Pixar, Ford, and the New (Whoops, Old?) World Order

My friend Andy Pearson, when he was president of PepsiCo many years ago, sat next to me at a head table in a moderate-size hotel ballroom somewhere. In the middle of some discussion or other, he pointed to a spot about halfway up the wall and said, as I recall, "Up to there is about the amount of syrup we make. The rest of Pepsi's market cap [several billion, even then] comes from marketing and execution." Which is to say we've actually lived in a "soft" economy for a long while, perhaps since P & G invented modern branding, maybe three-quarters of a century ago.

I indeed have the utmost sympathy for the soon-to-be-laidoff Ford manufacturing families, and the devastated communities that will be deserted by "solid" "industry." But speaking with my economics-growth hat on, the Pixar-Disney deal seems far more important than the Ford layoffs. Like it or not, and many don't like it or at least feel uneasy with it, we live in a "Pixar World."

By the way, I like it.

I've been a Design Freak, until recently a lonely one, for about 15 years. The $7B+ Pixar-Disney tango was basically a "design deal." Steve Jobs and his team will essentially be the key movers in the hoped for revival of America's premier "imagination company." Such meldings are nigh on impossible, but Steve has a strength of character and a steely temperament that may allow him to do exactly what he hopes and thinks he can—namely use his Emoryville CA team to wake up a slumbering, dusty giant. Incidentally, Steve's effort to revive the amazing spirit of Walt is not far in spirit from Jeff Immelt's gargantuan effort at GE to revive the Edisonian, innovative spirit lost as GE turned its mammoth attention to operational excellence. Getting on the bandwagon, Davos, just underway, this year is focused on innovation—and rightly so. All the established economies' cost-cutting thrusts, no matter how effective, won't get us within spitting distance of China.

But back to Andy Pearson and the anonymous ballroom with the figurative marker on the wall. On my recent spate of 14-hour flights, I began reading a superb book by James Twitchell, Branded Nation: The Marketing of Megachurch, College Inc. and Museumworld. My attention was captured by an amusing (whoops, profound) chart on page 11. The book was written in 2004, when the price of gas at the pump was a scant $1.75 a gallon in the U.S.A. Twitchell compared that to some other per gallon prices. To name a few: Lipton Iced Tea ... $9.52 per gallon. Ocean Spray ... $10.00. Diet Snapple ... $10.32. STP brake fluid ... $33.60 pg. Scope ... $84.48. Pepto-Bismol ... $123.20. Vicks NyQuil ... $175.13. Oh, and Evian water ... $21.19 per gallon.

To be sure, there is surely "substance" to these products (except if you're a cynic, like me, Evian); nonetheless the "other," beyond the syrup mark in the ballroom, is the "soft stuff" of the so-called "new" economy. From Harleys to iPods to Nyquil to the $46 billion value-added water market, we are miles and miles—and then more miles—beyond the "stuff" economy. And while I lament the fact, well worth lamenting, that China and India already turn out more engineers than we Yanks, I am not ashamed of our tidy lead in "other"—the intangibles that come out of the heads of freaks-in-animation-labs, and stoke the fires of the dominating "soft economy." Like it or not, we live in a Steve Jobs World. And in fact, though few were willing to acknowledge it, we have for half a century or so. Now if only we could get the schools, including B.Schools, to move beyond the industrial, rote-learning age ... and embrace the age of intangibles-creativity-innovation I really would feel better—I might even skip my appointment with my shrink this afternoon.

Meanwhile, I shall look with great interest at the Pixar-Disney dance, despite my skepticism of all big combos of divergent corporate "cultures"—especially when some one small becomes a "full partner" with someone big.