Reed Hastings…Please wake up!
The CEO and co-founder of Netflix, Reed Hastings, appears to be missing his wake-up call. He’s hitting snooze. He’s not listening to any of it.
Sure. He’s brilliant, and a forward-thinking execution-focused visionary. And what an impressive track record until recently! But his failure to listen to customers, and shift gears with them as he drives into the future with them, is ego-driven. He needs to apologize and start partnering with them.
Ever tried to shift gears from first to fifth? Your car will stall. This is essentially what Reed has done. It’s like he saw into the future that his car would eventually get into 5th gear, so why wait? “Fifth gear is the future, so I’m making the future now!” he must have thought. Now Netflix has shifted gears prematurely, and the engine is stalling badly. And Reed Hastings is not taking personal responsibility or apologizing. He’s not asleep at the wheel, but in a sort of trance.
For the sake of your own leadership development, let’s look at his leadership failures through the 5 LASER Leadership perspectives.
- He’s a very future-focused guy. That’s who he is. But, now he’s losing a grip on where the present reality lies.
- He’s smart, really smart. But, he may think he’s smarter than everyone else, including his customers.
- He sees the trends in the customer data so clearly, but he’s trying to get so far ahead of them, that he’s leaving customers behind.
- He’s driven, and willing to take big risks. But his timing is off and he’s not listening.
- He’s rationalizing his failures, and his ego is in the way. “It can’t be ME who’s to blame” is the tone in his email (below).
- He’s made some very bold moves recently, by:
- Rebranding Netflix’s DVD service as Quickster.
- Charging twice the amount for those who want what they had before: the option of DVDs by mail and streaming.
- Sending this letter to all Netflix subscribers (below).
- Not apologizing for his errors. (He’s apologized for people’s feelings, not for his actions; see the half-hearted apologies and explanations, or rationalizations, in his letter below).
- The customer situation: People want options for how to watch movies. (He’s now limiting those options.)
- They also want a price break if they get both DVD and streaming subscriptions. (He’s not giving a price break.)
- Competitors: Coinstar, their chief competitor, is growing much faster, and focusing on convenient DVD distribution.
- Technology: The shift to streaming is happening for sure, (but much slower than he thinks it is, or should be.)
- The selection of movies via streaming is much more limited than DVD’s.
- These are just the facts of the situation he’s operating within.
- What’s Reed’s impact on people? He’s pissing off customers, loyal customers.
- He’s getting negative reactions to the Quickster brand.
- People are frustrated that Quickster and Netflix websites won’t have any integration.
- People have lost confidence in him, and he’s losing credibility further with disingenuous apologies.
- Reactions to his letter (from 25,000+ people on the Netflix blog) show people believe he’s not interested in making things right.
- People don’t feel he’s really hearing them. They feel he knows better, no matter what.
- His recent actions have caused Netflix to miss their projections by 1,000,000 (one million) subscribers.
- Quarterly results are way off.
- The growth rate is dropping dramatically.
- Netflix’s stock is crashing.
- Competitors are gaining ground.
Here’s his half-apologetic (or half-hearted?) email he sent me. Judge for yourself.
From: Reed Hastings, Co-Founder and CEO of Netflix <firstname.lastname@example.org>
Sent: Mon, Sep 19, 2011 3:53 am
Subject: An Explanation and Some Reflections
So, for those of you who want to LeadPeople effectively, learn what not to do from Reed’s recent failures.