Netflix, and Disrupting Your Own Business

By March 28, 2017 March 16th, 2018 AgileBusiness, Digital Disruption

Lots to take out from this a16z podcast (embedded below) featuring Marc Andreesen talking to Netflix CEO Reed Hastings about how the company has successfully disrupted itself not once but twice on its journey to where it is today.

The appetite to potentially cannibalise your existing business whilst focusing on building the new disruptive model of the future is, as we discuss in the book, a key area of tension for many organisations. Saying it is easy. Actually doing it is terribly hard, not least because of the economic, resource and emotive challenges that this brings. Netflix is one of the relatively few companies that has shown itself to be willing to continually reinvent itself as new waves of technology, market dynamics, and consumer contexts hit.

In the interview Reed Hastings talks about how important it was to him for the company to retain agility as it scaled – as the company grew for it to have less rules, not more. But the key theme that he comes back to in different ways is the value of focus and context in enabling the big changes to happen. They spend, for example, very little time thinking about the what the competition are doing and instead focus their time and their thinking on how they can improve the service for customers. Where you choose to focus your attention is of-course a key determinant of organisational orientation. Many incumbents, he says, look at you as you are now rather than envisaging what you could become as technology inevitably improves.

Reed takes issue with Andy Grove’s maxim that only the paranoid survive. A key part of selecting where we put our attention is about having a point of view on the future (Netflix famously publish their long-term view), and if you see everything as a threat then it becomes distracting from following your own path – Reed compares this to a game of chess where you need to anticipate several moves in advance.

But the importance of focus was writ large when he talked about their transition from DVDs to streaming. If you need to develop an entirely new muscle as a business, he says, it has to be positioned as essential to survival. You can’t dabble in it. Consequently when the streaming business began to take shape he deliberately created space between the two (competing) businesses and teams and even went as far as separating the key management meetings to ensure that the streaming business should and could be built to stand on its own merits.

Fascinating stuff.

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Neil Perkin

Author Neil Perkin

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