How Marvel Went From Bankruptcy To Solvency

How Marvel Went From Bankruptcy To Solvency

Here is an interesting article on Marvel Comics and their fight out of bankruptcy.

Written by Chris Zook
SUNDAY, 13 SEPTEMBER 2009 19:26

On August 31, Marvel Entertainment Inc. accepted Disney Company’s $4-billion purchase offer—an escape from disaster for the comic-book giant that rivalled even the most hair-raising Spider-Man adventure. When Marvel 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, this reincarnation is not so unique, but follows the four-part pattern that we discovered at Bain & Company in a 20-year analysis of successful transformations:

1. The imperative of a strong, differentiated core. Marvel based its renewal on 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.

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

3. The power of a repeatable formula. 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 a company’s core and reapply them to new situations over and over again. This is quintessentially true in the case of Marvel’s endless stream of movies, games and characters.

4. The latent potential of hidden assets. We found that 90 percent of strategic comebacks were fuelled, in part, by assets in the original core business when it was at its best that had been adapted to new environments. This was true of IBM’s service business that led its turnaround, Harman Kardon’s automotive business that fuelled its renewal, and Apple’s software interface differentiation and young and loyal customer base.

The ultimate lesson from Marvel, and other businesses like it, is that for firms attempting major transformations the most important thing is to remain aware of your core principles. 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.
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