Netflix is one of the most successful companies of the 21st century. It has changed the world of entertainment and the way we spend our downtime. Break it down and its success is based largely on being better at identifying customer demand and delivering better customer service than its competitors. Too simplistic? Maybe a little, but consider:
Netflix started out renting out DVDs, something Blockbusters had been doing since 1985. Simply by changing up the model to offer DVD rentals through the post, Netflix made it more convenient for its customers. What started as an innovative move to shake-up a largely unchanged 20-year industry grew into sustained innovation. The introduction of an online subscription service, after that it moved into commissioning with international hits such as “Orange Is the New Black” and “The Crown”, directly taking on the likes of HBO and Disney.
From its algorithms to its staff manifesto Netflix is a continuous innovator, building on its last success or learning quickly from its rare false moves to deliver continuous enhancements to the service it delivers. But if you haven’t got $8 billion to invest in content, how can an average company ‘do a Netflix’?
Challenge the status quo. It moves fast, you know.
If you’re in an existing industry with an established business model and customer base look at how you can deliver your service more conveniently. Note: what’s more convenient for your customers might not be more convenient for you. That’s often the rub. Change takes effort but those that can transition to new business models will be rewarded. Uber, Netflix and Airbandb are ubiquitous in our consumer lives. Its natural to want the same convenience, ease of payment, and constant improvements they deliver in our business lives too. At Strategy to Revenue we’ve helped companies as diverse as ERP vendors, Unified Commutations companies and financial news outlets move their sales model and their partner eco-system to subscription services. Their customers benefit from convenient monthly pricing, constant innovation and ease, and ultimately it’s better for the company’s long-term business revenue too. So, what’s your company doing to keep pace? If the answer is nothing it’s time to look over your shoulder. As Reed Hastings, CEO, Netflix says, “That’s the bitch about the internet. It moves fast, you know.”
Don’t make decisions!
Hasting says ‘I pride myself on making as few decisions as possible in a quarter.’ That’s the type of claim that only makes sense in context. He adds that Netflix is ‘big on freedom and responsibility’ but qualifies that with ‘we developed all these mechanisms – super high-talented people, alignment, talking openly sharing information…’
When you’re transparent about your business strategy and your goals you make it easier for your teams to align their actions to support those goals. With a clear alignment, you can give your internal leaders the freedom to execute their role with confidence and deliver upon the part of the strategy they’re responsible for. That doesn’t mean there won’t be hurdles, but it does mean those hurdles will be easier to identify and quicker to overcome since everybody has the same end-goal in mind.
What sounds like a straight-forward process rarely is. If you give your staff freedom and responsibility, you need to support them. It starts at recruitment. Onboarding the right people to fulfil your company’s vision requires you to have a clear definition of the required roles, behaviors and competencies for success in each position. Then, with the right candidates identified, you need to build the right environment for them to develop the skills, knowledge and capabilities they need to achieve the results the business expects.
Consider managers too. As the lynch pin between strategy and execution, its essential they have the right tools to translate vision into deliverables. Managers that are given the support to motivate, mentor and coach their teams to achieve what is required will help a transparent business thrive.
When you combine super high-talented people, company wide alignment, and the ability to talk openly and share information you give your team the power to do their job. With power comes pride, and ultimately the ability, just like Hasting to make as few decisions as possible in a quarter. With a team that is firing on all cylinders, the truth is a good leader doesn’t need to.
The Keeper Test
The media has made much of the so-called ‘keeper test’ that Netflix uses to retain only the best employees. Critics argue that a system where managers are asked to evaluate how much they would fight to keep a certain employee has led to managers sacking colleague for fear of being week. I would argue that, with the right support mechanisms in place, a version of the keep test can work well for both organizations and employees.
As outlined above, a robust onboarding process will ensure you hire the right people, and get them to be a profitable contributor to the business in the fastest time possible. For existing employees, that don’t appear to be fulfilling their job role it’s important to investigate why. Moving people out of the business on a gut feel is never good. Taking time to assess how closely their capabilities are aligned to their current job role and then giving them training and development options to close the gap is the right thing to do. If the gap is still too wide then certainly a business should you consider transitioning them out of their role.It is by re-iterating and fine tuning this process of identifying, recruiting, nurturing and rewarding talent that your organization will become an A-list team of players. Behind the tabloid headlines, I’m sure this is the Netflix goal.
Netflix and chill
A net income of $1.21 billion, 139 million paid subscribers across 190 countries is a phenomenal achievement that any business leader would love to emulate. But while few will achieve Netflix level of success, there are some key take-aways that any size organization can use to build a strong, successful business: Innovation, alignment, and investment in staff. With these guiding principles you set yourself, and your organization, up for the best chance of success. Good news for any CEO, giving them peace of mind and ultimately more time for “Netflix and chill” in whatever way you choose to interpret that!
Robert Fox is SVP Sales, North America for Strategy to Revenue, the award-winning Sales Enablement consultancy.