1. How do you think the changes that John Lasseter and Edwin Catmull made to Disney's animation department affected that team's effectiveness?

2. Pixar relies heavily on creative people who are motivated to do their best under production schedules that can sometimes be highly stressful. How does this create challenges in maintaining effective team performance?

3. Pixar struggled in its early days. Steve Jobs was tempted to sell it when it was necessary to invest more and more money to keep it afloat until it finally achieved success. How did his actions and the events that contributed to Pixar's success increase team cohesiveness?

4. Further research—Some predict that Pixar’s best days are over and that it will be hard for it to stay creative as a Disney business. Find out how Pixar is now doing. In what ways is its current performance consistent with or different from the predictions, and why?

Pixar has delivered a series of wildly successful animated movies featuring plucky characters and intensely lifelike animation. Yet some of the most memorable ones—Toy Story, Finding Nemo, and Th e Incredibles—were almost never made. Find out how Apple guru Steve Jobs, whose company struggled to stay alive during its early years, took these upstarts of animation to success.

“The Illusion of Life” Th ough the story is far from over, it might seem like a fairytale ending of sorts for John Lasseter, Pixar’s creative head, who went from being fi red from his position as a Disney animator in the early 80s to running Disney’s animation wing with Pixar cohead Edwin Catmull. Lasseter provided the creative direction for Pixar as it grew from an off shoot of Lucasfi lm production company into the world’s most successful computer animation company.

Pixar’s movies—including the Toy Story movies, Th e Incredibles, Cars, Ratatouille, and Up—have succeeded largely because of Lasseter’s focus on employing computer graphics (CG) technology to make the characters, scenery, and minute details as realistic as possible. “Character animation isn’t the fact that an object looks like a character or has a face and hands,” Lasseter said. “Character animation is when an object moves like it is alive, when it moves like it is thinking and all of its movements are generated by its own thought processes. . . . It is the thinking that gives the illusion of life.”

This “illusion of life” is a direct result of the synergy between Pixar’s creative teams, who develop the story and characters, and its technical teams who program—and frequently develop—the animation software used to breathe life into each movie. Each forces the other to innovate, and together they successfully balance the latest technology with a back-to-basics focus on interesting characters in compelling stories. “Pixar has such a thoughtful approach, both from a storyline and business perspective,” said Ralph Schackart, analyst with William Blair & Co LLC, “I don’t think anyone has quite fi gured out how to do it like them.”

In an industry abounding with delight in others’ misfortune, some might be surprised that Pixar’s old-fashioned approach to moviemaking has succeeded. But Disney CEO Bob Iger believes the opposite. “Th ere is not an ounce of cynicism in Pixar’s fi lms,” Iger told Fortune. “And in a world that is more cynical than it should be, that’s pretty refreshing. I think it’s a critical ingredient to the success of Pixar’s fi lms.” Another unique quality of Pixar is that— unlike competitor DreamWorks Animation SKG—it does not limit its creative products to the animated movies it releases.

The studio shares its technical advances with the greater CG community through white papers and technology partnerships, such as its RenderMan software and hardware. Perhaps Pixar’s closest competitor is DreamWorks, headed by former Disney impresario Jeff rey Katzenberg and backed by media luminaries Steven Spielberg and David Geff en. Other smaller American animation companies such as Orphanage, Wild Brain Inc., and CritterPix Inc. face challenging budgets, limited technology, and tighter deadlines. And in the event these upstarts do manage a theatrical release, they’ve got a hard act to follow—Pixar grosses a domestic average of $258 million per movie. …………………