Leadership

Poll: What if you were CEO of Netflix?

Netflix is poised to move into new countries and is now into making movies itself. But business life coach John M. McKee says this is precisely the time it needs to take a step back and reconsider its plans.

Does a company that's grown its subscriber base from about 670,000 in 2002 to about 24 million today have anything to be concerned about? And, if any organization can increase revenues by 47% to $719M in this economy, can't the CEO relax just a bit and enjoy the fruits of success?

The answers to those two questions are yes and no.

Netflix is often credited for killing the video rental store business model. With the recent bankruptcy of BlockBuster Video, the biggest rental organization in the world at one time, that claim seems reasonable.  Now it's girding itself to become a dominant player online. Already its streaming service is claiming new users across North America on a daily basis. It is planning to add two new international markets a year, starting probably with Britain or South America.

Surely the future is golden, right? My thought: Not necessarily.

Why? Because success brings competition. This is true whether you're an individual doing well at work or a large organization doing well in a tough marketplace.

The new competitors may be less successful existing players or new entrants. The smart ones will figure out what you're doing well and where you're weak. (I'd suggest doing a SWOT analysis. These are just as effective for your career planning by the way.) They'll build on your successes and beat on your weaknesses. If you're great, you'll be ready and stay ahead of the pack. If you've decided that you've got the winning formula, you're destined to fall.

Back to Netflix -- here's what I'd be watching if I were CEO Reed Hastings:

1. Well-armed entrants from other sectors: For example, Wal-Mart has been trying to get into the online rental business for a couple of years. With Vudu it seems like they've got the technology, and because of their video sales, they've got the connections and partners. Wal-Mart can kill anything in its path if it sets its sights on it. Best Buy could take a chunk too. 2. Aggressive players who "get" technology: Amazon will continue to push the streaming business, Apple has shown it wants to branch into video rentals more aggressively, and Dish Network bought Blockbuster recently, with the obvious idea being that they wanted BlockBuster's contracts with Hollywood so that they can start streaming movies. 3. Concerned suppliers: It's to their benefit to have competition for their product. A supplier can encourage and assist by sharing ideas with new entrants or existing players. Hollywood studios like to control their destiny; they will look after their needs first. 4. Hubris: This tanks careerists and successful businesses. It's the old, "I'm golden, nothing can stop me" attitude that can bring down even the super successful. 5. New technology deployment: If you've streamed from Netflix and watched it abruptly stop playing a few times in two hours, it can be a real turnoff. Somebody out there is already figuring out how to use new ideas and technology to reduce costs and at the same time increase customer satisfaction with watching a movie at home.

If you were the CEO of Netflix, what would most drive your decisions about your five-year plan?

Looking forward,

John

About

John M. McKee is the founder and CEO of BusinessSuccessCoach.net, an international consulting and coaching practice with subscribers in 43 countries. One of the founding senior executives of DIRECTV, his hands-on experience includes leading billion d...

4 comments
njhou
njhou

Netflix is well know for rewarding outstanding employee especially with great ideas. For a company reviewed as a having a game plan similar to an ice cube on a sidewalk in August, I'd say these people take the risk to reap the rewards.

C-3PO
C-3PO

Keep in mind as you read this that I'm writing from Canada, where the competition and the application itself are quite different from the US. I never used the disk service with Netflix, but absolutely love the on-line service that they provide, and the price point at which they provide it. If I had two things as a consumer that I would gripe about and that would make me switch to another provider, they would be: 1) They are too closely tied to Playstation's network on the PS3 - the outage this week means I can't watch netflix on my PS3 - that's a bummer. 2) Their feature set is too slim - the application should allow me to tag shows I want to watch in the future and queue them up for me to watch. I should be able to create multiple queues for each of the members of my family. The search should provide some other options of ways to search, and I should have a friends list to see what my friends are watching. That's all about customer service to me. The tech is pretty stable as long as I have a good network connection, and as far as competition, I haven't seen anything close yet.

Slayer_
Slayer_

I know my folks absolutely love it, no advertisements, and the occasional 3 minute break caused by having to buffer doesn't bother them. They are using the cheapest internet possible (128k download) and it runs SD movies just fine. They are using an old cheap computer hooked up to a flatscreen SD TV. I boosted the font sizes so it is actually viewable at such a low resolution TV. My father watches about 3 hours of Netflix a day. Seriously going over their bandwidth limits. (15 gigs)

nate.irvin
nate.irvin

Honestly, I think any company has to focus on all three - tech, customer service, and competition - to be long-term successful. I voted tech because Netflix's ability to deliver high-quality video will be the life or death of them in the end, but customer service and competition are almost as big. The key with customer service is that it needs to be flexible. Netflix's customer service policies (in regards to problems with discs at least) are very flexible, so they win in that regard. In that arena I see it more as a 'stay-the-course' approach, so probably not something they need to 'focus' on. Competition I think can be over-emphasized: I've seen plenty of companies lose the thing that made them appealing in the first place by rushing to keep up with trends. Still, if the competition has some actually useful feature that you don't, you'd be stupid not to implement your own.