Reinvent or Die!
It is with great amazement I read about Netflix boss Reed Hastings predict that in the next few years his core business is completely doomed (WSJ, June 23rd 09). How many head honchos of public companies have you heard who talk about doom when their firm has added more subscribers in the first 3 months of the year more than ever, doubled their market cap in the last 8 months and garnered 25% growth in subscriber base in the last 1 year, all in recessionary times? Beyond traditional HBR style case-studies how many real-life corporate stories have we seen in the recent past predict that they will die in the next few years if they don't reinvent themselves?
For me - as a consumer, a movie buff and a Netflix customer it's an absolute "no-brainer" that watching movies through online streaming is the most natural evolutionary step in this business. It needs no market research or complex back office mathematical models to arrive at this simple evolution. But then most "no brainers" seem to be beyond the reach of large corporations who invariably cosy up to their early success where change becomes a challenge. How much research did Motorola need after their market leadership on mobile phones to reinvent themselves and stay relevant in the marketplace? Palm was a Xerox in the PDA world in late 90s but then squandered away their leadership simply because they could neither see ahead nor reinvent on their early success.
Given this backdrop, it is incredibly refreshing to see Netflix predict doom if they don't reinvent themselves, especially on the back of success in a recessionary economy. I wish the GMs and the Nortels of the world had such paranoia and their CEOs could see the future unfold. After all, the executive pays they command is precisely for that, figure ways to stay relevant and constantly reinvent for the future. Frankly if they did just that, who really cares whether they get paid in millions or billions as long as they deliver on what their firm has to deliver and not get paid for visiting Washington to receive taxpayer money.