Take risks and continue to innovate.

Six Lessons We Can Learn from Netflix

Blogger: Erik Carlson, Director of Operations, Architecture Consulting Group l Omaha, NE, USA
January 24, 2017

I never imagined myself working at an Architecture and Engineering firm since I am neither an architect nor an engineer. In fact, as a finance major I assumed I would have become an investment banker or a stockbroker. Life often turns out differently than what you originally plan. Knowing how my career has evolved from finance to healthcare to architecture, I think about how the architecture industry will also evolve and how our industry can learn from others.

At its peak, Blockbuster was a provider of home movie and video game rentals, with more than 8,000 stores and 60,000 employees. In 2010 the company declared bankruptcy. What happened to this once large and highly successful company? Many factors were no doubt involved, but I believe these and other issues contributed to their fall: Their inability to be innovative, flexible and nimble; not embracing technology; failing to take risks and to differentiate themselves, and not re-imagining how they delivered products and services. Enter Netflix. 

Netflix was a direct competitor of Blockbuster in the early 2000s, but from the beginning Netflix had a different business model. Originally they competed with Blockbuster as a mail-order DVD rental operation–at that time an innovative and competitive approach. Netflix focused primarily on convenience by delivering movies to their customers through the mail, eliminating the need to drive to a physical store for rentals. Then in 2007 something happened: Netflix began to offer non-traditional services and products to their customers.

Technology upgrades, such as the enhanced capabilities of mobile devices and tablets to stream movies, increases in internet bandwidth and cell phones (with larger data plans) along with YouTube’s proven success in video streaming, opened the door to new opportunities. Netflix recognized and immediately seized these opportunities in the market. They created an entirely new business model to further differentiate themselves from their competitors. A model that produces far more revenue than their DVD rentals. And a model that introduced the term, “binge-watching.”

Not that this new service did not have its share of problems (price point, amount of movies available, quality of choice, etc.) but Netflix was an innovator and disrupted the market. The company continued to innovate by investing in and creating “Netflix Original” content that you could only access as a subscriber. With critically acclaimed shows, such as “House of Cards,” “Making a Murder” and “Orange is the New Black,” Netflix created an increased demand for paid subscriptions. Additionally, they continued to improve accessibility and brand awareness by entering into relationships with television manufacturers to ensure the Netflix “app” was installed on newly produced components.   

Netflix is continuing to push the envelope in two new ways. First, they now allow subscribers to download movies to watch from their personal devices–something that was previously not an option. The hope is that by offering content on these flexible platforms, it will continue to build loyalty and enhance the user experience.

Second, they are offering a new and non-traditional talk show titled “Chelsea.” The show streams three days a week (episodes are released one at a time, which differs from how they typically release episodes). Chelsea does not follow the prescriptive “rules” followed by traditional talk shows, with monologues, a band and an announcer as a foil for the comedian-host. This format is new and it’s still unknown whether it will be successful. The move does take Netflix closer to a traditional TV network approach, but it retains the nuances of their business model. 

So what can we learn from the missed opportunities and successes of other industries such as Blockbuster and Netflix?

  1. Continuously innovate
  2. Reimagine product and service delivery
  3. Embrace new technology
  4. Be flexible, nimble and adaptable
  5. Continue to differentiate
  6. Don’t be afraid to take risks

If we can apply these lessons in architecture and engineering, I believe we can transform our industry and even become the equivalent of  being “binge-watched,” like Netflix.

How do you imagine the architecture industry will evolve? Share your thoughts in the comments section below.

Images: ©iStock/Thinkstock  

Reader Comments (4)

So what? Everyone knows businesses need to take risks, innovate, etc. How does one overcome the inertia of an organization and move it to action?

It is a fair comment.  The intent of this blog is to remind us all that if we do not revisit lessons from the past that are relatable, learn from them, and take action, then we may share a similar fate to Blockbuster, Kodak, and countless other companies.  Are these lessons already known? Perhaps, but if we feel as if we do not need to be reminded of them then we have already set to stage to be surpassed by our competitors.  

Having the appropriate culture to allow us to learn from these lessons is paramount.  We cannot think too highly of ourselves or have a culture that does not promote diversity, change and new ideas.  Additionally, those leading the organization must  be committed to letting go of past successes and see beyond what we know today.  Recruitment, development, retention, and cultivation of the talent that positions us to produce goods and services not currently delivered is also key.  Finally, having a bold  strategic plan, with measurable milestones, is necessary to guide a company.  

If this were easy everybody would be doing it. 
 

An excellent analog. I am fascinated by the creativity and research put into this piece. I can say that leading the way in innovation and taking risks is exciting and keeps me interested in future prospects. I especially like the part where they continued to improve accessibility and brand awareness... any great company should strive to do this.

Another example of how the 'Netflix' business model is impacting other industries!
https://www.wsj.com/articles/gm-tries-a-subscription-plan-for-cadillacsa-netflix-for-cars-at-1-500-a-month-1489928401

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