Having the courage to chase the future
What Netflix can teach you about making sure you keep your long-term goals in perspective
In February 2007 Netflix delivered it’s billionth DVD — that’s right, billion. This was a mere 7 years after they offered themselves for sale to Blockbuster for $50million. At this stage, Netflix and Blockbuster had their horns locked in a serious war to win in the DVD rental business. Blockbuster, bolstered with incumbency, a massive retail operation, and a history of understanding the market. Netflix was emboldened with newcomer status, serious marketing chops, and an impressive logistics operation.
It seemed like what would play out would be a race for market dominance. But, instead what happened was that Netflix began to pivot their business. They had just delivered a billion DVDs and were successfully challenging market giants and they began to pivot. This wasn’t Netflix being afraid, it was them being prescient. They looked into the future and realised the victor wasn’t going to be the company that could offer the most DVDs at the lowest price. The future was moving online even more.
Imagine having the courage to make that choice? To choose to begin moving away from nearly a decade of work to focus on something that was unproven, unknown, and uncertain. What was it that gave Netflix the conviction to make this choice? I’d argue that it was three things in particular, three things that you can consider if you’re building your own business.
Not getting too comfortable
After delivering a billion DVDs it was probably a tough call to make to begin to fundamentally refocus their business. However, this wasn’t the first time they had to do it. Shortly after getting into the DVD business, Netflix established itself as a dominant player in DVD sales, but they knew that Amazon would enter this market and they simply couldn’t compete with their distribution. So, whilst DVD rental was only 1% of their overall business they began to lean into this area. Hard. They refocused their efforts and doubled down on a field they could win in, DVD rentals. Netflix killed their sacred cow of DVD sales and doubled down on rentals and they rose to be a top player in that field. So, when the time came to refocus their efforts again they already knew how to do it. Amazon had launched video-on-demand a few months previously and Hulu would launch shortly after Netflix announced they were getting into the streaming business. However, Netflix knew this was their future and everything was to play for. They weren’t dealing with behemoth incumbents, they were competing fairly in an open field and they excelled.
Netflix is now primarily known as a streaming service and is reportedly thinking about stopping their DVD service altogether. Netflix has shown that they’re uncomfortable getting too comfortable and that’s a lesson for all of us.
What are you too comfortable with?
Having the time to think about “what’s next” and now just “what’s happening”
Following on from the first point Netflix have shown an uncanny ability to think about “what’s next” rather than getting too distracted with the day-to-day. Often, we’re so busy running the day-to-day of our businesses that we can be totally blinded to what’s coming round the corner. Think about a giant mentioned at the start of this article — Blockbuster. They were so concerned with the “right now” that they couldn’t comprehend, predict, or bet on the future of their own industry.
Are you making time to notice and prepare for the fundamental shifts that might be 5–10 years away?
Realising that the culture is the business
Netflix’s famous culture deck is a well-known silicon artefact. However, it’s popularity can often belie the importance of the document to Netflix. They used it as their holy-text of running the business. You see, Netflix realised that just as important as becoming a large force to be reckoned with was how they became that force to be reckoned with.
Netflix’s culture was the very thing that allowed them to pivot safely, several times. It allowed them to grow exponentially. And, it’s the culture that continues to allow them to take big bets on the future (did you know they plan to spend over $17bn this year on original content?).
Focusing on the culture of your business can often be one of those things that falls down the ‘to-do’ list because winning the next client or signing the next contract is more important. But, culture develops whether or not you’re intentional about it. So, it’s important not just to think about the next big milestone you need to hit; but also consider how you’re going to hit it.
Are you carving out space to think about the type of culture you want in your company?