Pass a flag-draped steam-power plant, turn left toward a water-treatment facility, cross twin railroad tracks and you'll arrive at DreamWorks Animation SKG, where writers and artists imagined the fanciful worlds of Shrek, Kung Fu Panda and How to Train Your Dragon.
The gritty neighborhood in Glendale, California--eight miles north of Hollywood--disappears once inside the studio's ivy-covered hedges, which surround a 13-acre campus akin to that of a small liberal arts college. Stone walkways and arched breezeways connect Mediterranean-inspired buildings, meandering past elm trees that rise above blooming flowers. Fountains, a man-made waterfall and a stream, which empties into a lagoon, disguise the noise of two nearby freeways.
It's an environment designed to cultivate creativity, as is the management strategy honed within the walls of one of the world's most innovative companies. The strategy: foster spontaneous discussions, encourage risk-taking, openly discuss mistakes, share successes and nurture professional development. The result: The digital-animation studio is perennially ranked in the top tier by Great Place to Work Institute and boasts a 97 percent retention rate.
"DreamWorks Animation is an incredibly creative and collaborative operation because of the culture," says communication strategist Evan Rosen, who studied the company for his book The Culture of Collaboration.
Its main campus offers perks intended to reduce stress and distractions: a doctor's office; yoga and kickboxing classes; one full-size kitchen on every floor stocked with all types of snacks; and, of course, Monday-night movie screenings. Cabanas, wooden picnic tables and lively conversation fill a courtyard outside the cafeteria, which serves free breakfasts and lunches as well as dinner for employees working late.
Everything from the complimentary food to the layout was chosen with a common goal: encourage spontaneous conversations, with the belief they lead to great ideas.
"Many times true innovation, true original ideas, don't happen in a conference room or in someone's office," says Dan Satterthwaite, head of human resources. "They happen in hallways, they happen outside. It's the function of people running into each other that was really thought through in the layout of the campus."
For creativity to flourish, Satterthwaite also advocates the importance of providing a sense of security. The 2008 financial crisis tested that conviction. Economic anxiety triggered layoffs in many organizations. In Hollywood, that unease came amid an industrywide decline in DVD sales. Paramount Pictures, Sony Pictures Entertainment Inc., and Warner Bros. Entertainment Inc. all trimmed their workforces. The Walt Disney Co. cut more than 600 positions in 2010 and 2011.
COMMITMENT NOT TO CUT
But DreamWorks executives decided that job insecurity would be "antithetical to creating great creative work," Satterthwaite says. At an all-staff meeting, executives told the workforce that the company would avoid layoffs "at all costs."
It was a bold promise--one that it kept--for a company whose stock rises or falls based on the fortunes of two or three films a year. In contrast, rival studios such as Warner Bros. Pictures distribute 20 films each year, minimizing the impact of a single flop or average box-office performer. DreamWorks also bet big on 3-D, releasing all of its films in the format since 2009, and relies on revenue from DVD sales, which have declined steeply. In addition, more studios released family and animated films last year, significantly increasing competition.
"I think this year feels like it's a bit more of a normalized market," said DreamWorks CEO Jeffrey Katzenberg in May during the company's first-quarter earnings conference call. "There are far fewer animated titles and far fewer family titles."
DreamWorks shares fell to an all-time low last year with its Puss in Boots opening softer than its previous releases. …