I admit, I didn’t expect to have thoughts on the Netflix implosion, but I guess I do, and so it goes.
Netflix’s lack of understanding their customer in the information age is simply unacceptable.
The outcome of poorly executed company strategy and every knee-jerk decision at the corporate level is a potential social wildfire. How much damage and how long these fires last is uncertain, and that should be well enough reason to avoid them at all costs. Certainly their costs can be high: Reputations are tarnished, PR and the hype machine must spin into overdrive, which in itself always carries some amount of risk, and the company becomes hugely unfocused as the events play out.
These fires used to be in the control of the media. With blogs, Twitter and Facebook, this is no longer the case. Distributed complaints are much harder to reach, and therefore, much harder to quiet.
Netflix is a company that, prior to this fiasco, I routinely used as an example for how we should build our own business. Forgoing the monolithic apps of the past, Netflix has done an exemplary job of building a cloud based architecture that just works. Even through massive Amazon outages, Netflix was available and showed us how to correctly build a redundant system capable of withstanding the previously unthinkable.
Building chaos monkey and an infrastructure guaranteeing such a high amount of uptime takes a massive planning effort. Developers, ops, and management had to come together and put a plan in place that had never been undertaken before. All of this was a herculean effort on the part of the company.
So the question is, for all that planning, how did what started as a pricing change shake the company to its bones?
Were these recent decisions thought out as well as their platform was? Did they do the simple, “what if this? What if that?” scenarios I find myself thinking through late at night when I can’t sleep?
The simple answer is that they could not have.
As a response to outrage over pricing changes, they again made a quick and unclear decision to split the company into two in an attempt to further manage the situation.
This just added fuel to the fire.
I think we’ve seen evidence of what happens when customers ultimately don’t understand, don’t like or don’t believe in a company’s decision or direction. Facebook, AirBnB and now Netflix have all been caught in consumer wrath and all managed to make a situation worse by trying to manage it in a half-cocked manner.
Remember changes to Facebook’s privacy settings about a year ago? The follow up to the initial outrage from Facebook was a series of screens that further clouded what consumers had control over. After that they worked to smooth out the screens and ultimately give consumers a level of control that they were looking for.
Remember the AirBnB customer who had her apartment ransacked, identity stolen and the company’s mismanagement of the firestorm that ensued?
Seems to me that it boils down to these companies all trying to strong arm the customer and making decisions not based on any kind of customer input or data. The masses will no longer be strong armed, for at the very least, they’ll complain about it on Twitter.
Not making decisions based on real data, particularly for these companies, is simply idiotic, because they have accumulated vast amounts of consumer data just by the very nature of their business. Netflix customers visit the web site often enough they could have easily piloted changes to smaller groups of people. They could have just asked a few key questions.
Instead, they made a decision ignorant of this customer data and told their customers what they should want. It did not work. When that did not work, they did the same thing a second time. Until you know what might put the fire out, you probably should refrain from putting your company or your people in harm’s way a second time.
A simple query would have told them the number of customers using both DVD and streaming services. Another simple query would have told them which way people went when pricing split the two services.
If there were a million people still wanting the DVD service, then I would argue that is a million people too many to alienate.
Contrast all of this with Amazon or Etsy, who both make very small incremental changes to their websites often. They run these changes with subsets of users in order to perform real world tests of what their responses are going to be. The review the output of those tests and adjust accordingly.
They make decisions based on real customer input. The data drives their decisions.
When you know what your customers want, expect and will tolerate, you will not find yourself having the unpleasant task of trying to manage an unpredictable social wildfire.