I was reading Reed Hastings "No Rules Rules" again to make some management slides for my team meeting. Although my industry is different but the style apply to any industry. The book offers a captivating glimpse into the early days of Netflix and its revolutionary approach to the streaming television industry. In the early 2010s, the company was grappling with the complex challenges of transitioning from a DVD-by-mail service to a streaming platform. The television landscape was dominated by traditional cable and satellite providers, and there was significant skepticism about the viability of a subscription-based streaming service.
Netflix faced numerous obstacles in its quest to disrupt the status quo. One of the biggest challenges was securing content rights from major studios and production companies. These companies were reluctant to license their content to a relatively unknown upstart, and negotiations were often fraught with tension. Additionally, Netflix had to invest heavily in building its streaming infrastructure and developing a user-friendly platform that could compete with the established players in the market.
Despite these hurdles, Netflix remained steadfast in its vision of a subscription-based streaming service. The company's leadership recognized the potential of the internet to revolutionize the way people consume entertainment, and they were determined to capitalize on this opportunity. Netflix pioneered a number of innovative strategies, including binge-watching and original programming, that would ultimately reshape the television industry.
One of the most significant factors in Netflix's success was its ability to adapt to changing consumer preferences. The company closely monitored user behavior and data to identify trends and preferences. This data-driven approach allowed Netflix to tailor its content offerings to meet the needs of its subscribers, ensuring that they remained engaged and satisfied with the service.
We do that in my industry a lot, oil & gas exploration. We take a lot of risk, and industry exploration success rate is about 10%. Lately, as the global demand is on the rise, I am encouraging my team to take more risks and bring forward more risky ideas. Trouble is if people bring forward more risky ideas, chances are some of those ideas will be failures for sure, but perhaps one or two will shine and pay off for all others.
So, what do we do if a team member's idea fails? Put them in box of shame? Like the image above? No, that will essentially guarantee that no one will come forward with any innovative idea. The method suggested at Netflix are as follows:
This one I remember personally. Back in those days, you can only stream videos to TV via a Nintendo Wi or an Xbox, and that too via monster cables. Netflix had a project called "Explorer" that they ran a pilot to test on 200K customers.It was too complex and customers hated it. Needless to say, it was a failure at the time. It was just ahead of time and industry and consumers were not ready for it. It was a failure, but Netflix teams learned from it and that essentially made them the most successful streaming service 10 years later.
Chris Jaffe, the director of product innovation was in charge of this project. In fact it was his personal idea. He wrote the following when he was presenting his failed project to the CEO Reed Hastings:
I talked about the project, detailing every part that had and hadn’t
worked and explaining that this had been one hundred percent my
bet. Reed asked some questions and we talked about which parts of
the project led to the flop. Then he asked what we’d learned. I told
him we’d learned that complexity kills consumer engagement. That,
by the way, is a lesson that the entire company now understands as
a result of the Explorer project.
“Okay, that’s interesting. Let’s remember that,” Reed concluded. “Well
that project’s over. What’s next?”
Reed asked what they learned from it, and he didn't make a big deal about it. It observed it, and moved on. He took the whole event as a training project, and a learning exercise. This is the right way to champion a failure.
