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How Netflix Went from Commodity to Category Leader

Netflix continues to collect the scalps of some of the top creative talents in TV and film. Recently, they signed Kenya Barris, the creator of “Black-ish,” to a development deal. That’s just the latest in a long line of star showrunner signings that have set Hollywood on its ear, including Shonda Rhimes (Grey’s Anatomy), Ryan Murphy (American Horror Story), and Mark Millar (the comic book maven behind titles like Kick-Ass). Right now, it’s Netflix’s world and we’re all just living in it.

But how? How has the little DVD mailing service that could, which started as a rival to now-dead Blockbuster Video, become the 800-pound gorilla of streaming entertainment? And more important, how can you apply its strategy to your own business and own your category?

One thing’s for sure: Netflix didn’t get here because of streaming. Sure, back when Blockbuster was still a thing, streaming content was novel and super-cool. But bandwidth quickly became a commodity, because anybody with the cash to put into fiber-optics and servers could stream content, too. If rivals can easily copy what you’re selling and your only advantages are brand or price, you’re a commodity.

No, Netflix has excelled at something that few companies have ever even tried, and they’ve done it so well that I call what they’ve done the “Netflix Rule.” To avoid having your company become just another commodity, follow this rule:

Turn your business into a creative platform for brilliant people.

Netflix hasn’t settled for being a distribution platform for other people’s content. They’ve become a producer of some of the best original films and television shows available today, from Stranger Things to Unbreakable Kimmy Schmidt. They’ve used the power of their platform to drive innovation and in doing so, they’ve blown past commodity status to become a power player, influencing markets and shaping opinions. Incidentally, that’s why companies like Amazon and Hulu are trying to catch up.

What does this mean for your business? Well, almost any business in any category can become a platform for inventive, forward-thinking, quirky minds. The trick is to turn those minds loose, let them do their thing, and then ride what they create to new heights of success. Here’s how to start:

Hire with creativity in mind.

When you’re recruiting, spend less time in search of people who fit certain roles or molds and more time on bright, audacious minds looking for an environment where they can test themselves and their ideas.

Build a creativity-friendly culture.

This takes time, but you can start now by clearing away the roadblocks to creativity: endless meetings, top-down approval processes, penalties for risky failures, and a lack of creative brainstorming time at the office.

Keep your eyes open.

Too many commodity businesses become inward-focused and stop looking outside themselves for ideas and inspiration. Wrong move. You should always be looking outward to culture, art, politics, technology, science and more to inspire new ideas. As an example, Jenji Kohan came up with the idea for mega-hit Orange is the New Black after reading Piper Kerman’s memoir.

Look outside your sector.

The best companies constantly get inspiration from businesses outside their industry. For example, the iconic design of the first iPod was inspired by a phone built by Danish consumer electronics company Bang & Olufsen. Don’t be limited by the work done in your neighborhood; cast a wide net and you’ll find ideas all around you.