Harvard Business Review on Netflix's "Bold Disruptive Innovation"

Adam Richardson from the Harvard Business Review notes that the transformation Netflix is attempting to make from DVD to streaming-only is a "...lab experiment we can observe in realtime." Richardson cites the Netflix Culture presentation and the focus on talent, short-term complexity, and rapid recovery as signs that Netflix is going through this short-term pain to transform the company quickly.

But more important, when it comes to execution Netflix is an outstanding company (the attention to detail put into its user experience is fanatical), that it is clearly getting the best and the brightest, even though it is not the sexiest of tech companies. Netflix has set itself up with just the right type of smart, nimble, curious, and fearless organization that it needs to thrive and outwit competitors in the challenging times ahead.

Netflix will be roundly criticized from many quarters for its bold move, and it will upset and probably lose many customers. But it's the long-term endgame that Netflix is playing for. No one ever said self-cannibalization is painless.

Comments

[Stu Goldstone]

I have to admit, I don't exactly understand all the outrage. When I signed up for Netflix in March 2002, it was $20 for 3 DVDs, no streaming. Now, that same plan is $16. They're offering the same product (DVDs by mail) that they used to, at a lower price than they used to (albeit soon under a different name). They included free streaming for a while; now they're offering streaming as a separate product. I agree the range of selection on streaming isn't what I would like it to be-- that's the movie studios' fault in my opinion, not Netflix's. but for me, the streaming content is worth $8/month. I can drop 8 bucks on a cocktail, so I still think it's a bargain. If you're unhappy with the streaming selection, and don't want to maintain queues on 2 different websites, why not just sign up for a DVD-only plan? The DVD-by-mail service and selection are just as good as they ever were, in my opinion.

[RJM35126]

After reading the entire Netflix Culture presentation, its no wonder they dont have time for common sense.

[ClydesMP]

"The DVD-by-mail service and selection are just as good as they ever were, in my opinion."

Like you said, in your opinion. But I and others on here have given chapter and verse on how the DVD selection is steadily dwindling. Netflix refuses to replace many of their selections as they become worn out or "lost." It's almost impossible to watch many series now on DVD because there are seasons missing. It seems once one disc from a season is gone, that whole season is no longer available. And there have been many movies as well. I just had five movies come up as unavailable in my queue that were available just a few weeks ago. I don't think you really need me to give you a list do you? So how you can say it's as good as it has always been? It doesn't add up.

[ClydesMP]

Here are the five movies that were in my queue now unavailable: A Guide for the Married Man, Breakdown, Dakota, Dead Calm, and The Red Pony. And there have been many previous to this. Somebody should just start making a list where any previous available titles are now gone. I mean we have feed flicks, Instant Watch, so why not Qwikster Dead Zone?

[Art Artistry]

@ClydesMP How long has it been since any copies of those DVDs have been produced? Netflix can't just go to a local store and buy a used copy of the series and start renting it out.

[ClydesMP]

@Art Artistry

They are each one still available for purchase and in circulation. The same way most of the unreplaced TV series episodes are. You'd be surprised how even few are actually out of circulation. So don't even go there. I know some stuff does go out of print. But these aren't, so quit offering up flimsy excuses like this when most are still on the market. Or do I need to go make that list as well? Nobody expects them to replace movies that are no longer on DVD (although some of these titles were streaming and are gone from there as well).

[Nick]

"the attention to detail put into its user experience is fanatical"

I'm not so sure about this. There has been so much lack of attention to detail lately that I'm considering dropping my streaming only plan. Open your streaming queue on the Netflix website and go to a TV series you've previously added. Now how do I watch a specific episode? I can't. I have to search for the series outside of my queue, then I can select the episode I want to watch. This is only one of a number of "attention to detail" issues I've had recently. So for someone to say they're fanatical about this???? Really????? Do you even have a Netflix account?

[Steve Lumley]

@ClydesMP - netflix discontinuing certain dvd's is nothing new, really. almost 2 years ago they had Locked Up Abroad - only bought a few copies - one disc went bad, they took it out of offering. I asked way back then for them to order another copy, never did. And such.

[Marcus Hall]

Ho, hum to all of the complaints. I've been a subscriber since 2001 and have no complaint. I want to see the streaming service grow and grow quickly. If there is something I want to see on BD I will go out to a Redbox or BB store and get it. If I like it enough I'll buy it from Amazon. BTW, Amazon Instant Streaming is an interesting option but as a prime member I have not tried it yet. The reason being that they don't make it easy enough to access. They need an app to make it accessible from my Tivo, PS3 or Xbox. I'm not really interested in hooking up a computer to the TV that is not an HTPC.

[Edward R Murrow]

Usually, people with good business common sense can look at an initiative and figure out what the strategy and tactics are. Can anyone figure this one out?

It looks to me that Netflix's Bold Disruptive Innovation was to buggy whip themselves in an act of self-flagellation.

[RJM35126]

"the attention to detail put into its user experience is fanatical"

Yes, netflix is fanatical about taking the top 7 titles in my instant watch queue and putting them at #183-189.

Its happened a half dozen times. 3 phone calls hasnt stopped it from continuing.

[Steve Vaughan]

Wait, Netflix no longer has "My Red Pony"?! NOOOOOOOO!!!!!!!

[Teslaener]

Never give a party if you will be the most interesting person there.