Latest / The Operations Podcast with Fexingo: Process, People, and Profit in Modern Business / How Pixar Turned a Failed Movie Into an Operations Blueprint
Transcript
- Lucas: So Pixar. One of the most celebrated creative companies in the world. Fourteen Academy Awards, seven billion dollars at the box office. But in 1990, the studio was six months from collapse. Luna: I know the broad strokes — they were a hardware company making a computer nobody bought, and the animation division was a money pit for Steve Jobs. Lucas: Exactly. Jobs had bought the computer graphics division from Lucasfilm in 1986 for five million dollars, then poured another fifty million of his own money into it. By 1990, Pixar had sold maybe a hundred of their Pixar Image Computers. The hardware business was hemorrhaging cash. And the only bright spot was a tiny animation team making short films and TV commercials. Luna: And that team had just been hired by Disney to make a feature film — what became Toy Story. So they had a lifeline. Lucas: They had a lifeline that was about to snap. In early 1990, Disney pulled out of the deal. They said the script wasn't working, the technology wasn't ready, and they didn't want to risk it. Pixar was left with a half-developed film, no production partner, and no revenue. Luna: How close did they come to shutting down? Lucas: Jobs told the team they had until the end of the year to find a new deal or he'd pull funding. He actually put the studio up for sale — courted Microsoft, Silicon Graphics, even a French animation house. Nobody bit. So Jobs made a decision: he'd shutter the hardware division, lay off about a third of the staff, and bet everything on animation. That bet paid off, obviously. But the interesting part for us is what happened next. Luna: The operations lesson. Lucas: Right. Because after that near-death experience, Ed Catmull — Pixar's co-founder and the technical brain — insisted the company build a formal process for learning from failure. He'd seen how close they'd come to extinction, and he wanted every future crisis to be caught early. So he institutionalized the postmortem. After every film, Pixar would hold a mandatory, no-blame postmortem. Everyone from the director to the janitor was invited. The rule was simple: you can say anything about the process, but you can't attack people. Luna: That sounds like standard practice at a lot of companies today. But in the early 90s, that was radical. Lucas: It was. And the key innovation wasn't just the postmortem — it was the Braintrust. That was born during Toy Story's production. When Disney came back to the table in 1991 after a rewrite, the film went into full production. But early story reels were terrible. John Lasseter was stuck. So Catmull and Lasseter created a small group of directors and story artists who would review the film every few months and give unfiltered feedback. No notes from executives, no power hierarchy. Just creative people telling each other what wasn't working. Luna: But isn't that just a peer review? What made it operational? Lucas: What made it operational was the structure. The Braintrust met on a fixed schedule — every four to six weeks. They had a standard format: watch the reels, then the director leaves the room while the group discusses. Then the group gives their feedback to the director, who has full authority to accept or ignore it. That last part is critical. The Braintrust couldn't order changes. They could only provide what Catmull called 'honest, productive candor.' The director made the final call. That kept the feedback from feeling like a command. Luna: And this process got credited for fixing Toy Story's third act, right? I've heard that the original ending was much darker. Lucas: Yes. In the early version, the toys never make it back to Andy. They get left behind at a gas station and have to accept their fate. It was bleak. The Braintrust — which included Lasseter and a few other directors — told the story team it was a downer. They went back and rewrote the ending to the one we know: the race to the moving truck, the happy reunion. That change came directly from the Braintrust process. And it happened because the system encouraged candor without punishment. Luna: So the operational insight is: build a feedback loop where the power dynamic doesn't silence criticism. Lucas: Exactly. And Pixar didn't stop there. They made this process replicable. Every subsequent film used the Braintrust. Finding Nemo had major structural problems in early story reels — the Braintrust pushed the team to completely rethink the father-son dynamic. Up was originally going to be about two brothers escaping a city. The Braintrust helped redirect it to the Carl and Russell story. The system worked because it was consistent, scheduled, and safe. Luna: But does that work outside of a creative studio? Can a manufacturing company or a logistics firm use a Braintrust? Lucas: That's the question. I think the principle transfers, even if the form doesn't. The core operational idea is that you need a regular, structured, power-neutral forum for reviewing work before it's final. In a factory, that might be a daily stand-up where line workers can flag quality issues without fear of retaliation. In software development, it's the code review process. But most companies don't do it well because they mix feedback with hierarchy. The person who approves your budget shouldn't be the same person you're telling that their project is on the wrong track. Luna: And Catmull wrote about this in Creativity, Inc. — he said the biggest enemy of candor is people pleasing. And that the Braintrust was designed to override that. Lucas: Right. And he backed that up with data. Pixar tracked how often films changed direction after Braintrust sessions. By their count, every single film that went through the process had at least one major structural change — usually more. The films that resisted feedback the most were the weakest. Cars 2, which is widely considered Pixar's worst film, had a Braintrust but the director reportedly ignored much of the feedback. The system only works if leadership is willing to listen. Luna: So the operational lesson is: build the feedback mechanism, but also build the culture that makes it safe to use. Lucas: Exactly. And that's the part most companies miss. They put a process in place but don't protect the people who use it. Pixar's postmortems were famously blunt. People would say 'that scene is boring' or 'that character doesn't work.' And no one got fired for it. That creates trust. And trust accelerates the feedback loop. The faster you can identify a problem, the cheaper it is to fix. In film, fixing a story problem in pre-production costs nothing. Fixing it after animation is millions. The same is true in product development, supply chain, or any operation. Luna: It's interesting that this all came from a failure. If Pixar hadn't nearly died in 1990, they might never have built the system. Lucas: Catmull has said as much. He wrote that the near-death experience was 'the best thing that ever happened to us' because it forced them to confront how fragile their operation was. They didn't just survive — they emerged with a repeatable method for making great films. And that method has generated over fourteen billion dollars in box office revenue. Not bad for a company that almost didn't exist. Luna: If these conversations have moved your work forward in some small way, there's a link at buy me a coffee dot com slash fexingo. It's the smallest possible ask — if today was worth a coffee to you, that's the link. Lucas: Yeah, listener support is what keeps this show ad-free and independent. So if you found value in how Pixar turned a failure into a process, that's the spot. No pressure, just gratitude. Luna: Alright, back to the story. So after Toy Story's success, how did Pixar scale the Braintrust as they grew from one film every four years to one every year? Lucas: That's where the operational discipline really kicked in. By the mid-2000s, Pixar had multiple films in production simultaneously. Each one had its own Braintrust, but the senior directors — Lasseter, Brad Bird, Pete Docter — served on multiple Braintrusts. That created cross-pollination. Ideas from one film would show up in another. And because the meetings were scheduled on a fixed calendar, teams could plan their work around them. They knew that every six weeks, they'd have to show their progress to a room full of their peers. That forced a rhythm: you couldn't coast for two months and then cram. Luna: So the Braintrust also functioned as a forcing function for progress. Lucas: Exactly. And Catmull was meticulous about protecting the process. When Disney acquired Pixar in 2006, one of his conditions was that the Braintrust system would be adopted by Disney Animation. He spent years training Disney's leaders in the method. Today, Disney Animation uses a version of the Braintrust. That's a direct operational legacy from a near-bankrupt company in 1990. Luna: I want to ask about a potential downside. Doesn't this system risk groupthink? If everyone is in the same room giving feedback, don't you lose diversity of thought? Lucas: Catmull worried about that too. So he instituted a rule that each Braintrust had to include at least one person from outside the film's department — someone from technical, or marketing, or even the café. That brought fresh perspective. He also rotated members so no group got too insular. And the fact that the director could ignore feedback meant that a dissenting view could still win. The system was designed to surface disagreement, not suppress it. Luna: So the lesson for operations leaders is: create a feedback process that is scheduled, safe, and diverse. And protect it from hierarchy. Lucas: That's the shorthand. But the deeper takeaway is that Pixar's operational system wasn't designed for smooth sailing. It was designed for crisis detection. They knew that every project would hit a rough patch. The system was built to find those patches early. And that's a mindset shift from most companies, which build processes to avoid failure. Pixar built a process to catch failure fast and learn from it. Luna: And that's what turned a failed movie into a blueprint for twenty-five years of success. Lucas: Exactly. Next time on The Operations Podcast, we're looking at how one hospital system used lean manufacturing principles to cut emergency room wait times by forty percent. That's for next time.