How Marvel Went from Bankruptcy to $4B Buyout

The $4 billion offer by the Disney Company to purchase Marvel Entertainment, Inc. is the
apotheosis of an escape from disaster to rival even the most hair-raising Spiderman adventures. When the world leader in comic books, a dying medium, entered bankruptcy in 1996, only a few visionary loyalists saw a viable future — let alone a path to reattain leadership and high profitability.

Yet, as described several years ago in my book Unstoppable (HBP, 2007), this reincarnation is not so unique, but follows the four-part pattern that we discovered at Bain & Company in a twenty year analysis of successful transformations.

The four parts:

1. The imperative of a strong, differentiated core: The renewal of Marvel was based not on leaping to new hot markets, or dramatic new technologies, but the reapplication of the strongest assets in the company’s historic core—its loyal customer base, its stable of 5,000 characters, its library of 30,000 market-tested stories, and its brand. These were the elements that made Marvel a dominant force at its best, and these are the elements that rejuvenated it.

2. The value of following the profit pool: Profitability in the entertainment world has shifted dramatically from channels (e.g., stations, magazines) to proprietary content and from analog to digital. Marvel’s strategy follows the profit pool.

3. The power of a repeatable formula in the core: The most successful strategic transformations are not those that find a large singular opportunity, but those that find a repeatable formula to take the strongest elements in its core and reapply them to new situations over and over. This is quintessentially true in the case of Marvel’s stream of movies, games, self-production initiatives, and even treatment of individual characters (e.g., Spiderman I, II, III….). The great and lasting renewals like the Apple music strategy or the rejuvenation of P&G reveal this lesson too.

4. The latent potential of hidden assets: We found that 90% of strategic comebacks were fueled, in part, by assets in the original core business when it was at its best that were adapted to a new environment and took on new value that had not been previously recognized. This was true of IBM’s service business that led its turnaround, or Harman Kardon’s automotive business that fueled its renewal, and even of Apple’s software interface differentiation and young and loyal customer base.

So often, we found, companies held the right cards, but did not always see how to play that hand, or were organizationally constrained from acting on it until often too late. As surprising as it sounds, the ultimate lesson from Marvel, and others like it, is that the most important thing of all is self-awareness of the core. Yet sometimes that is also the most difficult insight of all — even though it can be right in front of us.

Chris Zook is co-head of the Global Strategy Practice at Bain & Company.
He is on The Times list of top 50 global business thinkers based on his work and
books on how companies find their next wave of profitable growth. Chris currently
lives in Amsterdam, The Netherlands.