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Assignment Task
Background Netflix is the world’s leading internet entertainment service with 139 million paid memberships in over 190 countries enjoying TV series, documentaries and feature films across a wide variety of genres and languages. Members can watch as much as they want, anytime, anywhere, on any internet-connected screen. Members can play, pause and resume watching, all without commercials or commitments. Netflix provides a range of programming directly to internet users, without relying on a cable or satellite company. It allows users to watch shows anywhere at any time via the internet.
Reed Hastings, an American entrepreneur who co-founded Netflix in 1997, often told the story of his inspiration for Netflix: a $40 late fee from Blockbuster. Frustrated over the late fee, Hastings, a dot-com multimillionaire, formed Netflix, a company that would rent DVDs through the mail for a monthly subscription price, with no postage charges or late fees. Hastings’s model for Netflix seemed simple enough. Netflix subscribers would create a wish list of DVDs on the company’s website, and Netflix would send a new title from the list when the previous rental was returned
Co-Founder and CEO: Reed Hastings
Hastings is an active educational philanthropist and serving on the board of several educational organizations. Hastings is also a board member of Facebook, The City Fund, and was on the board of Microsoft from 2007 to 2012. Hastings received a BA in 1983, and an MSCS in Artificial Intelligence from Stanford University in 1988. Between Bowdoin and Stanford, Hastings served in the Peace Corps as a high school math teacher in Swaziland. Hastings is married with two children.
Hastings is a leader that prides himself on making few decisions; his aim is to allow his employees to take ownership of generating new products and initiatives. Take for instance the hit series, “House of Cards”. It took only 30-minutes for Hastings to give the green-light for production. He credits the company’s culture of freedom and empowerment as the leading contributor (not only to the success of the show) but for just how quickly the show was approved. He admits the decision came quick because it was the employees who laid the ground work to make it happen.
Together, Hastings and the employees at Netflix have redefined how we watch cable television today. Netflix was a transformational pioneer as seen with its initial mail-order DVD service (surpassing the likes of Block-Buster). Hastings’ ability to see a need, design a plan and introduce it to the market-place again remains testament to his creative intelligence and abilities as a leader.
Netflix Culture, Leadership and Strategies
Netflix is better entertainment at lower cost and greater scale than the world has ever seen. Their purpose is to entertain everyone, and make the world smile. The core philosophy is people over process. More specifically, they believe they have great people working together as a dream team. With this approach, Netflix is seen as a flexible, fun, stimulating, creative, collaborative and successful organization.
According to Hastings, Netflix strives to hire the best workers. Hastings and Netflix value integrity, excellence, respect, inclusivity, passion, curiosity and innovation, communication and collaboration. What is special about Netflix, though, is how much they: 1. encourage independent decision-making by employees 2. share information openly, broadly, and deliberately 3. are extraordinarily candid with each other 4. keep only our highly effective people 5. avoid rules
According to Netflix, they believe staff will learn faster and be better if giving and receiving feedback is made less stressful and a more normal part of work life. Feedback helps to avoid misunderstandings and the need for rules. This relies on a strong underlying relationship and trust between people. Netflix actively help people learn how to do this at Netflix through coaching and modelling the behaviours by all managers.
The goal is to inspire people more than manage them. Teams are trusted to do what they think is best for Netflix — giving them lots of freedom, power, and information in support of their decisions. In turn, this generates a sense of responsibility and self-discipline that drives workers to do great work that benefits the company.
Hastings believes that people thrive on being trusted, on freedom, and on being able to make a difference, and so Netflix fosters freedom and empowerment wherever they can. In this way, Netflix avoids becoming rigid, resistant to change and growth. Instead, they retain freedom, ambitions, and employee excellence.
Some examples of how Netflix operates with unusual amounts of freedom are:
- Personal time – employees are given the autonomy to take as much time off as they feel is necessary; employees and managers work it out together.
- Travel policy – employees are expected to act like adults; solidified in five words, “Act in Netflix’s Best Interest” and spend money as if it were their own.
- Formal reviews – eliminated, instead managers and employees are asked to have conversations about performance as an organic part of their work interactions.
- Compensation – no bonuses; employees are offered market-based pay and can select how much (if any) compensation would be in the form of equity; those with stock options have their salaries reduced accordingly.
Hastings empowers his workforce, believes they are sophisticated enough to manage an autonomous-driven work environment and will ultimately do what is right for Netflix, themselves as employees and their families. To reinvent the company’s human resource policies so radically can be viewed as a testament to Hastings creative intelligence and transformational leadership abilities. Hastings believes that creating a company culture at Netflix centred on traditional corporate practices would not work and negatively impact motivation, attitudes, behaviour and performance. The positive company culture created by Hastings means employees feel obligated to repay the company by performing well. Today the company culture and their performance are well revered. Since being founded in 1997, the company is worth an estimated $23 billion with stock increases rising more than 200%.
Case Study Questions
1. Why is it critical for Netflix to scan and understand the external forces operating in the business environment? Using Thompson’s Model, describe one general external force and one specific external stakeholder that may threaten the success of Netflix.
2. Using Schein’s three layers model describe the organisational culture of this business. Use examples from the case to support your points.
3. Using Cameron and Quinn’s typology on culture, diagnose the type of culture evident in Netflix. Give two reasons why this type of culture is appropriate to the business.
4. Using Blake and Mouton’s Managerial Grid, describe the management style of the Founder/ CEO of this organisation. Explain whether this style of leadership may be considered appropriate given the goals and the culture of the business.
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