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What is behavioral economics? Why does it matter to you?

Podcast Episodes

What is behavioral economics? Why does it matter to you?

144. Disney: A Behavioral Economics Analysis

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It has been over a year since there was a company analysis episode on the show and they are coming back by popular demand! In addition to this episode about the happiest place (and perhaps the most magical company) on earth, there are behavioral economics analysis episodes on Apple Card, Costco, Peloton, and Starbucks (which quickly rose through the ranks to become the third most downloaded episode of all time) here on The Brainy Business. Links to all those (and so much more) below.
Disney is such a massive company this episode could have gone in a lot of different ways (and I would guess it won’t be the last time you hear me talk about Disney on the show). Today is mostly focused on traditional Disney: amusement parks, movies, and a bit about Disney+. I’ll go through a whole bunch of concepts from behavioral economics that I see them using/leveraging in their work, and explain what you can learn from Disney in your business.

Show Notes:

  • [02:10] It is important to acknowledge that Disney is a massive organization with many, many facets and paths I could have taken this episode down. I would be willing to bet that there could be an entire podcast that is exclusively dedicated to the behavioral science of Disney and it would not run out of content. 
  • [03:12] Knowing coronavirus has impacted their numbers, before the pandemic, they were reported as having 210,000 employees and revenue of about $60 billion.
  • [03:23] That is before launching Disney+, which has been the most successful launch of a streaming service to date. In a little over a year, Disney+ is over halfway to being the largest streaming company in the world.
  • [05:38] Their focus on innovation and always working to be better makes them stand out.  Among the 210,000 employees I mentioned earlier, there are over 20 behavioral scientists, along with hundreds of imagineers creating the amazing features and attractions around the parks and experiences throughout the world.
  • [06:14] They have an incredible talent for balancing expectations with surprise and delight in this beautiful dance that works with the brain’s bias for the status quo.
  • [07:11] If any of the things you expected of Disney were to change it would be a letdown and a negative experience. You would have negative dopamine because your expectations weren’t met and it can tarnish the brand.
  • [07:57] These constant little tweaks and adaptations keep it fresh at Disney without being so different you lose the nostalgia factor and trigger ambiguity or uncertainty aversion. Enough remains the same to find that perfect balance of new and nostalgic. Because we have a bias for the familiar and love to share particularly great experiences with others, especially the next generation, it is important to keep some things static even over decades.
  • [08:51] This embracing of nostalgia goes beyond the parks. Their movies and merchandise build on this concept as well.
  • [11:12] Our brains love a little novelty and Disney incorporates theirs along with the IKEA effect.
  • [11:36] Disney has little surprises throughout their parks. For example, the hidden Mickeys around Disneyland and Disney World–reportedly about 1000 per park.
  • [12:19] Disney also does a great job of putting little “easter eggs” in their movies, particularly in its subsidiary brands.
  • [13:36] Those little wins that help you feel smart also help you shape your experience with the brand. You look for little hidden gems and get to be part of the magic.
  • [14:45] Being part of the fun and shaping the experience makes people like it more, and in Disney’s case, it is also a great way to sell lots of other merchandise.
  • [15:57] Scarcity creates buzz and excitement, we herding humans love to follow the crowd and if we see some social proof that an item is popular AND in short supply we can’t help but get excited.
  • [16:40] Having others spread the word about you and create their own fan version of your creations is another great reflection of how much people love Disney.
  • [18:27] Really thinking through those experiences, caring that much, is a gift (reciprocity), and one that people repay Disney with by being loyal fans of the entire organization. 
  • [20:08] When there is something to DO it is easier to forget about how long you are waiting (combating idleness aversion).
  • [21:19] Turning that line into a dopamine generating anticipation-building experience is a great way to make it so we end up loving the thing we probably would have thought we would hate! That anticipation is made possible by making the experience fun and getting people excited about what is to come. 
  • [22:35] Our brains love that little tease and waiting to see if something is going to live up to our expectations, we will hype it up in our brains while waiting to see what happens.
  • [23:25] Some of the guiding principles at Disney include Mickey’s 10 Commandments. Think of these as a handbook or a set of value statements.
  • [24:58] When you expect error (a key concept of nudging) and think about all the ways to make it easy for people to not get stuck, it can make for a much better overall experience.
  • [26:08] Consider the simple frame of being “the happiest place on earth” or “where dreams come true.” This frame works as a prime for the experience people have with the brand. It’s a very simple tactic, but hugely important. Not only does it shape the customer experience, but it can shape the employee experience as well.
  • [27:21] Going through a process of making the impossible possible means a lot of variety from one project to the next, so they leave lots of room to let each project have a flexible approach. However, because there is some framework needed, they have a set of questions to help guide every project.
  • [29:29] Asking great questions adds to that thoughtfulness and makes your entire brand experience different.
  • [30:35] Disney starts with a great story and then says, “What can we build around that story?” It might be content or an experience or merchandise, but it is secondary to that tale we love.
  • [31:57] Know what you are about, why you exist, and how you are creating value in the world, then look for ways to incorporate that brain friendliness to make the best possible experience.
  • [32:25] Asking great questions adds to that thoughtfulness and makes your entire brand experience different.
  • [33:19] My first book, What Your Customer Wants and Can’t Tell You is officially on presale and available on AmazonBookshop, and Barnes & Noble order yours today and be one of the first to receive a copy when it officially launches May 11, 2021.

Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. 

I hope you love everything recommended via The Brainy Business! Everything was independently reviewed and selected by me, Melina Palmer. So you know, as an Amazon Associate I earn from qualifying purchases. That means if you decide to shop from the links on this page (via Amazon or others), The Brainy Business may collect a share of sales or other compensation.

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