Culture and Organisations Pixar case study HRO372 1. Background Pixar Animation Studios was founded in 1979, initially specializing in producing state of the art computer hardware (Carlson, 2003). In 1990, due to poor product sales the company diversified from its core business and began producing computer animated commercials for outside companies. Success came for Pixar after the production of its first computer animated film ‘Toy story’ in 1995 (Hutton and Baute, 2007).

Since then, Pixar has made many innovative animated feature films, with well known ones including – A Bug’s Life, Toy Story 2, Monsters, Inc.

, Finding Nemo, The Incredibles, Cars, Ratatouille and WALL-E, six of which are in the top grossing animated films of all time (Pixar, 2010). The company has won many Academy awards for Best Animated Feature film, and puts its success largely down to the “rare talent” of its employees (Prokesch, 2008). Pixar’s operates a strong organisational culture, which has seen it become a benchmark for other companies in the film making industry.

The company’s key objective is “to combine proprietary technology and world-class creative talent to develop computer-animated feature films with memorable characters and heart-warming stories that appeal to audiences of all ages (Pixar, 2009).

” In 2006, Pixar entered a 7. 6 billion dollar agreement to work with the Walt Disney Company. The Pixar Company is now a wholly owned subsidiary of Disney (La Franco, 2006). Although the merger has been a success long term, it has not been without its problems.

Pixar’s unique ‘hands off’ management culture has often conflicted with Disney’s traditional bureaucratic leadership style.

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The animation industry is a highly competitive environment, with Pixar’s biggest competition being, DreamWorks Animation and Blue Sky Studios. In 2008, the global animation market was estimated to be worth 300 billion US dollars per year (Skillset, 2009). In order to remain competitive, Pixar need to retain a highly skilled workforce and not lose their strong organisational culture, which is the foundation of their creative power and innovation. 2. Frameworks for analysis . 1 Schein’s framework Many theorists have given their definition of organizational culture. Schein (1997, p. 6), defines it as the “basic assumptions and beliefs that are shared by members of an organization, that operate unconsciously and define in a basic taken-for-granted fashion an organization’s view of itself and its environment. ” Schein highlights the importance of understanding culture within an organization stating that “organizational learning, development and planned change cannot be understood without considering culture as the primary source of resistance to change. Schein’s framework (see appendix a) argues that an organizations culture is made up of three levels, consisting of artifacts, espoused beliefs and values and underlying assumptions. This framework will be used to analyze the human resource management within Pixar to see how it impacts on the company’s organizational culture. In his book “The corporate culture survival guide,” Schein reveals that there is clear link between corporate culture and Human Resource Management. He states that corporate culture isn’t always what it seems. There are ‘hidden depths’ that managers fail to acknowledge in times of organization failure.

Managers need to grasp the true meaning of the company in which Schein states can be “learned, shared, tacit assumptions on which people base their daily behaviour. ” Pixar’s HRM is one that is designed to increase employee satisfaction. Catmull (2008), states that the belief at Pixar is that “people are greater than ideas. ” The company’s organizational structure, strategy, communication levels, team work environment, values and norms are central to its unique “hands off” management culture, which has seen it become a benchmark in the film making industry. 2. 2 Artifacts

Physical organizational structures and processes are at the basic level of defining an organizations culture. Schein states that “these artifacts are those aspects, at the surface, that can be easily discerned, yet are hard to understand. ” At Pixar these artifacts are as follows: 1. Pixar University The key to Pixar’s success is its talented employees which lie at the heart of the organisation. The company promotes a learning culture and all employees are encouraged to devote at least four hours a week to their education. In house courses are provided through the company’s own established university- Pixar University (PU).

Pixar University is responsible for training and cross training people, helping them progress in their careers (Catmull, 2008). Educational classes include screenplay writing, drawing and sculpting, however there are optional classes such as Pilates and yoga that encourage people from all disciplines to interact and value one another. Through expanding knowledge in and outside of their areas, employees become more resilient to change. Redman and Wilkinson (2006), support this view stating that through training and development, organizations are readily able to adapt to changes in the business environment. 2. Building structure

The Pixar building is designed for a functional purpose- to maximize interaction between all Pixar employees. Schein suggests that if you want to understand organizational culture have a look at their work place environment. The building typically represents a “den” culture (Duffy, 1997-) and is designed to allow for high interaction and low autonomy (see appendix B). The layout consists of a large atrium at its centre and includes a cafeteria, meeting rooms, bathrooms, and mailboxes. This systematically ensures that people gather there repeatedly throughout the day, providing “valuable encounters” (Catmull, 2008). . Recruitment All new hires attend an ‘orientation session’ where Pixar’s president Ed Catmull, gives a presentation on the mistakes the company have made and the lessons that were learned. The process is intended to ‘break down the barriers’ and change the assumption that successful people are not always right. 4. Communication structure There are no channels at Pixar. Members of any department are freely allowed to approach anyone. The decision making hierarchy and communication structure are seen to be separate from one another. Nobody needs to ask permission to speak to another member on how to solve a problem.

Pixar offer a “safe environment” on freedom of speech with all employees being encouraged to email notes to leaders giving their opinions on what they liked and disliked about their work and why. Barret (1997), states that transparent and open communication can positively influence innovation and creative processes in an organization. Ways in which Pixar manage this communication is through the following processes: (a) Pixar’s “Creative Brain Trust” Teams are typically made up of a director, a writer, some artists, and some storyboard people.

All team members are encouraged to share their ideas through a process called “the brain trust. ” This occurs when the producer or director need advice and so call together all members of the group to discuss the current state of work. All employees are actively involved in a “lively 2 hour session” on how to better their work. All Pixar employees are seen as valuable assets to the organization, and therefore all ideas are valued. (b) Daily Review process The company encourages daily review processes called “dailies,” in which all teams come together and present their work in progress to one another.

All employees are encouraged to give each other feedback on each team’s current state of work. Everyone shares their opinions and make suggestions for improvements. The director ultimately makes the final decision, however the teams get to put forward their ideas. “Dailies” is a technique that was originally used by Disney. (c) “Postmortems” After every film is completed, reflections or so called “postmortems” are encouraged as a way of focusing on the positives and the negatives. The idea is for employees to analyze what went right and what went wrong and use these boundaries as a benchmark for later productions.

Through using data, the organization is able to analyze each process, keeping track of the rates at which things happen, how often things are amended, and the current state of a piece of work when it gets sent to another department etc. The data helps to “stimulate discussion” and challenge any assumptions that may arise. 2. 3 Espoused Values Schein states that “beneath these structures there are espoused values, which are conscious strategies, goals and philosophies. ” It is these underlying beliefs, values and assumptions that dictate the way people act.

Tesluk et al (1997), believes that shared norms, beliefs and values help individuals to assume whether innovative and creative behaviour determine the way in which the organisation operates. Pixar’s corporate mission is “to combine proprietary technology and world-class creative talent to develop computer-animated feature films with memorable characters and heart-warming stories that appeal to audiences of all ages” (Pixar, 2009). This corporate mission is managed through the following strategies, goals and philosophies: 1. Recruitment of those with “rare talent”

The hiring process should communicate the organizations shared purpose. The belief at Pixar is to ensure that all recruits don’t fall into what Catmull (2008) calls the “awe-of-the-institution” syndrome. Management transmit the values of the company through the process of the “orientation session. ” This resembles a storytelling of the company and its culture. The session highlights the belief that all employees are seen as valuable assets to the organization, and that successful people aren’t always right. Harrison (2005) agrees that in order to foster creativity, it is vital to recruit and retain talented employees.

Management at Pixar believe that through the “regular injection of outsiders” (Catmull, 2008), the company will be able to embrace change. Mathis and Jackson (2008) agree that a core competency of any business is to be able to attract and retain employees with unique, professional and technical capabilities. 2. Invest in people Pixar’s employees are seen as valuable assets to the organization, therefore the value of the company is to invest in people. This is achieved through ongoing training and development. Pixar University creates this learning environment.

Randy Nelson, dean of Pixar University describes its purpose as: “We’ve made the leap from an idea-centered business to a people-centered business. Instead of developing ideas, we develop people. Instead of investing in ideas, we invest in people. We’re trying to create a culture of learning, filled with lifelong learners. It’s no trick for talented people to be interesting, but it’s a gift to be interested. We want an organization filled with interested people” (Baker, 2008). Pixar believe that through training and developing employees, it will help them progress in their careers.

Catmull (2008) states “Pixar University helps to reinforce the mind-set that we’re all learning and it’s fun to learn together. ” All employees learn from their mistakes through the process of “postmortems. ” The idea is not to beat yourself up about what went wrong but to use the experience as a learning opportunity. One way that Pixar overcome this is by getting employees to list the things that went right against the things that went wrong. Conner and Clawson (2004), state that learning should be linked either directly or indirectly to a business goal. 3. Obtain Creative leadership

Syrett and Lammiman (1997) believe that the most successful companies are capable of integrating innovation and creativity into their culture through the management process. Pixar’s philosophy is “You get great creative people, you bet big on them, you give them enormous leeway and support, and you provide them with an environment in which they can get honest feedback from everyone” (Catmull ,2008, p. 68). The management at Pixar operate a “task based culture” in which Mullins (2007), notes that the organization seeks to bring together the right resources and the right people to utilize the unified power of the group.

At Pixar, this task based culture is evident through the process of the “creative brain trust” in which each team is given creative ownership over all tasks. Catmull (2008) notes “Clear values, constant communication, routine postmortems, and the regular injection of outsiders who will challenge the status quo aren’t enough- strong leadership is essential to make sure people don’t pay lip service to the values, tune out the communications, game the processes, and automatically discount newcomers’ observations and suggestions. Judge et al (2007), believes that this philosophy is one that increases employee creativity, because top management set strategic goals but allow employees considerable freedom within the context of these goals. 4. Create Trusting Relationships Pixar’s goal is to create lasting relationships. Catmull (2008) states “we believe that lasting relationships matter. ” Much of the production crew at Pixar have worked with each other for many years. Trust and respect for one another is vital in order for people to work effectively together.

The role of management at Pixar is to create an environment that fosters these relationships. Gilbert, (2007) notes, “Pixar trusts the teams they build to do their jobs and gives them the freedom to do them well. Executives don’t go to story meetings, they recognize that is a job they’ve hired artists for and they trust the artists to do it. There is little micromanagement. ” Trust is established through the ongoing process of Pixar’s “creative brain trust”, daily reviews and “postmortems”, were employees are able to freely express their ideas and opinions and everyone is actively involved in the discussion process.

Barnard (1938) believed that the commitment and contribution of all employees to achieve a common purpose were necessary for the existence of a co-operative system. The Pixar building is typical of a nodal design, which according to Myerson and Ross (2004) is one that is designed to encourage knowledge and learning. The belief is that people will mix in the relaxed atmosphere during the course of the day and discuss their ideas, increasing creative thinking and promoting innovative ideas. Kouzes and Posner (2000) believe that trustworthiness is the foundation of leadership. . Freedom to communicate Pixar’s operational principles (see appendix C) state that every employee should be able to freely and safely communicate their ideas to anyone. Hooper and potter (1999) found that an open communication culture is a key attribute for effective leadership within an organization. Pixar’s open communication structure resembles that of a “den culture” and allows for high interaction and low autonomy. This enables flexibility and co-operative teamwork. Catmull (2008) notes that employees “really do feel that it’s all for one and one for all. Communication is effectively established through Pixar’s “creative brain trust,” in which all employees help the director to solve any problems that he/she may have. The strategy enables employees to express any organisational concerns that may arise. 2. 4 Underlying Assumptions Schein defines this bottom level as “the core or essence of culture. ” These assumptions and values are difficult to understand because they exist beneath the surface, operating at an unconscious level. In order for management to understand why things happen the way they do, is to look at the deeper dimensions of human existence.

It is through this that they can truly identify with truth and reality. The assumptions at Pixar are as follows: 1. People are good The assumption that people are good leads to the belief that ongoing training and development should be provided. This belief is established through the creation of Pixar University; in which Pixar invest in their employees through providing them with classes to broaden their academic and interpersonal skills. Rodriguez (2005) notes that a successful business is one that invests in its employees.

Trust in employees is another belief put forward by management that results in the process of an open communication system and the belief that employees should have creative ownership over all tasks. 2. Company’s should fight the “success syndrome” Pixar has had many triumphs of success, but according to Catmull (2008) it will continue to improve itself until the end. This assumption is evident through the belief of providing a learning culture for its employees and is evident with Pixar University and through the processes of post-mortems, daily reviews and the recruitment of new hires.

Prokesch (2008) notes that “some of the most exceptional unsung heroes in business are the managers who resist taking authority and the limelight and build a solid stage where others can be stars. ” 3. Taking risks is good for business. Pixar operate through the assumption that managing creative talent and taking risks is responsible for their success. According to Catmull (2008) the role of management is not to prevent risk but to build the capability to recover when failures occur. This is evident through the belief of creating trusting relationships and being a creative leader.

In the animation industry, companies can’t afford to play it safe. It is up to the management to have trust in the new ideas put forward by employees. Pixar’s creative brain trust offers this safe environment were all employees’ ideas are valued. Catmull (2008) adds “we believe the creative vision propelling each movie comes from one or two people and not from either corporate executives or a development department. ” Koontz and Weihrich (2007) agree that management should take risks for the long term survival of a business. 3. Changes and Improvements

It is naive to assume that by giving employees great leeway they will become more creative. While creative leadership may work for Pixar, it may not be the case for other company’s. Although the Disney Pixar merger has proved to be a success short term (with the creation of Award Winning movies such as Ratatouille, WALL-E, and their latest film UP), they could face problems in the long term. The Disney Pixar merger could be seen as a future weakness for the company as Disney’s bureaucratic management culture is quite the opposite to that of Pixar. Previous studies show that there is a high failure rate for mergers.

Millier (2008) found that 85% of merger failures are related to the mismanagement of cultural issues. Lundberg (2001) goes on to say that a high percentage of these are the result of failure to integrate management teams. In order to achieve success long term Pixar and Disney could adopt a Transformational Leadership style (see appendix C). According to Crossan and Vera (2004), “this type of leadership is necessary for creating the organizational environment and culture needed for growth, and for encouraging the development of creative thinking and problem solving. This will help managers of both companies to stay focused on the company’s tasks and goals and help to set up plans of action. Leadership will help them to stay focussed on the individual needs of employees, creating a shared vision and aiding the change process. Through transformational leadership Pixar will effectively break down resistance to change (Prussakov, 2010). 4. Conclusion Human Resource Management plays a big part in developing an organizations culture. Pixar’s HRM culture has helped them to foster an environment in which creativity and innovation prospers.

Their creative leadership combined with the rare talent of employees and trusting relationships have become a cultural benchmark for other companies in the animation industry. However, studies have shown that what works for one company may not work for another. Companies need to find out what culture works best for them and which produces the greatest output for them in order to achieve success.

References Baker, R. J. (2008) Mind over Matter: Why Intellectual Capital is the Chief Source of Wealth. New Jersey: John Wiley and Sons. Barret, R. 1997) ‘Liberating the corporate soul’, HR Focus, 74(4), pp. 15-16. Bernard, C. (1938) The Functions of the Executive. Oxford University Press. Carlson, W. E. (2003) Pixar Animation Studios. Available at:

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Pixar- Culture and Organisations
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