In the business world there are many curious stories that at the same time give us interesting lessons for those of us who are dedicated to strategy and marketing. Behind each organization or brand lies a story, sometimes unknown, that reveals to us the intricate paths through which their life has taken place and that leads to what they are today. These roads are often full of curves, setbacks, detours, stops and crashes.
All this is usually ignored when the company has become successful, but it is worth knowing because we can learn a lot about how important goals can be achieved despite the fact that there are many stones in the road. The PIXAR story is an example of how a strategic reorientation from an initial activity turns the core of the business into something entirely different .
The beginnings: a technological company.
John Lasseter and Ed Catmull are the founders of PIXAR . When the two met at the beginning of the 80s in the computer animation division of Lucas Films ( The Graphics Group ), John had been fired from Disney (you’ll see that they will meet again later) and Ed was a specialized computer engineer dedicated to digital animation.
At Lucas Films, they initially dedicated themselves to the design of hardware and software that would allow the rendering of images. They called the device PIXAR, and they began to sell it mainly to institutions and companies together with their own rendering software. This activity was not as successful as expected, perhaps because it was such an advanced technology that the sector it was aimed at was very small. In fact, no more than 300 units were sold. At that time, The Graphics Group was a mere technology company, yes, very new, and Steve Jobs (after leaving Apple), was already in charge of it. And the truth is that financially it had not just started.
At that time -1986- Lasseter, as the good animator he was, tested the technology they were developing with an animated short that today is already a cult video for PIXAR fans. Lasseter did it to demonstrate to the market the possibilities of the technology, but the effect was as unexpected as it was successful. In fact, it was nominated for an Oscar for “Best Animated Short” in 1987. The popular Luxo Jr lamp would also become the company’s icon over time.
This success was what launched this new line of business, until then just a way to demonstrate the capabilities of the software to potential customers. During the following years, as an independent company from Lucas Films, PIXAR made several more short films that were once again very well received, including Tin Toy , which finally won the Oscar for Best Animated Short in 1988.
It is around this time that the company begins a profound reorientation of its business focus , the computer technology division is sold and the interest of major animated film producers begins to arouse, including Walt Disney .
The birth of PIXAR as an animation company.
The experience acquired by PIXAR in animation technology (CGI) for many years, and the confidence given by the first shorts, have finally made it a definitive step in its business strategy and decided to focus on the production of animated films, with technology as a differentiating base compared to what already existed in the sector (which was a step behind and certainly had not been used in animated films).
Disney urged PIXAR to make a new feature film based on the Tin Toy short (in addition to two more with different themes). This is how the film Toy Story (1995) was conceived , which represents the debut of PIXAR in style and the first animated film in the history of cinema made entirely with digital effects. The critical and public success was endorsed with a multitude of awards and recognitions.
PIXAR’s strategic reorientation paid off, mainly due to these factors :
- Utilization of a unique competitive advantage (animation technology) in an industry where traditional animation predominated.
- Excellent stories (scripts) that break with the traditional plots of this type of film and touch the emotional fiber of the viewer. Maximum creativity thanks to the “Pixar Braintrust” , the group where the director, the scriptwriters and the production team participate to propose ideas and suggestions to develop the stories.
- Expansion of the target audience of your productions (not only children, but also adults).
- And especially, starting with a company like Disney , specialized in animated films, from which it took advantage of all its know-how and its film promotion and distribution networks.
The sum of all these factors propelled PIXAR into this new market niche (3D animated films for the whole family) that was consolidated with films for Disney such as A Bug’s Life , Monsters SA . or Finding Nemo . However, PIXAR continued to make commercial shorts for companies to help generate revenue.
PIXAR’s accounts soon began to swell, after the success of the films commissioned by Disney, to which was added The Incredibles , released in 2004. With this background and in less than ten years, PIXAR had gone from being a technology company oriented to the sale of highly specialized hardware and software to be the great protagonist of entertainment cinema . It had become an appetizing morsel for anyone willing to pay to eat it.
2006: Disney acquires PIXAR.
And who better placed than Walt Disney to do it. One of the best ways to grow in a market is to acquire the assets of companies that provide complementary synergies to your business. It’s faster and cheaper than developing an aggressive competitive strategy on your own that erodes your competitor. Heinz knew it when he bought the Orlando tomato brand in the late 1980s , or Procter & Gamble (Ariel…) when he acquired Gillette in 2005 for 57 billion dollars.
Disney, who knew PIXAR firsthand, saw the opportunity of a lifetime, and in 2006 signed the new acquisition for 7.4 billion dollars . Steve Jobs becomes Disney’s largest individual shareholder (let’s remember that Steve bought PIXAR from Lucas Films for just $10 million), and John Lasseter continues as creative director and Ed Catmull as studio president.
This strategic move by Disney allows it to relaunch its business, weighed down by new productions with a large digital component, and to face competitors like Dreamworks , which had already had successes like Shrek.
The new stage gives birth not only to new films with novel scripts and perfect workmanship, but also new lines of business based on merchandising or video games . The PIXAR universe expands to all corners.
In addition to achieving a new positioning, now with Disney it reaches more distribution points and has greater promotional capacity. After all… who doesn’t know Walt Disney movies?
Pixar: the keys that transformed it to success.
As I pointed out, all company stories contain interesting lessons. And in the case of PIXAR, there are several that are very illustrative.
Art challenges technology and technology inspires art. (John Lasseter)
As a technologically advanced company, PIXAR initially had a great innovation on its hands, a technology that allowed images to be rendered and animated. Something out of the ordinary in the 70s. His first idea was to offer it to companies that, due to their activity, could take advantage of it. And during his first stage he set his sights on sectors such as the medical or the automotive sector. The problem was that the market was very small, being a highly specialized product. On the other hand, few firms wanted to share PIXAR’s technology with the competition.
Due to financial needs, and above all because of Lasseter’s creative spirit, they began to create commercial shorts for various companies, using the same technology with which they went to the hardware and software market. That was the germ of the jump to another sector.
One of the business strategies derived from the well-known SWOT analysis is reorientation, which implies the existence of certain weaknesses that must be corrected to take advantage of market opportunities.
In the case of PIXAR, they had a great strength, technology, which was useless to take advantage of hidden opportunities in a market other than the one they were serving. The weaknesses that had to be corrected were above all conceptual. The product to sell was not the technology, it was what the technology allowed to do . (Something similar to Starbucks , coffee is not what is sold but the whole experience that surrounds the fact of having it in one of its establishments). The possibilities of computer-generated animation went beyond the images for a CT scan or a car engine.
And I believe that, without the creativity of Lasseter, who insisted on continuing to produce shorts, the transformation of the company would never have occurred. In fact, PIXAR shorts are still her hallmark as a producer today.
The elements that build your business strategy from change are always the same. A story with an emotional base, contribution of technical novelties (innovation), very careful scripts and suitable for all audiences and an almost unhealthy obsession with the quality of each production. I’ll always remember when I first saw Monsters SA, the detail in Sully’s hair was amazing. Perfectionism is a hallmark of PIXAR, no doubt about it.
And the final strategic decision , the acquisition by Disney, which was actually a change of shares, maintains all of the above and gives it more resources for the production and distribution of the films. In addition, it gains in expansion capacity to an audience already loyal to Walt Disney. Since the brand, the know-how and the teams are maintained, the essence is not lost, being the same PIXAR, but with more muscle in every way.
Pixar isn’t about computers, it’s about people. (John Lasseter)
John Lasseter is right when he expresses what PIXAR is. I have been reflecting on this phrase and I think I understand its meaning, I don’t know if you will share it with me.
Really, PIXAR is made up of people who jointly conceive and shape each of their creations, remember the “Pixar Braintrust” that they conceived to build each film. Technology is the tool that later facilitates production, but without the contribution of people , there would be no stories to tell.
On the other hand, PIXAR is about people . In all their films they touch on very deep aspects of the human being, such as friendship, the loss of a loved one, love, kindness… Their films deal with the aspects that make us human, that is why they manage to touch our most sensitive fibers, we excite, even if they are represented by animals, monsters or toys.
And finally, PIXAR is also designed for people , it wants to reach all audiences (unlike the traditional animation represented by Disney, focused on children). That’s why so many people like it, because it tells stories in which we are all represented.
In short, I think so, that focusing on people both inside and outside the company is a good way to define PIXAR. A company that had a hard time at the time, but has been able to redirect its strategic objective towards more attractive markets without losing what was its essence, a technology that today continues to be innovative and surprising.