What Netflix Can Teach Leaders About Staying Nimble
From the success of its original sci-fi thriller Stranger Things to the allure of a “Netflix and Chill” night, Netflix has an untouchable coolness that many companies long to emulate.
It seems that, despite the ever changing needs and demands of consumers, Netflix always knows what content people want to watch, when they want to watch it. And with Netflix’s most recent innovation–downloadable content that retains video quality and storage space–the company is poised to stay ahead of its competition.
What started as a DVD mailing service is now a dynamic provider of offline streaming content — and that harmonious transition occurred in just under a decade. How did they change so much in such a short amount of time? Because Netflix is one of the most nimble companies on earth.
Although many large companies struggle to be nimble due to the complexity of their internal operations, these three lessons from Netflix prove that companies of any size can stay nimble.
1. Know What Your Customers Need Before They Do
Part of what enabled Netflix to achieve its current status was its transition to online streaming in 2007. During this time, WiFi was becoming more ubiquitous and more people were relying on cell phones and tablets in their daily lives.
As a result, the demand for instant, high-quality content was at an all-time high.
Online streaming allowed Netflix to determine how long a user watches something, when they watch it, and what they browse, along with a multitude of other complex data points. This allows Netflix to evaluate changes in customer preferences.
What shows are more popular now that weren’t before? What is the reason behind this trend? Such information helps Netflix tweak its content offerings to be more appealing. This way, it always has a trending show, movie, or documentary that people are buzzing about, and Netflix never goes out of style.
Knowing what your customers want and need helps you understand what changes are needed, when they are needed. Additionally, this level of customer behavior data helps you stay nimble enough to pioneer industry changes before your competitors.
2. Keep Testing, Even When it’s Perfect
A/B testing isn’t a novel idea, but Netflix adopts a highly detailed approach that proves its commitment to customer experience.
Consider how seriously it takes image testing. After conducting a number of studies, Netflix realized that images played a vital role in whether or not viewers clicked to learn more about a piece of content.
It decided to test the images that accompany each program title. It enlisted its internal creative team to devise multiple pieces of artwork that would “convey the emotion of the entire title in a single image, while staying true to the spirit” according to the Netflix blog.
Once it replaced the poorly performing content with the highly engaged piece of content, it achieved a 20 percent to 30 percent increase in viewing for certain titles.
Many companies are afraid to change or adapt a product that’s selling well. However, failure to improve a product is exactly how companies get behind.
Testing doesn’t mean you have to make an immediate change on a product that’s performing well. It just means you’re gathering the information you need to stay nimble when change is required.
3. Lead, Never Follow
After years of mounting anticipation, Netflix announced this past November that its content would be available for offline streaming. The ability to download content for offline streaming isn’t new — competitors like Amazon Instant Video have already implemented this method. However, Netflix’s new feature entails a number of capabilities that differ from other streaming services.
Downloading video uses up phone and tablet storage, so many offline providers tackle this challenge by reducing file sizes, which decreases content quality. This simply isn’t an option for Netflix, which is dedicated to maintaining customer retention rates. That’s why its new offline capabilities entail advanced settings that neither use up storage or compromise content quality. To understand how this works, consider the fact that different scenes require different amounts of data (an action scene with special effects is harder to encode than a short animated film, for example). Netflix has split up all of its content into one-to-three minute clips, so computers and other devices can encode each of these parts separately. This segmentation is hidden from the user, but it saves bandwidth on devices by using the smallest amount of data required.
This shows that a company doesn’t always have to be first in releasing a new feature or product. The world’s most agile leaders are constantly assessing their industry’s landscape to figure out where their company can enact change. Ask yourself this: How can you improve a product or feature that already exists while also delighting customers in new, unexpected ways? Adopting this mindset is key to becoming a more nimble company.