reasons behind Netflix’s successful
Introduction
Nowadays, global organizations have to face a rapidly developing market
where change seems the only invariable. Facing this challenge, continually strengthening the management’s efficiency, and being flexible in responding to the external changes become the responsibilities of enterprises. Netflix, as the successful leader of the global provider of streaming films and television series, has the competitive advantages of innovative leadership style, and effective teamwork accelerates the growth and makes sure there is consistent innovation. This essay intends to illustrate the theories of transformational leadership and high-performance teams (HPTs), find out the related business practices in Netflix, and critically evaluate the firm’s performance.
Leadership
Successful leadership does not only generate a positive effect on the workforce but
also enables the enterprise to maintain a leading position in strategy planning, corporate culture, and employment practices. Reed Hastings, the co-founder of Netflix, His leadership can be described as the combination of transformational leadership and creative intelligence. Hastings applied the affiliative leadership in formulating employee regulation. For instance, employees have greater autonomy to arrange their time off. Meanwhile, Hastings abolished the annual formal reviews; instead, employees are required to communicate with managers about the performance as the natural part of work interactions. The Hastings approaches are opposite to mainstream Corporate America. As an affiliative leader, he is concerned more about the flexibility and freedom of the employees than the tasks. He treated employees as friends by reducing unnecessary constraints and providing more chances for innovation. The approaches to empower the workforce and create an autonomous-driven work atmosphere leads to a positive reciprocal organizational culture and prompts employees to feel obligated to repay the company via excellent performance. At the same time, Hastings considers the traditional leadership approach would generate negative impacts on employee behavior. For example, the coercive leadership would cause employees to feel oppressed, lack innovation consciousness, and not working in the best interest of Netflix.
Hastings is a pride leader for himself in making fewer decisions. He expects the employees to hold ownership of developing new products and ideas. Take the hit series of “House of Cards” as an example; he approved the production decision for only 30 minutes. He had to admit the effective performance is inseparable from employees actively participated in devising the work direction. The democratic leadership approach allows employees to have the opportunities to express their ideas to the leader and finally build the group consensus via respect to each other. The approach inspired the leader’s initiative to be concern about individuals and maintain high morale in teamwork. By encouraging employees to exert their potential, the firm reaps a better performance result.
However, exceptional leadership is not enough to bring benefits to the organization. Hersey, P. and Blanchard, K.H. (1996) indicate “leaders have to adjust their style to the situation.” The key point is that leader is required to have comprehensive thinking about different situations and be flexible to switch the leadership.
No matter how capable the leader is, he will inevitably make mistakes. Hastings, as a visionary leader who believes that if a company does not cling to its roots, it won’t survive for the long-term. Therefore, he announced the mail-order service would separate from the streaming business and charge consumers separately for each service in 2009. The bold move was considered as a failed innovation. It increased the consumer cost by 60 percent resulting in the majority of DVD membership subscribers loss. The authoritative leadership approach did not work as expected. Because Hasting was obsessed with completing the innovation, he ignored standing with the customer’s perspective and listen to the employees’ opinions in setting the strategy planning. The authoritative style is the most effective leadership, particularly when the company has an unclear direction. The leader motivates the employees by showing them how their missions fit into the grand vision.
High-performance team
There are seven critical factors to build successful HPTs, and the most relevant
factor is to satisfy the needs of individuals. Robbins and Finley (1996) summarized that “people will only agree to team if it meets their own needs first”. Netflix made the commitment that employees will receive an attractive salary which is at the top of their personal market. Even though the firm faces the economic hardship, there is nothing changed with the reward. The reason behind this is that the firms want to motivate the employees for them to provide better performance and valuable aid in solving the financial difficulties on time.
On the other hand, if the company operate well, the outstanding employees have the chances to receive a valuable stock option. It is evident that Netflix gives employees the most excellent satisfaction to motivate them to do the right thing and contribute to the best interest of Netflix. Meanwhile, the policy of highest salary can help the company attract and retain the talents in the high-performance team. Besides, personal needs are not always about compensation but also involve self-improvement. Working in Netflix is exceptionally worthwhile to the ambitious employees. Given an example of how the Netflix develop the talents in the team, according to the news in 2006, Netflix set up a competition, which reward one million dollars to the teams which could largely improve the movie recommendation system. Netflix breaks the traditional top-down management model and builds a sense of urgency surrounding the individuals. The competition inspired the members to have an equal voice and fully participate towards the intended goal. By joining the competition team, employees can learn the unique skills to solve the difficulties and cooperate with experts in different areas and finally increase
the personal market value and extensive experience.
However, there is a fundamental issue that influences the team performance that is the
existing work structure. Senge et al. (1994) state that “most aspects of existing infrastructure, such as measurement and compensation systems, as well as rewards, have not yet `captured’ the significance of teams”. It is a common phenomenon for the company intrinsically prefers individual accountability over the team. For example, the job description, formal reviews, and remuneration system often emphasize individual responsibility. Church (1998) makes the point that “no matter how the team approach is
established, members have their job responsibilities.” The company that neglects the importance of team accountability would lead to issues like lack of training and wrong team composition. The individual with poor teamwork skills to
financial difficulty in time.
The reason behind this is that the firms want to motivate
the employees to provide better performance and valuable aid to solve the
company
intrinsically prefers the individual accountability over the team and group is quite
a common phenomenon nowadays.
Cooperation with others would decrease the overall performance, and the wrong team composition resulted in the team’s critical skill gap. The conflict of teamwork does not only waste personal time and effort but also decreases individuals morale and generate negative impacts on the firm. Netflix has the problem of the employees focusing too much on the growth of subscribers, and less attention to the marketing expenses often ran ahead of it. Therefore, the problem is that even if the employees want to do well, they are unclear about the approach to profitability and what the critical point to success is due to lack of communication and team training.
Conclusion
The success of the firm is inseparable from transformational leadership and effective teamwork. An excellent leader is always flexible to switch a different direction to different situations and motivates the employees by satisfying their personal needs.
References
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