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  • Raghav Sand

Netflix: Reinventing Work and Pop Culture

Netflix was founded in 1997 as a DVD rental by mail. Marc Randolph, the co-founder of Netflix had one basic idea in his mind – to sell something on the internet. The world was not ready for streaming content at the time company was founded. At the time when Netflix commenced operations, DVD players were not common in households and therefore not many titles were available on DVD. The late 1990’s was a time of transition in almost all the sectors of economy and the entertainment industry was also on the cusp of a revolution.

A commercial venture has the potential to scale if it can solve a problem / and create convenience for people. Before DVD / Blu-ray disc became dirt cheap, they were hard to find and once someone bought it, they would lie idle in a cabinet after watching. Initially, Netflix sold the idea to customers, that renting a movie is more cost-effective than owning it permanently. As more households decided to purchase a DVD player the subscriber base for Netflix grew every quarter.

If we were to compare the Netflix to today with its younger self, it would be prudent to say that initially Netflix was just a logistics provider. Someone else made the movies, another person produced the discs and DVD players and Netflix became a bridge between the content creator and the end user. After transitioning to producing own content, a part of current operations for the streaming pioneer is still third-party content. It still has some miles to cover in the local language content across geographies and regions.

Let the Streaming Wars Begin

As legacy entertainment companies enter the streaming ecosystem, the reliance on own content will grow in the time to come. Why would someone take a slice when they can have the whole cake? The buzz in the market is that Netflix is thinking about starting a TV channel. Such a move will give it access to an untapped market where high-speed internet personal mobile devices are not widespread.

The binge-watching consumer will have the option to choose the time and pace for viewing, while for people getting access to Netflix shows / movies on TV will be satisfied thinking something is better than nothing. There may be some churn in the subscriber base where a prospective TV consumer may switch to streaming and vice versa. The executives at Netflix feel that growth has plateaued after the peak of new subscribers during lockdown and a few calculated risks and some trial and error will do no harm.

Culture of Reinvention

Organisations are run by people, and the founding team at Netflix took this aspect of the operations seriously. Employees were encouraged to share open and honest feedback, and this helped in developing a culture of innovation and leading with context. Reed Hastings, the co-founder of Netflix and Erin Meyer of the INSEAD Business School have co-written a book titled No Rules Rules: Netflix and the Culture of Reinvention. This book has found prominent mention in annual best books list and made the shortlist of ‘Financial Times/Mckinsey Business Book of the Year 2020. Some of the key takeaways of the book are worth their weight in gold.

Incredible Co-workers

Creativity and passion make an employee standout. It should be the primary goal of an organisation to hire competent and capable people. There should be no room for mediocrity because it can hamper the culture of the workplace. Domain experts should be placed as functional heads and a person should be judged based on their primary responsibilities. Those who do not perform at desired levels should be asked to leave at the earliest. This may make others feel insecure in the near term but eventually the culture of the organisation will benefit.

Candid Feedback: Being Polite and Positive

If we take the example of a professional sports team, a player need not to be told everyday what they have to do. A player makes it to the top teams in any sport because they have earned the right to be there on the basis of performance in lower tier leagues / tournaments. Occasionally, a player may go through a dip in performance, but if their processes are intact , class outshines form. Players, coaches and other support staff know that open and honest feedback is in everyone’s best interest. Similarly, in a company, candid feedback exponentially magnifies the speed and effectiveness. Quality of talent and openness make way for relaxing controls and offer workplace freedom.

Selecting, Segregating and Paying Top Talent

In the early stages, company operates through bootstrapping i.e., building a company from the ground up with nothing but personal savings or the cash coming in from the first sales and little or no outside cash support. It is imperative to conserve resources, but at the same time no compromise should be made with quality. Creative and operational employees should be segregated and the former should be paid top of the market salary.

Financial Literacy and (some more) Openness

Apart from being open with feedback related to expectations and work performance, companies should encourage their employees to read and understand profit and loss statements. This will send a strong symbolic message to employees, as the true health of the company will be known to all the concerned people. Good financials can work as encouragement, where as a below par quarter / year will act as a wake-up call to do better.

Dispersed Decision-making

Businesses are making decisions all the time. It is a classic case of ‘If-then’ situations and possible outcomes. Accountability of critical decisions should be spread across the workforce at all the different levels and should not be assigned according to hierarchical position. Employees who speak to please the boss should be made aware of their actions. Failure should be communicated as soon as it is known. Outcome of one single instance should not be held against a worker’s performance and a holistic approach will encourage risk taking. Unrealistic scrutiny of a project’s failure will certainly be counter-productive.

Feedback vs. Performance Review

Performance review usually goes one way and comes from a single person. Feedback on the other hand is a process where two-way communication is possible. Performance review makes the whole work environment tedious, while feedback has the potential to infuse receptivity for new ideas and experiences.

D-I-Y: Do it Yourself

Now that you have some taste of the Netflix secret sauce, it is time to apply it in your work environment. This article talks about the ‘what’, but you have to figure out the ‘how, why, when, and where’ yourself.

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