#103 How to Navigate Change and Sustain Momentum in a Declining DVD Industry

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Hi everyone, and welcome back to the Proteus Leader Show. I'm Marie-Olive, and I'm thrilled to have Eddie Cunningham join us today. Eddie is the president of Studio Distribution Services, a joint venture between Universal Pictures and WarnerMedia, which handles the home entertainment distribution of major studios. With decades of experience in the DVD industry, Hedy has navigated some of the most significant shifts in media consumption. I was lucky to be in Hedy's team for a number of years, seeing him in action, and still have him as a mentor to this day. We'll explore together how to lead and innovate in a declining market such as the DVD industry while keeping your team and yourself motivated. Eddie, thank you so much for joining us.

Well, thank you for having me, Marie, as always. It was great to have you and my team as well.

Thank you. Now, the DVD industry has faced significant disruption over the years, especially with the rise of digital streaming. Now, who is still buying DVDs nowadays, Eddie?

Really good question, and one I get asked often because There are a number of people that will say, do people still buy those? Because it was such a big business 10 years ago. The truth is it's still a billion-dollar market in the United States alone. So it's a fairly big business still. The consumers, I mean, it's oversimplistic, but they probably split into 2 main categories. One is the more high-end consumer who tend to buy Blu-ray or 4K UHD now. And it's people generally that know a lot about movies. Mm-hmm. They're big fans of the movie business. They want the best quality picture, best quality sound, and that is very much still on a physical product rather than something that's transported to your device digitally in some way. So it's people that want the highest quality. I think at the other end of the scale, it's probably people who never really got themselves comfortable with electronic sell-through, meaning buying or renting for a price and owning a piece of digital copy, digital signal, as opposed to something physical they could touch, have in their collection, have a library and so on. And maybe a third category really would be gifters, which often is family content or content that could be consumed by children, you know, animated movies and so on, where you feel like you get lots of value for the money, where the kids will probably watch the latest How to Train Your Dragon movie or Minions movie 20, 30, 40 times. So probably those are the 3 main groups, but it's worth about $1 billion today in the US.

Yeah, there's something about collecting physical products. I have my shelves, I have the books, and on the other hand, I have all the DVDs that we released over the years when we worked together.

Absolutely. And a fair part of the market is impulse purchase. You're in Walmart, you're browsing on Amazon or something, and you see something where you've seen the marketing for the theatrical release or some other part of the movie marketing, and you see it there and then. Impulse. We all like shopping. We all like putting things in a basket if we're in a physical store and Increasingly online.

Yeah, absolutely. So what have been the most critical shifts in your leadership approach to help your organization adapt to all these changes?

So you mean in a declining environment as opposed to growth business?

Yeah, exactly.

The obvious thing to start with here is that I was in a growth business for like 15 or 20 years. And I used to say, You can probably get double-digit growth before breakfast for a lot of years. And the people that would get 15 or 20% growth were the people that worked hard at it and the smarter, more resilient ones. So we had a lot of years of growth. And then obviously, like most businesses, the market kind of peaked and started to move into a decline situation. In all honesty, I don't think I've changed my management style that much. I've worked for 11 parent companies in my time, but I've only moved companies once. So I've been through 10 takeovers. So I've seen with 5 different nationalities of those owners. So I've learned a lot, hopefully, from watching all those different styles, all different bosses and so on. At some point, I kind of distilled down or tried to distill down for myself what was important about running a business. And I'd been in retail operations, I'd been in clothing, I'd been in music, I'd been in video, the film business and so on. And really, when I tried to distill that down quite a long time ago, I came up with 3. I like things in 'Cause people tend to remember them a little bit better.

The power of 3s.

The power of 3s, yeah. And really for me, I think it's about the right strategy. It's about the right people. And it's then about creating the right environment. So the strategy is an all-encompassing name that really, for me, it means the vision. It means the goals for the company, the tactics and the executional plans. But basically have a plan. Yeah, the right plan. Clearly, if you're on the wrong plan, you're kind of in trouble. So it has to always start with the business plan. So the right strategy, the right people, hiring the right people. I used to study Jack Welch quite a bit when GE owned the company, maybe a little bit for that, actually. And on people, he always used to talk about the numbers and the values. And what he meant by that, obviously, was not numbers per se, not that we all had to be accountants, but he meant the day job, you know, the skills that you need to deliver your day job. So he would call that the numbers. And then he would talk about the values, the kind of people we are, the kind of culture we want to create, and so on and so forth. And I think if I've learned one thing over the last 20 years, it's that the cultural piece of it is equally as important, if not more important actually, than the day job. You should hire for character and you can train some of the things in the day job side. So I think Jack Welch had a lot going for him when he talked about the numbers and the values. And the last thing, so I've talked about the right strategy, the right people, and then creating the right environment.

Yeah.

And for me, that's the one that I've often seen in certain companies I've worked for or some of the departments I've been in, leaders don't spend enough attention to.

Yes.

And my argument really would be, if you fail at any one of those things, you know, the right strategy, having the right people in the organization, and creating the right culture, you're probably going to fail, or you're certainly never going to max out on what you're doing if you don't get all 3 of those. Right. Most of the time.

Yeah, it's music to my ears because we focus a lot on cultural work at Proteus. And how do you create the right environment? I think that people agree with this in principle, but then it's hard to execute, especially in that declining market where you have all those challenges.

I think the first thing as a leader of an organization, and particularly a new organization that I went into 4 years ago where we set up this joint venture from scratch, is As a leader with experience, you're going to go in with some pretty strong ideas about the kind of culture, the kind of business that you want to run. But I think it's important to recognize that you haven't got all the answers. So what I tend to do is probably spend 3 to 6 months working with my leadership team, and then with a few selected individuals, maybe further down the organization, to basically devise the culture towards the culture. And perhaps one of the things I learned recently was when we decided on the joint venture, what the values would be, things like belonging and leadership and accountability and courage and listening and, and so on, that for the first time ever, we actually came up with some behaviors. So on each of the values, we described very clearly the type of behaviors that would show that you were demonstrating those values.

Yes.

And then I think it's a question of fine-tuning. That is a question of communicating it Widely. It's a question of walking the walk.

Yes.

Not just talking the talk. It's a question of making sure your leadership are completely bought into it because the obvious way any of these things are going to fail is if you as the leader are sitting talking about, here's the values we espouse, and you've got 2 or 3 people running around doing the exact opposite, that will fail fairly quickly. So I think it's a lot about communication. As I say, it's a lot about walking the walk and demonstrating those values every day. There's none of us perfect. You're not going to get it right every single day and every single hour of the day, but just Keep thinking about those values and talk values all the time. Another thing we do is I do a town hall once a month. I think really important to keep the communication going with everyone in the company. And we actually present some culture awards at each of those. So we actually get one or two people on stage.

Celebrate the values.

And we celebrate the fact that they have demonstrated in some fairly significant way the values that we espouse. So we, so we. Keep it front of mind.

Yeah.

So the leading by example, and I love the behaviors associated with those values, because if you take a value, it could be seen as vague or abstract. And so you kind of say, how do you actually do it? So you make culture more tangible in some ways. Yeah.

Yeah, absolutely.

Absolutely.

And one of our values is listening, but I've been thinking the next time we rewrite those, because the values have really held for the 4 years we've been here and they're Pretty much as relevant today as the day we started. We do pull them out every year and have a think if they're still current and the world is changing around us and so on. But I think the value about listening is such an important one, particularly when you're in a change environment. But I think if we're rewriting it, the idea that's in my head at the moment is we should talk more about hearing than listening, because there's a very big difference between the two things, which is probably obvious.

Tell me, tell me. I don't want to assume.

Well, I think it's very easy to say listening. I think the world we're in today, we've all got shorter attention spans. We skip from one thing to another. We've got 2 or 3 devices on the go at one time. And I think it's very easy to think you're listening, but you're kind of missing a fair bit of what's actually been said to you. And because there's nothing you can give people probably that's more valuable than your time and focus and the fact they think you're listening, but more importantly, you're actually hearing what they've got to say to you. So I think if I'm redoing those, I might change listening to—

Yeah, I think it definitely can stick more with people because we talk about listening all the time, but what is it to listen deeply and being able to restate what people have said, right? They need to have heard it.

Yeah, exactly.

Yes. And I think also I take away those initial 6 months where even with your deep expertise and knowledge. You don't go to the table with all the answers. You involve your team, you collaborate. So those are shared values, shared vision. I think that's also important to remember. This is a collaboration period.

Yeah, no matter how many times you've done it, it is always far, far better by the time you involve some more people in the process.

Yeah. challenge I'm thinking about in this declining market is how do you drive innovation, right? And foster those opportunities when we think that traditional formats are losing ground. How do you do that?

Well, I think going back to my 3 things, right strategy, right people, right environment. I think keep that front of mind with regard to innovation. So there's something about the kind of people you hire into the organization. There's an expression I used as we came out of the boom years for If you like, and then moved into kind of flatter cycle. I think we had a lot of really great people that were great at, I call it riding the waves.

Mm-hmm.

But we didn't have so many people that were good at creating waves.

Yes.

So I think it was important when we started to turn into flatter cycle that we brought in some different kind of skills, people that were a bit more innovative in style and so on. And then it goes back to hearing again. listening to people. The best ideas don't always come from the leaders. So make sure you're creating an open environment where people feel comfortable making suggestions, where people feel that they're supported when things don't work. You know, as long as they've communicated the plan, as long as they've got buy-in for the budget, as long as they've been transparent about it, we're all in it together. So trying to encourage an environment where people feel comfortable With their ideas, one thing I do once a month, we call it coffee morning with Eddie. I take an hour with about 12 to 15 of the more junior staff. I might do 10 minutes on what's happening in the business and so on, but the other 50 minutes are: What do you want to talk about? What are your questions for me? What's working well? What do you hate about the place at the moment? You know, just open-ended questions. And sometimes when you go down two three levels in the organization in terms of seniority, that's where the best ideas come from because those. People tend to be less inhibited about their questions and throwing forward ideas. And as often happens, 9 out of 10 probably don't make sense. They're probably going to be impractical. Maybe you would never have a budget to do it. But that one nugget is sometimes going to be in there. And I think the role of leadership in terms of innovation is the leadership team need to come up with one or two, one or two ideas. So this joint venture was created really If we're being honest, it was a kind of cost play. The market was declining a little bit. Two studios came together and thought we'll get some economies of scale here and what have you. But we didn't sit around and wait for our two studio owners to tell us what to do next. We came up with a plan fairly quickly to say, "Well, look, if this market's getting smaller and we can be the best at this, then could we become a sort of consolidator for the industry? Would that help retail? Would it help other studios? Would it help the market's longevity?" And so on. So I'm pleased to. I should say that when we created the joint venture, we were touching about 38% of the content in the United States. This year we'll be up to about 76 or 77% of the market where we're handling a number of services connected with the distribution of the content. We've been appointed last year as Walmart's sole distributor and consolidator. They're the biggest player in the market here in the United States. So it's just basically taking those skills, trying to be your core skill set and seeing if you can expand them. And you can certainly be very successful taking a bigger share of a declining business. And that's what we've tried to do. So there's ideas from the top and there's ideas coming up from the bottom. And you just try to, to try to create a culture where people feel comfortable bringing those ideas forward.

This is a fabulous example of how you transformed a challenge into an opportunity. Oh, if the market is declining, then you need one consolidator. And if we're best in class, we can be That company.

Absolutely. And now we're thinking about the next level of innovation, which is we were really set up as a video company to distribute for 2 studios largely. Now we've grown significantly in the market we're in. Could we be taking some of those skill sets to adjacent categories? Music, books, for example, where a lot of the skill sets required to handle the distribution and retail side of those businesses are pretty similar.

Yeah, that's a bit what Amazon did, right? Initially books and then it's become what it's become. Now, for leaders listening today who might be facing those declining markets or major disruptions, I love to leave them with additional practical steps. You've already given many, but what would be your top 3, as you love 3 practical tips?

Yeah, I think the first thing to say is, as a leader, is to recognize that almost everyone is going through this in some way. You know, even if you've got a successful growing business, the pace of digital change is probably changing your business. And also, if you're in a world where the economy is growing 2 or 3%, simple arithmetic says half companies are going to be in some sort of decline and half are going to be growing. So you're not alone or also unique in facing these challenges. The first thing is, Setting a really clear direction for the company, you know, have a real clear vision of what you want to do, have a real clear set of goals for the year ahead, have a clear set of values. So set a really clear direction. Make sure you cascade that to everyone, that it's discussed, that it's demonstrated. It's walking the walk again and so on. So I think there's something about clear direction. I think there's definitely something about hiring people into the organization that have the right values or certainly will buy into the values of the company. And as I've said, earlier, I think that's equally important, at least as the day job. I think it was Peter Drucker that said, culture eats strategy for breakfast.

Yes.

And there's some— there's something in that quote for sure. Third thing I'd probably say is inevitably you will always get blockers in the system. So I would say, have a little bit of patience, try to take them on the journey with you, try to break down the blocking. But if you can't, removed from the organization. They're like a cancer in an organization, and you have lots of collateral damage if they won't buy into the values and the vision for the company. So if you're going to reward the people who achieve and are successful and deserve bigger bonuses and so on, you need to deal with the people who are just not going to come with you on that journey. And I know that sounds a bit harsh, but I think it is incredibly important. And maybe if I could pick a couple other ones is make sure You have a rigorous process around performance feedback, setting individual goals that line up with the company's direction as much as you can, and rigorous performance feedback. Embrace those difficult conversations. You're not helping people by not going back to them with constructive feedback or ignoring things because they're difficult conversations. And maybe the last thing I'd say is measure yourself and keep yourself honest.

Beautiful. Beautiful. And I imagine on the performance feedback, as you were saying earlier, based on behaviors, right? That you give the feedback that is factual, that you've observed so people can really act on it versus judgmental.

Yeah. I think if you're going to say the numbers and the values are important, people need feedback on both. And quite often what people will do is they'll get feedback on the numbers, the day job side, because that's easier to do. It's a little bit easier to measure and there's goals and targets and they're fairly visible, but giving feedback on the values. Sometimes that's a slightly grayer area and it's a little bit more difficult to describe, but you shouldn't avoid it. You should try to embrace it.

Wonderful. Thank you so much for sharing your wisdom and experiences with us, Eddy. Your insights on adapting, innovating, and leading through challenges are incredibly valuable. And if you're interested in learning more about how to navigate change in challenging markets, visit us at produce-international.com. Thank you for tuning in today, and until next time, here's to creating the life you truly want.

We hope you're feeling better equipped to create the career, the business, and the life you want. To find out more about how we support our clients in leadership, learning, and change, visit us at proteus-international.com. Have an excellent day, and thanks for listening.