking at where real creativity was coming from during the late ‘90s and early 2000s, it was coming from Pixar.

Next: Pixar's approach to managing employees

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                     MagazineCU Mag: What’s Pixar’s approach to managing employees?

Capodagli: It’s based on a collaborative effort. Pixar goes to great lengths to make sure employees are a group of creative people who are, first and foremost, collaborative teammates.

That means they try to accomplish a common goal based on a lot of different skills. They’re constantly reviewing.

One thing many creative types there had to get used to was that Pixar has a daily review of all their work. It’s not about saying something is wrong or bad. It’s just an open area where everyone can comment and help each other.

To do that you need to have a safe haven where people feel safe to tell the truth and express their ideas.

CU Mag: How can CUs create a safe haven for innovation?

Capodagli: It starts with leadership. Leaders must realize they can’t be everywhere all the time and they don’t have all the answers.

One cofounder of Pixar said it’s about people functioning as a team and being enabled to make decisions. That’s more important than great ideas coming down from top management.

I did a keynote for a financial institution a few years ago, and I love what its president said: “We have to do what our customers ask of us unless it’s illegal, immoral, or unethical. They’re entrusting us with their money and their financial future. We need to solve their problems, not cause more problems.

CU Mag: How does Pixar motivate employees to be creative?

Capodagli: The whole premise of our book is that Pixar is this corporate playground. When you go there, you may see people playing foosball or swimming in an Olympic-sized pool.

It has created an atmosphere where work is fun—working hard and playing hard. That’s the greatest motivator.

CU Mag: How can employees embrace playfulness when their employer doesn’t?

Capodagli: That’s tough. If leadership doesn’t embrace or create an atmosphere that enables workers to have a good time, it’s hard for the worker to do that.

On the other hand, front-line employees can still embrace fun during their interactions with customers. You see a lot of examples of that in non-fun organizations, where there may be one employee who’s a little wackier than the rest of them. But the customers love that person and wonder why the whole organization can’t be that way.

Next: How to encourage risk-taking

Subscribe to Credit Union MagazineCU Mag: How can an organization encourage risk-taking, especially during these poor economic times?

Capodagli: As children, we learn by exploration and discovery. We try something, fail, and try again.

Organizations need to do that. They need to learn to fail forward fast rather than being risk-averse during these tough times.

We need to embrace risk and try new things, but be able to react quickly to them and make adjustments so they ultimately can be successful.

CU Mag: What are the best ways to improve employee morale?

Capodagli: We’ve about having fun, collaborating, and trusting. When people know they’re trusted in how they do their work and that their work is valued, that improves morale.

CU Mag: How can companies benefit by employing Pixar’s approach?

Capodagli: Disney, Pixar, Men’s Warehouse, and Nike have three to five times better turnover—that’s lower turnover—than their competitors.

Two studies have shown that replacing an employee making $8.50 per hour costs $10,000 to $12,000 for training, advertising, and service disruptions. If you’re doing three to five times better than your competitors, that gives you quite a competitive advantage.

CU Mag: What mistakes do some organizations make when they try to be more innovative?

Capodagli: We worked with one organization, an engineering group, that was trying to promote fun in the organization. It said that every Tuesday afternoon would be fun time.

People in the organization starting referring to this as FFT: forced fun time.

The problem organizations have is that they try to dictate a set of values rather than showing people why it’s important to embrace those values. If achieving great customer service was as simple as posting values on a wall, every organization would be innovative.

It’s a matter of embracing those values, and seeing examples of leadership embracing those values, that really makes organizations innovative, creative, and customer-centric.

Walt Disney was once asked, ‘What’s the secret to your success?’ He said he’d dream of things that never were, test those dreams against his values, dare to take the risk to make those dreams come true, and put plans in place to make those dreams become reality.

Pixar’s ‘dare, dream, do’ philosophy is alive and well. You need to dream like a child, believe in your playmates, dare to jump in the water and make waves, and unleash your childlike potential.