Second, despite their frustrations, these production managers felt that they were making history and that John was an inspired leader. Toy Story was a meaningful project to work on. That they liked so much of what they were doing allowed them to put up with the parts of the job they came to resent. This was a revelation to me: The good stuff was hiding the bad stuff. I realized that this was something I needed to look out for: When downsides coexist with upsides, as they often do, people are reluctant to explore what’s bugging them, for fear of being labeled complainers. I also realized that this kind of thing, if left unaddressed, could fester and destroy Pixar.

As John and his creative team went to work, I considered the stark reality we faced. We were asking our people to pull off the cinematic equivalent of a heart transplant. We had less than a year before Toy Story 2 was due in theaters. Getting it there in time would drive our workforce to the breaking point, and there would surely be a price to pay for that. But I also believed that the alternative - acceptance of mediocrity - would have consequences that were far more destructive.

However, if we only made sequels, Pixar would wither and die. I thought of sequels as a sort of creative bankruptcy. We needed a constant churn of new ideas, even though we knew that original films are riskier. We recognized that making sequels, which were likely to do well at the box office, gave us more leeway to take those risks. Therefore, we came to the conclusion that a blend - one original film each year and a sequel every other year, or three films every two years - seemed a reasonable way to keep us both financially and creatively healthy.

As we were finalizing the merger, Disney’s board of directors didn’t like the fact that key Pixar talent was not under contract.
If Disney bought us and then John or I or certain other leaders left the company, they felt, it would be a disaster, so they asked that we all sign contracts before the deal went through. We declined. It is a tenet of the Pixar culture that people should work there because they want to, not because a contract requires them to, and as a result, no one at Pixar was under contract. But even though this rejection was based on a core belief, it made the deal feel questionable for Disney. On the Pixar side, meanwhile, there was considerable concern that the Disney bureaucracy would inadvertently destroy what we had built. Both sides, then, felt at considerable risk. The result, though, was that at the heart of this merger was an understanding that both companies had to trust each other. Each side felt a personal obligation to live up to the intent of the agreement - and I believe this was the ideal way to begin our relationship.

In short, Pixar had the kind of diverse problems that any successful company has. But chief among them, to my mind, was that more and more people had begun to feel that it was either not safe or not welcome to offer differing ideas. This hesitancy was difficult to see at first, but when we paid attention, we saw many clues that people were holding back. To me, that meant one thing: We, as leaders, were allowing some faulty ideas to take hold, and that was bad for our culture.

There is nothing like a crisis, though, to bring what ails a company to the surface. And now, we had three crises brewing at once: (1) Our production costs were rising and we needed to rein them in; (2) External economic forces were putting pressure on our business; and (3) One of the central tenets of our culture - good ideas can come from anywhere, so everyone must feel empowered to speak up - was faltering. Too many of our people - and to my mind, “too many” is the same as “any” - were self-censoring. That needed to change.