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.
Comments
On the internet, lot of 'clone' companies come up very fast! So Netflix's paranoia is understandable, but great that he is thinking that way.
Just look at the URL shortening services, we will always need these services but will a company be able to monopolise the sector given the competition??
Posted by: Priyanka D | June 26, 2009 07:52 AM
Nice article and very relevant to the times. You want stagnation and lazy CEOs?... I give you the Gulf Region.
The entire place is one big Xerox (pun) machine of their parent companies. The CEOs command big salaries just to populate the offices. (yes some survive even today in this economic downturn)
No innovation, no foresight what-so-ever. Forget them coming up with new ideas... For Example, you won't see a GM or Porsche Middle-east R&D wing climatizing the Cars for the region, neither will you see Microsoft ME coming up with something ground breaking.
(Most) of the regional offices of some of the biggest Ad agencies are just there to "dub" the creatives supplied by head offices overseas.
Oh yeah they do pass the buck onto the clients saying that they are helpless when it comes to the caliber of clients here.
It's like how you say.. what happened to the music channels in India.. a hash of Hinglish (neither pure Hindi nor pure original English), and then to defend the laziness, it got termed "we are like that only" ;-)
Well I've rambled on enough... It's good to see forward thinking being nurtured at Infosys starting at management and gracefully cascading to employee level.
I wish every technology or IT company worth their salt will have, in the near future, a "think tank" department, if not a full fledged wing!
Posted by: clyde | August 3, 2009 11:17 PM
All that is very true. Maybe the answer lies in the way Netflix is managed. The more they grow, the more freedom they give to their employees. Netflix is ready to listen to new challenges as the managers don't see themself as defenders of an organisation's legacy.
Posted by: GlobeCorp.biz | August 11, 2009 11:33 AM
I have seen it to be the other way... the more a company grows, the more freedom they take away from their employees, and although they may have the resources and money for innovation (that a startup just wishes they would have, and not in venture capital), they start with some protectionism and to go into the everything is a process way.
It is refreshing to see that someone just doesn't want to stay in the comfort zone. Of course it doesn't say how it's going to reinvent itself but it's going to be interesting. The future of this area is gray, maybe the consoles (xbox, wii) will be the next movie players and teathers in the decade, or the computer will finally move to the bedrooms and replace th tv. Maybe an appliance like a remote controller for Netflix is needed, as it is somehow troublesome to watch movies online yet and a tv is just more comfortable.
I hope more business take this advice. We would be having more groundbreaking technology.
Posted by: Ricardo Ramírez | September 14, 2009 02:08 PM