Innovation and partnerships: The ingredients of Netflix’s success
Chris Whiteley, Head of Partnerships at Netflix in the UK, shared his thoughts of some of the values that have enabled Netflix growth over the last decade at O2’s Blue Door Conference, as part of O2 Live.
As a part of O2 Live week, we welcomed a number of amazing guest speakers to the O2 Blue Door Conference, a day of discovery designed specifically for businesses and public sector organisations.
Our morning speaker was Chris Whiteley, Head of Partnerships at Netflix in the UK. Chris shared with us the role that innovation plays at Netflix, as well as some of the company’s core values that have helped to create the Netflix success story.
Here are five ways that set Netflix apart:
- Members Come First
One of Netflix’s guiding principles is that their members always come first. It may sound like just another promotional headline, but Netflix really means it. A good example of this is the company’s cancellation policy. We have all experienced companies who can make it quite difficult to leave, for example by insisting that a request is put in writing. Netflix intentionally make the process straightforward. By doing so they believe that a member is likely still to speak highly of Netflix to friends or family, and may well rejoin and become a long term, valued customer in the future.
“Everything we do is focused on giving our customers the best experience. The proposition is simple: Whatever, whenever, wherever and as much as you want, on any device, with no ads.”
Netflix attributes the culture embedded throughout the organisation as the foundation for its approach to innovation. Everyone from the Chief Executive, through to the product designers, the network staff, the legal team, and even the newest recruit, shares a responsibility for innovation.
There are ten values that Netflix looks for in every new recruit, and innovation is one of them. So what does that mean in practice? A Netflix employee challenges every assumption and is always looking for new, different and better ways to do things. New perspectives on established practices are encouraged, as is seeking out new opportunities arising from change.
This is what drives Netflix’s innovation and has enabled the company to adapt and thrive in such a fast moving sector. Nor is it just the pace of technological change that Netflix has had to adapt to. In the last ten years the company has established operations in a number of new territories as well, many of which have also required doing business in a different language.
“Our culture underpins innovation, and culture eats strategy for breakfast!”
- People over process
The Netflix way is to give staff genuine responsibility for what they do and to encourage independent decision making. The best person to make a decision is the person closest to it, in other words the expert who is performing the role day in, day out. Rules are kept to an absolute minimum and the guiding principle is one of ‘people over process’.
There is a caveat, however. Giving people this much responsibility for decision making means that they have to be the right people. So Netflix retains only the highest motivated and those with the closest cultural fit, enabling the company to move swiftly and remain lean.
- Using data to support decisions
You would be forgiven for assuming that the development of Netflix’s user interface was the result of months spent creating and analysing complicated data algorithms. But Netflix likes to keep things simple. In fact, the way content is presented and categorised was defined by serving up four different homepage layouts and measuring which of them resulted in the most content being streamed.
Data is used to take the ego and politics out of a decision, which also means that a proposal can be tested before being implemented. Chris gave the example of when Reed Hastings, Netflix’s CEO, suggested that they remove the requirement for entering credit card details for customers taking up the 30 day free trial. Surely more people would sign up for a trial if they made the process quicker and simpler? The data confirmed that while the number of free trials did indeed increase, the conversion rate from free trial to subscriber plummeted. The suggestion was quickly dropped, and it’s a great illustration of a CEO modelling the culture of the organisation.
Netflix would not have 130 million members worldwide were it not for the partnerships the company has formed with other organisations. Here in the UK, O2 is proud to have had Netflix as a partner and we have previously bundled Netflix into many of our most popular mobile tariffs. Netflix also works with our parent company, Telefónica, in several European territories.
Partnerships weren’t always part of Netflix’s strategic plan however. Back when the company was transitioning from a DVD by post to a streaming service, they considered developing their own hardware in the form of a dedicated set top box. The project was shelved at the eleventh hour when the company realised that they wanted to keep the business simple, and have since built relationships with TV manufacturers, mobile providers and other content companies to ensure that the Netflix experience is intuitive, fast and accessible for everyone, regardless of location or device.
“Two businesses coming together can deliver a greater benefit for their customers as well as for each other.”
It is these values, and the culture at Netflix that has enabled the company to grow and adapt so remarkably. In just ten years, Netflix has grown from a physical media distribution business to a streaming service, then to a content producer – television dramas, documentaries and films, – with 130 million members that fund them. It’s hard to think of another company that adapted to successfully.
Want to read more from the keynote speakers who presented at O2 Blue Door Conference, as part of O2 Live? Baroness Martha Lane Fox delivered a hugely inspiring presentation on responsible use of the internet. Or to recap the day in full, head over to our wrap up blog.