Netflix: A Success Story (part 2)
Netflix has also innovated its HR functions
Netflix is not only innovating technologically. Although that is not the main focus of this analysis, we can not fail to mention that Netflix has attracted the best talent in the country thanks to the fact that it has also strongly innovated in its Human Resources policies. This has also strongly contributed to it being able to bring the best series and movies to their TV sets; You can read about it in this revealing article from the Harvard Business Review.
One of the maxims of the company in this regard is to trust its employees, and to assume that they have “adult behavior,” by which they decide at every moment for themselves what matters most to their company.
To give you a couple of examples, one of these policies is for an employee to take all the vacations that one considers appropriate in conjunction with their manager. Another policy in the same sense of “adult behavior” is to let decisions on corporate expenses fall on the employees themselves and be evaluated by oneself: the results are obvious with an evident reduction in those expenses.
Netflix Human Resources also encourage their employees, for example, to speak with headhunters of the competition, so as to ensure that their compensation is in line with the market at all times. And that their talent is not going away for that reason (more money). They do not want to be a company that holds their talent “hostage,” but to rather be the company for which the talent wants to work. A key perspective change to be a truly innovative company, for which having talent on staff is essential.
And Netflix has used technology as a catalyst to finally innovate in marketing
And Netflix has also used this technological innovation to innovate in other fields. One more demonstration of that I always tell you is that technology should be in the DNA of every company that aspires to some kind of future. Since today more than ever, the services, products and quality offered to customers depend heavily on the underlying technology. This has been the case with Netflix, converted by its own merits into one of the business and technological paradigms of recent years.
One of the great market innovations that Netflix has brought to the audiovisual sector has been how it has launched and successfully produced its own content. What for some may not be too significant and is a natural evolution, is not for a film industry that was traditionally divided between the all-powerful producers (mainly Hollywood) on the one hand, who created the product, and the distributors and media groups that put those products on the air (or screen). Netflix has definitely broken that sectorial barrier.
Speaking of its own productions, can bring up the second most disruptive aspect that Netflix brought to the entertainment sector? Have you noticed that, they ave several low-cost productions that have still had great success? They put content on the market products that are cheaper to produce yet they still are a resounding sales success! How is it that Netflix can easily achieve this type of success that is so occasional and difficult for traditional players to foresee?This recidivism of Netflix in this type of success is not coincidence, much less, and is, for a change, also intimately related to technology. The key issue is that Netflix, in addition to facilitating and becoming more flexible in the face of consumer habits, has made video clubs and movie theaters obsolete, where shelves and screenings are the scarce resource, respectively. Netflix has a tiny cost to keep on its servers and distribute one more movie to its customers, for very few customers who see it.
In other words, Netflix has eliminated the opportunity cost. That cost was an important limitation in a movie theater where not only do you raise a little for a projection of a non-commercial film, but you have high fixed costs to cover, and also if instead of that film B you project the last movie of super – Hollywood movie you would have a full room.
The opportunity cost is high, and it means money lost because you are wasting your chances of maximizing your profit with the resources you have available to do business. The same happens with television networks or video stores and their shelves.
But with Netflix that has changed, and, for a few GBs of low-cost storage space, it can offer its purist customers ribbons that would never have been profitable to market on traditional commercial circuits. With such low costs, and a global audience, it is profitable to them to commercialize a series or film a priori little commercial. And that is a great advantage, since one of the Achilles heels of the audiovisual sector is that it is very difficult to anticipate the success or failure of each production.
Netflix is continually cheap betting on a little commercial product that may not work, but if it works is going to give great benefits, because it is usually about low-cost series and movies (which does not imply low quality at all).
The lessons we can learn from the Netflix success story
And the corporate policies exposed above are the reason we respond to that question that gives title to this analysis, and the reason why Netflix can bring so many series to your TV. Moreover, they are successful series (often unexpected) and initially unknown.
Only companies like Netflix can dare as a rule with risky products, but due to its low launch and maintenance costs, Netflix can afford to bet on them frequently. If they are quality, the streaming giant will see how they can quickly become popular, and end up being on the lips (and screen) of everyone. Therefore, one of the most important conclusions of today’s analysis would be to see technology as the great catalyst for the transformation that every company must do on a continuous basis to reinvent itself day by day.
And it is not enough to copy what others have done before. What you have to do is invent the future, without fear, but with vision and a certain dose of prudence, and give your clients what they still do not even know they want. Easier said than done admittedly.
For this, cutting-edge technology is your best ally, a cutting-edge technology that you must develop yourself to ensure that it does exactly what you need most. Netflix is an excellent and illustrative example of all this, and the results are in sight. Invest in talent and develop an ambitious and truly innovative product that can make you the next Netflix.