Netflix is a company that seems to do just about everything right. Here’s how they got to their projection-crushing Q3 and why you shouldn’t feel weird taking a few cues for your biz.
It is increasingly difficult to come across a person who does not have a subscription to Netflix. Sure, there are those who’ve chosen to go with a competitor of this streaming powerhouse, such as CraveTV, Amazon Prime, or Hulu (it’s okay, you can Google that last one). But upon release of its Q3 in mid-October, it’s clear that Netflix isn’t going anywhere. Other than how Eleven gets rid of that scary-as-hell headless alien in Stranger Things (retribution for Barb!), is there anything we can learn from Netflix? Why yes, there is. And it has everything to do with business.
Business with a Buzz
CEO Reed Hastings and CFO David Wells have made some bold moves on their way to securing their (strangle) hold on the streaming market. Netflix began 19 years ago as a DVD-by-mail and sales service. Since Hastings and Wells understood this business model was easily copied, they turned it into a subscription service after just six months – and ran all the way to the bank. Fast forward to 2004 when Hastings and Wells realized that even though their goal was to be the top DVD company in the world, online streaming was becoming very big, very fast. So, instead of continuing with a potentially huge business failure (Hi there, Blockbuster Video), their strategy changed: become as big as possible in DVDs and then move into online streaming. Why? Because, a built-in customer base for the new product! Que $2.29 billion in revenue and 32% growth YOY for Q3 2016.
The moral of the story here is to not be afraid to see the big picture and change strategies if that’s what will be best for your business, even if it might seem risky.
Being comfortable with risks goes hand in hand with business, but it’s also another clear lesson Netflix has taught us. Although there’s less of a need for streaming devices these days, many who subscribe to Netflix have one. Netflix almost had one, too. In fact, they had poured millions of dollars into the development of their own branded ‘little black box’ and had even begun filming promotional material before they decided to pull the plug.
In his 2015 LinkedIn tome, How to Copy Netflix, former Netflix marketing guru Barry Enderwick speaks frankly about that monumental decision. “The decision to stop something we had spent so much time and money on was not easy. But it was absolutely the right thing to do. The company didn’t focus incessantly on sunk costs – with new information and views; the future is what matters to Netflix, not the past.” Enderwick worked 11 years for Netflix and was part of the team that brought it from DVDs-only to the juggernaut it is now. He indicates that they decided to forgo the Netflix streaming box because of strategy. “Our strategy was to have Netflix on every device capable of connecting to the Internet.”
Que Internet streaming take-over. Reversing a decision, especially one that you’ve poured money, time, and thought into can be rough. But if it’s the right decision for your business, you can handle it.
If you’ve never read through the 124-page Netflix Culture SlideShare, you need to. Published over six years ago, it has over 15 million views, and for good reason. Netflix clearly understands that to foster a strong culture is to foster a strong business. Netflix Culture goes into detail about how Netflix makes decisions, why they do what they do and what it means for the company overall. They have acutely redefined what ‘high performance’ employees look like and have a strategy around attracting and keeping them. In broadcasting such lofty expectations, Netflix outright admits that certain types of individuals are not suited to their level of expectations and environment, and are very clear about those people who are.
While this may seem a bit cut-throat, it has obviously worked very well for them. But it would not have worked without the leadership development and planning coming from the top, a point Enderwick makes in his post. “Chief Talent Officer Patty McCord and CEO Reed Hasting spearheaded this change, and the employees helped refine what it really meant. Processes were stripped away, and ultimately what emerged was a culture in which one was trusted to be a responsible adult. Which also meant you had to make own your decisions. And live with the results, for better or worse.”
While it’s great to have values and goals within company culture, the old saying still rings true: actions speak louder than words. A company’s values – and culture – aren’t demonstrated through words but through action that is lived as much by leaders as by the newest employee. Expect and demonstrate more as a leader so your staff can emulate your actions. Because really, what’s the worst that could happen – except perhaps a $2.29 billion third quarter?
Written by By Jess Campbell