Another Netflix Article, But For Good Reason

by mattdentler
August 8, 2010 10:03 AM
1 Comment
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There are so many Netflix articles that have been published in the last couple of years, and for good reason: they took a risk on a new platform, and it paid off. The streaming aspect of Netflix service has helped the company maintain its competitive edge in a landscape (DVD rentals) that becomes less competitive by the day. Why? Because the company learned to adapt from its launch, something other companies have been forced to do when new technology emerges. This is the lesson learned from the new article in the Sunday New York Times:

Consider silver halide photographic film, a technology cited in “The Innovator’s Dilemma,” Clayton M. Christensen’s 1997 book about established companies’ struggle with disruptive technologies. Kodak saw digital photography coming. It even invented some of the earliest such technology, in 1975.

Kodak just misjudged how fast consumers would give up on film and start snapping up digital cameras. And it misjudged its ability to outrun both trends.

“It’s kind of alarming,” said Henry C. Lucas Jr., a professor of decision, operations and information technologies at the Robert H. Smith School of Business at the University of Maryland. “It’s not like they had to turn around overnight.”

Even when Kodak wanted to change, it couldn’t, said Mr. Lucas, who has studied the company. “It was so large and had been so successful for so long that it was difficult to bring in people with a digital background.”

Kodak has had to take draconian steps to survive. It closed labs and factories and laid off 60 percent of its staff of 60,000.

Established companies’ historical inability to change is what makes Netflix’s maneuvers so fascinating. It foresaw its possible demise at the moment of its own creation.

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1 Comment

  • jl | August 8, 2010 11:14 AMReply

    great topic. very interested in your perspective given your role at crm.