change management case study netflix

Netflix Change Management Case Study

Netflix is one of the world’s leading internet television networks with over 100 million members in 190 countries. It has a wide variety of award-winning original programming, documentaries, TV shows and feature films. 

Netflix offers a subscription services to its users to watch all its content online. Now Netflix is producing its own content and also adding quality content of other producers for its users. It has become one of the popular online video streaming web portals and been on first top 50 websites globally.

But Netflix transformed itself and it embraced change with ever changing technology and business market.

What is Netflix successfully change story? How it happened and what challenges it faced to cope with change?

For this questions, we are presenting here Netflix change management case study.

This case study will explore how Netflix has successfully managed change in the past and present. It will also provide recommendations for other businesses on how to approach change management.

The story of Netflix change management

Netflix is a streaming service for movies and TV shows. It has a library of over 200,000 titles that you can watch on your phone, tablet, computer, or TV. You can also download shows to watch offline. Netflix offers a variety of plans, including a basic plan that starts at $7.99/month and a premium plan that starts at $11.99/month.

Netflix was founded in 1997 by Reed Hastings and Marc Randolph. They started the company with the intention of offering a DVD-by-mail service. In 2007, they introduced streaming, which allowed instant streaming of TV shows and movies on your computer. In 2013, they introduced the concept of ” binge watching” with the release of House of Cards, which all episodes of the first season were released at once so that viewers could watch them all in one sitting. In 2015, they launched their own production company, Netflix Originals, which produces movies and TV shows that are only available on Netflix. 

Netflix has undergone several changes since it was founded. The most notable change was the introduction of streaming in 2007, which changed the way people watched TV and movies.

Netflix made two big changes since its started business. First, it introduced the subscription option in 1999 to store DVD rental. This option allows users to rent unlimited DVD rental without late fees. It was a drastic change in the business model of Netflix.

The second big change was happened in 2007, when it launched an online video streaming service. It was a highly disruptive change which completely revolutionalized the concept of watching movies and Tv shows online. Consumers also welcomed this change because this change was the need of time. Because everyone was using smartphone, laptops and computers and trend of going to cinema to watch a movie was on decline. Netflix also used social media and present its content to reach out their customers.  

Netflix’s Change Management Process 

Netflix’s change management process is a model for other organizations to follow. The company has a dedicated team that is responsible for managing change. This team works closely with Netflix’s engineers and product managers to ensure that changes are made in a controlled and safe manner. Netflix has also implemented a series of mechanisms to help prevent and mitigate the impact of changes. For example, all changes are assessed for risk before they are implemented. Netflix also conducts regular post-change reviews to identify any issues that may have arisen from the change. As a result of these measures, Netflix has been able to successfully manage change while minimizing disruptions to its business.

How Netflix manages organizational change forces

There are many factors that affect organizational change . But primarily these are two broad forces of organizational change: a) external and b)internal. Among the external forces there were rapid changes in technology, globalisation, social media etc. These all external factors led to organizational change at Netflix. .For instance, people’s expectation and behaviour, likes and dislikes in terms of watching content was changing due to new technology. New tools, techniques were also affecting business of movies watching and TV shows. But Netflix managed all those forces of change and responded in a big way to meet expectations of its consumers.

There were also internal forces of organizational change like new skills of employees and employees expectations, need of change in work environment, cost of business model etc. Netflix taken all these factors into consideration before going to execute change. And that’s the reason behind their successfully implementation of change.

How Netflix Uses Data to Drive Change 

Netflix’s data team is made up of over 800 people, including statisticians, analysts, and engineers. Their mission is simple: “to help Netflix understand its business and the world.” To do this, they collect and process tons of data every day. This data comes from a variety of sources, including things like clickstream data (what you watch and when you watch it), surveys, social media activity, third-party research, and more. 

Once all this data is collected, it’s organized and stored in a massive data warehouse. This is where things start to get really interesting. The team then uses a combination of qualitative analysis (looking at the meaning behind the numbers) and quantitative analysis (using statistical models to draw conclusions) to glean insights from the data. These insights are then used to inform everything from what new shows to green-light to which actors should star in them. 

For example, let’s say the team notices that a lot of people who watch Stranger Things also tend to watch You. They might then use this information to suggest Stranger Things to people who haven’t watched it yet or recommend You to people who have finished Stranger Things and are looking for something similar. This is just one small example of how Netflix uses data to drive change within its business. 

It’s clear that data plays a big role in everything Netflix does. From deciding which new shows to produce to suggesting content for individual users, data is at the heart of the company’s decision-making process. And as our watching habits continue to be tracked and analyzed, we can expect even more personalized recommendations and a more tailored streaming experience overall.

Learning from drastic changes

In order to maintain a successful business, it is important to occasionally review your company’s methods and make changes where necessary. This is especially true in today’s ever-changing marketplace. Netflix, a leading provider of streaming video content, knows this well. In 2011, the company made a drastic change to its business model that upset many of its customers. However, thanks to careful planning and execution, the change was ultimately successful and resulted in increased profits for the company.

The introduction of drastic changes can be a difficult process, but with proper planning and execution, it can be successful. Netflix provides a great example of how to successfully navigate a major change. By carefully considering the needs of its customers and taking the time to properly execute its plans, the company was able to weather the storm and come out stronger than ever before.

Final Words

Netflix is a great example of change management. Business organizations can learn from Netflix change management case study to keep up with the latest changes and trends. Netflix has been successful in managing change by using data to drive their decisions. There are multiple lessons for other business entities that how Netflix capitalised on its human resources and rightly understood needs of modern-day customers.

About The Author

Tahir Abbas

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Netflix Organizational Change Case Study

Introduction.

In a business environment where companies always experience competition from their rivals who manufacture and sell similar products, change is not only an inevitable undertaking, but also a necessary aspect of driving innovation and attaining a competitive advantage (Goffin, Lemke & Koners 2010). Since it is considered as an imperative aspect of innovation, a company cannot let change to happen without managing it in a manner that will fit the organization’s structure and achieve the desired results (Willard 2009; Wysocki 2011).

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As a result, managers must adopt suitable models of change management in order to ensure that all stakeholders embrace the change without much or any resistance (Ball 2010). This paper will discuss the various models used to manage change, define a case study of a company in regard to the Netflix organizational change, identify problems that appear in the case study, and provide solutions for them.

Literature Review

Practically, the various steps included in the models of change cannot take place completely in the real-life situations (Bernoff & Schadler 2010; Blood 2013). As a result, most of the change models that are evident in Netflix are not necessarily complete in accordance to the theoretical stipulations (Berry & Fazzio 2010). In some instances, the agents of change skip some steps or undertake several stages at the same time so that it becomes difficult to isolate the distinctive levels (Cooper 2012; Deshmukh & Naik 2010.

Lewis Three Step Model

Lewis proposed a model that introduces a change in three steps, including unfreezing, moving and freezing. Following the struggles that Netflix has undergone in an attempt to introduce price plans in correspondence to the cost of the Internet and licensing fee, the company adopted strategies that envisage the Lewis Three Step Model.

The CEO first expressed dissatisfaction of customers with one price plan. He stated that all customers are not satisfied with one price plan bearing in mind that the customers have different need (Barr 2011; Bell & Koren 2010). In essence, this was a tactic of unfreezing the existing price plan to prepare customers for change. Second, the company has expressed their intention to introduce the proposed model. This implies that the company is prepared to make the change (Bransley 2010; Bell & Koren 2007; Delimitrou & Kozyrakis 2013). However, they have not accomplished the last stage of freezing back to normalcy.

The Process of Transition

There are various aspects of the process of transition that have been shown in the Netflix’s attempt to introduce three tiers of price plan. In regard to the process of transition, there are three steps that have been portrayed including anxiety, fear and threat. In this case, it is important to understand that the company is in the process of introducing the new price plan, but it has not implemented it at this point. When the CEO announced their intention to change the prices in January, 2014, the customer expressed fear and anxiety that the plan might lead to a situation such as the one experienced in 2011. In addition, the change has been challenged by investors because they seem to have little confidence in regard to the ability of Reed Hastings to introduce the change successfully.

Kotter’s-8-Steps Model.

In regard to Kotter’s eight steps, it is evident that the company has already implemented the first step of this model. In this case, the CEO has successfully convinced the customers about the importance of making changes in the price plan. When he was announcing about the company’s intention to introduce the plan, Hastings said that one price was not fit for all customers. This argument seeks to capture the attention of the customers since it portrays the company’s commitment to their welfare.

Additionally, the CEO has shown diligence in regard to creating a strong coalition. In this case, he has included his co-founders when making this decision in contrast to what he had done in 2011 where one of the executives had opposed the decision publicly. In addition, he has created a strong vision with the help of his coalition members. In essence, this implies that they have implemented the third step of Kotter’s model. Besides the creation, the CEO and his co-founders have accomplished the fourth step of this model by communicating their vision to the customers and investors.

According to their report, they aim at introducing a price plan that caters for all customers in accordance to their preferences and financial capabilities. Accordingly, the company has implemented the first four stages of Kotter’s-8-step model.

The Technology of Leading Sustainable Change

Another model of change management that is essentially evident in the company’s attempt is the technology of leading sustainable change (Durrant, J & Holden 2009; Erskine 2013; Feher & Towell 2010).

The technology of leading this change incorporates three aspects that include the mind-set, emotional conviction, and capability. The CEO has been capable of harmonizing the three aspects considering the difficulties he experienced in 2011 when he introduced price hikes (Feuerverger & He 2012; Gallaugher 2010). First, the CEO has facilitated the collection of factual data in order to support the importance of introducing new price plan. In this case, he stated that the company needed a different price plan based on the fact that customers are not satisfied with one service provision.

Importantly, this step has occurred simultaneously with that one of the motivational conviction. In this case, the reason that was provided shows the urgent necessity of changing the old price plan which is both conservative and insufficient. He has also formed a strong team stating with his co-founders. This implies that the CEO has implemented the three steps of this model. Essentially, these are the models that the company has employed in its quest of introducing a new price plan.

Successful Netflix Change Management

When focusing on how Netflix is planning to introduce the new price plans, Gallaugher (2010) stated that the company is seeking for a breakthrough rather than incremental change. Incremental change refers to situation where success is achieved gradually due to undertakings that build on the members’ skills and commitment. On the other hand, breakthrough refers to profound success that is realized over a short period of time. Bransley (2010) stated that a company realizes breakthrough when it changes the paradigms of the organization.

On the hand, he revealed that if it needs incremental changes, it must concentrate on the behaviors and attitudes of the various stakeholders (Bransley 2010). In the case of Netflix, the CEO is concentrating on changing the organizational structure by splitting the company and introducing two additional price plans. This implies that the company is seeking to achieve a breakthrough rather than incremental change that needs a lot of time to give real results.

Role of Sponsor Change Agent

Bransley (2010) stated that change can be introduced successfully if the agents sponsoring it are involved actively in the process of implementation. Reed Hastings, who is the CEO and the sponsor of price changes, has been involved in the process of implementing the proposed plans. In this regard, he has been involved in making critical decisions, communicating them to the public, and defending the company against criticisms that arise in relation to the proposed changes. The active involvement has been a crucial force in regard to implementing the new price plans.

Netflix Change Management: Case study

Netflix is known as one of the most successful companies in the technological field where it has been providing streaming services and selling DVDs by sending them through email. These services are provided to the customers on a constant subscription that warrants them the opportunity to access unlimited materials such as movies and e-books. The companies have been struggling to introduce changes in its organizational structure and pricing plans. The most important attempts of introducing such changes were experienced in 2011 where the company entered into severe crises owing to the introduced changes.

In 2011, Reed Hastings, who is the CEO of the company, announced that the company had sought to split the DVD-by-mail form the streaming services. In this case, he stated that DVD services could operate as a different company known as Qwikster. According to his report, he explained that the name of the new company was chosen to portray the company’s intention of quick delivery. He stated that the two services were based on the premises that the two businesses had different benefits (Villarroel & Taylor 2013).

As a result, the management felt that the two services needed distinct marketing strategies and cost structures. During the announcement, it was made stated clearly that this plan could start applying to new subscribers immediately while the existing subscribers were affected after one month. However, the company reversed their decision whereby Qwikster was dissolved so that the two services were provided from the same company (Tuzhilin & Koren 2008).

Besides splitting the company, Netflix changed its price plan where it abandoned the original one that required customers to pay a monthly subscription of $7.99 for unlimited access of DVDs and streaming. In the updated price plan, they split the DVD and streaming provisions where the customers were required to pay $7.99 for each of those services (Vickers, A & Fearn 2010). This implied that the customer could either choose to subscribe to one of the services at $7.99 or both at $15.98.

This plan was introduced amidst sustained criticisms claiming that the access for DVDs was not satisfactory since the company had limited stock. According to business analysts in USA, the company experienced a shortage of DVDs’ supply due to the increased licensing fee charged by DVD owners in order to distribute their content. In fact, this shortage forced the company to start developing its own content despite the lack of the required human resources. This undertaking also led to the overloading of the employees due to the added job description.

Introduction of Drastic Changes

In this case study, it is evident that the company sought to introduce two critical changes in regard to their structure and pricing plan. Pricing and organizational structures are sensitive areas that can lead to insolvency if they are not changes carefully and strategically (Ghimire 2011; Gilbreath 2010; Girard & Parsons 2012).

In essence, when the company split the services into streaming provision and DVD-by-mail service, it meant that most of them had to quit one of the services and maintain the other. Practically, splitting the company implied that the customers would be forced to visit the two websites in order to find for a movie (Harmon 2007).

Whereas the change presented customers with operational difficulties, the company announced their plan and implemented it immediately. Expectedly, the introduction of Qwikster, could come with other provisions that customers needed some time to learn (Goldfayn 2011; Harmon 2007; Harris 2010). As a result, immediate split was a completely doomed decision that could only see customers abandon the company and subscribe with their competitors (Goffin, Lemke & Koners 2010).

Additionally, the decision to split the company into two sections was followed by a new price plan that presented another challenge to the customers. In this case, the provision of DVD and streaming services separately led to division of price subscription. After these changes, the customers were needed to pay twice the original amount in order to access the two services since they were provided under different protocols.

Also, the customers were notified about one month prior to the implementation thus leading to drastic change of budget besides the operational difficulties. As a result, they did not have enough time to conceptualize and understand the necessity of those changes as explained by the CEO. This implies that the two changes were implemented drastically rendering them risky, destructive and financially invalid.

Changes Insensitive to Company’s Credibility

When making any changes in an organization or a business, it is extremely important to consider the credibility of the company in the face of its stakeholders (Hamada 2010; Harmon 2007; Ingwer 2012). It is fundamentally necessary to maintain their trust towards the company by ensuring that the company’s principles are upheld (Hastrup 2013; Hernaez 2011; Holgersen 2011).

It was clear that Netflix has made severe mistakes in regard to securing their credibility in the face of their customers (Healy 2010; Linden & Conover 2009; Lusted 2013). For example, it was evident that the company reversed the decision of splitting their services whereby they re-integrated the two services and continued with the original business model in which DVDs and streaming services were provided under the same company.

The re-integration took place after few weeks of lamentation and criticisms from various quarters. This portrayed lack confidence and raised critical questions on the company’s foresight and research. It also implied that the company did not have a well-defined plan of implementing their original plan of splitting their services. In addition, their attempts to regain respect and credibility have been impeded by strong resistance from stockholders and consumers.

In addition, the investors put pressure on the CEO since they almost lost their holdings during the splitting. In this case, splitting the company meant that the returns for the investors could reduce drastically since they had invested under the Netflix Company rather than Qwikster (Ransohoff 2010). In response to the investor’s complaints, Reed Hastings mocked them stating that he needed a food taster, and that is why he could not blame them for their criticisms.

This was an additional insult that resulted from poor implementation of change. In essence, change should be introduced in a manner that does not disparage the dignity of the company since it needs to maintain the trust and loyalty of the customers.

Lack of Proactive Approach to Change

In light of introducing and managing change managers are required to exhibit a proactive approach when handling the process (Komives & Wagner 2012; Lawes & Rider 2010). In this regard, they are required to anticipate and foresee problems and risks that could necessitate a change (Legutko 2012; Martin & Fellenz 2010). This implies that the company could be prepared to initiate the process of change gradually in order to avoid afflictions that could paralyze the organization (Marquardt 2011; Paul 2011).

However, the case study portrayed lack of proactive approaches in various instances. In the first instance, the company should have anticipated the increase in licensing fees bearing in mind that the company did not have its own content. In this case, the management should have anticipated such risks since the company did not develop its content, but practiced brokerage between the DVD developers and consumers (Rettie 2001; Roebuck 2012).

This implied that at the long-run, the DVD developers could have sought to sell their content directly and discourage brokerage by putting measures such as increasing licensing fee. If they had anticipated such eventualities, they could have been prepared to make changes in a manageable manner rather than take drastic measures that could paralyze the company.

In addition, the case study shows that the company decided to introduce price plans despite the criticism regarding the limited availability of DVDs. This undertaking showed that the management did not foresee the possible backlash of customers owing to increased prices without improvement of services’ quality or fixation of sustained problems. This problem is intensified by the insensitivity of the CEO towards the company’s investors, although they play an important role to determine the success of a company. In fact, it is regrettable that the CEO could afford to mock the investors claiming that he did not blame them because he needed food tasters.

Change Insensitive to Stakeholders’ Needs

Changes that are introduced to an organization should not be implemented for the sake of the management and the financial prosperity without considering the welfare of the customers as well as other stakeholders (Ryle 2011; Sarin 2010; Tihanyi 2012). In response to the question of the price changes, the company spokesman explained that the DVD and streaming services were split since the company felt that the two were different businesses.

Further, he stated that the splitting was necessitated by the need of the company to market the two services differently. However, they did not explain how they considered the operational and financial need in light of making their decision. In addition, the CEO mocked the investors showing his insensitivity towards the needs and concerns of stakeholders in the process of inducing change (Zeng & Gualdi 2013).

In regard to the problems identified in the case study, the company should apply the Kotter-8-steps model. First, it should create urgency such that all stakeholders want the pricing plan to change and the company to split. In this case, the executive must come up with idealistic proposals explaining the reasons as to why splitting and changing the price plan is important to all stakeholders (Weinberg, Sutherland & Cooper 2010).

Second, the executive must form a strong coalition with people who have influence in terms of politics, expertise and job status. This will call for identification of true leaders within the organization such that the coalition is capable of leading change. Thirdly, the CEO must harmonize all the identified opportunities, threats, and concepts in order to come up with a vision for the process. The vision should be easily understood by all the stakeholders so that they can embrace the process.

In the fourth stage, the CEO should communicate this vision to the stakeholders and make sure that he repeats it often bearing in mind that it will face competition from many people daily. After communicating the vision to people and establishing buy-in, the CEO should identify the obstacle that could be inhibiting change, including employees and company’s structure. Having streamlined the organizational structure, then he should create short-terms wins to give the company members an early taste of success in order to motivate them.

Then, Mr. Reed Hastings should go a step ahead to build change and incorporate the attained change in the company’s structure so that it becomes a part of the organizational culture. This will help the company to cope with the existing pricing conflict since the process is gradual and inclusive contrary to the one introduced in 2011 that was not only drastic, but also unilateral.

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Netflix Organizational Change, Structure & Case Study 2023

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What is Organizational Change?

Organizational change means business modification in which a company changes its business tools, such as policy, strategy, operation, structure, infrastructure, and culture. The most prevalent reasons for organizational change are technology, globalization, new market condition, poor performance, and customer demand.  The organizational changes enable the company to cope with the digital era. Therefore,  many organization has embraced technological changes to adjust to the digital age. Organizational change assists the company in replacing old systems with new strategies to achieve competitive advantages in the same marketplace.

Organizational Change Examples

Netflix change management case study, netflix organizational change.

Technology has changed the world in many ways, including education, business, sports, entertainment, etc. Many renowned companies have been closed due to new technology such as computers, smartphones, and social media. Some have managed to cope with the force of change by applying sophisticated strategies and accepting organizational change.

The following year, in 1999, Netflix launched its new subscription feature for customers to rent DVDs at a monthly rate. This service allowed the subscribers to enjoy unlimited DVD rental with monthly payments. So, the change was from the pay-for-use model to a monthly subscription model. The subscribers choose the movie and video titles from Netflix’s official website. After that, the distributors send the shows in the form of DVDs to the subscribers.

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In 2016, Netflix launched its offline playback feature to cache the contents. Therefore, Netflix mobile app users can watch high-quality cache content without an internet connection.

Netflix History Timeline

Netflix launched its operation with the first and largest online DVD rental store. Since 2012, Netflix has produced and distributed its original content, including film and television series entertaining many viewers. This variety of content has been stored in the online library for viewing by subscribers. Since 2016, it has been providing services in around 190 countries. This company has established its office globally, including in Brazil, the Netherlands, France, the United Kingdom, Japan, India, and South Korea. In 2023, Netflix owned more than 231 million subscribers globally involved in a pay-per-month payment.

Netflix Organizational Structure

Netflix has a flat organizational structure that provides ample freedom for employees. It is also known as a decentralized organizational structure that allows the respective person to make quick decisions. Netflix maintains the unitary organizational structure, also known as the U-form organizational structure. It influences the employees to be more responsive to their duties. Netflix’s organizational structure avoids top-down decision-making strategies to create a conducive working environment for employees. It also focuses on creating a favorable environment to promote employee performance. Netflix has a labor division that works to improve performance. The authority reviews the performance regularly. They opt for a multi-rater feedback system that is also known as a 360-degree review method. Netflix’s corporate administration team always focuses on practicing and maintaining the principles of total quality management tools that trigger it to become the most popular company worldwide.

Netflix Organizational Structure 2023

The three main divisions of the Netflix organizational structure are functional, geographical, and products team. The operational division includes the CEO, content, communication, talent, finance, legal, etc. Additionally, the geographical team consists of local and international streaming. Finally, the product team controls the content and ensures the effectiveness of the operation.

Netflix CEO in 2023

Netflix organizational transformation, first-change in 1999, (pay-for-use model into a subscription model).

Netflix has made two significant changes since its launch. First, it began the subscription option in 1999 to store DVD rental. This change allows consumers to rent unlimited DVD rental without late fees. It was the first change in the business model in the history of Netflix.

Second-Change in 2007

(streaming service), purpose of netflix organizational change, how netflix handles the organizational change forces.

Organizational change refers to the adjustment and transformation of a company’s operations. The company brings a minor or significant change to improve productivity and cope with the new context. There are two types of forces of change in a company: external forces and internal forces. Technological change, globalization, social and political change, and managing ethical behaviors are external forces. For example, technological change and globalization are the primary external forces that compelled Netflix to change the feature.

Conclusion and Takeaway

Citation for this article(apa-7th & mla-9th edition), 6 thoughts on “netflix organizational change, structure & case study 2023”, leave a reply cancel reply.

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Netflix change management analysis & solution, hbr change management solutions, strategy & execution case study | sayan chatterjee, elizabeth carroll, david m. spencer, case study description.

The 'Netflix' case describes how Netflix created the business model of delivering DVDs using mail services. Essentially, Netflix exploited a whitespace that other players, such as Blockbuster, could not engage in primarily because they were constrained by their own business models. The case allows the instructor to develop the details of the capabilities that have allowed Netflix to deliver the values its customers desire. The case can then explore the competitive dynamics between Blockbuster, Netflix and Wal-Mart, a new entrant, in this space. Finally, the case describes future technologies, such as Video on Demand (VOD), that in turn pose a threat to Netflix's business model.

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What is Change Management Definition & Process? Why transformation efforts fail? What are the Change Management Issues in Netflix case study?

According to John P. Kotter – Change Management efforts are the major initiatives an organization undertakes to either boost productivity, increase product quality, improve the organizational culture, or reverse the present downward spiral that the company is going through. Sooner or later every organization requires change management efforts because without reinventing itself organization tends to lose out in the competitive market environment. The competitors catch up with it in products and service delivery, disruptors take away the lucrative and niche market positioning, or management ends up sitting on its own laurels thus missing out on the new trends, opportunities and developments in the industry.

What are the John P. Kotter - 8 Steps of Change Management?

Eight Steps of Kotter's Change Management Execution are -

• 1. Establish a Sense of Urgency
• 2. Form a Powerful Guiding Coalition
• 3. Create a Vision
• 4. Communicate the Vision
• 5. Empower Others to Act on the Vision
• 6. Plan for and Create Short Term Wins
• 7. Consolidate Improvements and Produce More Change
• 8. Institutionalize New Approaches

Are Change Management efforts easy to implement? What are the challenges in implementing change management processes?

According to authorlist Change management efforts are absolutely essential for the surviving and thriving of the organization but they are also extremely difficult to implement. Some of the biggest obstacles in implementing change efforts are –

• Change efforts create an environment of uncertainty in the organization that impacts not only the productivity in the organization but also the level of trust in the organization.
• Change efforts are often made by new leaders because they are chosen by board to do so. These leaders often have less trust among the workforce compare to the people with whom they were already working with over the years.
• Change management is often a lengthy, time consuming, and resource consuming process. Managements try to avoid them because they reflect negatively on the short term financial balance sheet of the organization.
• Change management efforts are made when the organization is in dire need and have fewer resources. This creates silos protection mentality within the organization.
• Change efforts are often targeted at making fundamental aspects in the business – operations and culture. Change management disrupts are status quo thus face opposition from both within and outside the organization.

Netflix SWOT Analysis, SWOT Matrix, Weighted SWOT Case Study Solution & Analysis

How you can apply Change Management Principles to Netflix case study?

Leaders can implement Change Management efforts in the organization by following the “Eight Steps Method of Change Management” by John P. Kotter.

Step 1 - Establish a sense of urgency

What are areas that require urgent change management efforts in the “ Netflix “ case study. Some of the areas that require urgent changes are – organizing sales force to meet competitive realities, building new organizational structure to enter new markets or explore new opportunities. The leader needs to convince the managers that the status quo is far more dangerous than the change efforts.

Step 2 - Form a powerful guiding coalition

As mentioned earlier in the paper, most change efforts are undertaken by new management which has far less trust in the bank compare to the people with whom the organization staff has worked for long period of time. New leaders need to tap in the talent of the existing managers and integrate them in the change management efforts . This will for a powerful guiding coalition that not only understands the urgency of the situation but also has the trust of the employees in the organization. If the team able to explain at the grass roots level what went wrong, why organization need change, and what will be the outcomes of the change efforts then there will be a far more positive sentiment about change efforts among the rank and file.

Step 3 - Create a vision

The most critical role of the leader who is leading the change efforts is – creating and communicating a vision that can have a broader buy-in among employees throughout the organization. The vision should not only talk about broader objectives but also about how every little change can add up to the improvement in the overall organization.

Step 4 - Communicating the vision

Leaders need to use every vehicle to communicate the desired outcomes of the change efforts and how each employee impacted by it can contribute to achieve the desired change. Secondly the communication efforts need to answer a simple question for employees – “What it is in for the them”. If the vision doesn’t provide answer to this question then the change efforts are bound to fail because it won’t have buy-in from the required stakeholders of the organization.

Step 5 -Empower other to act on the vision

Once the vision is set and communicated, change management leadership should empower people at every level to take decisions regarding the change efforts. The empowerment should follow two key principles – it shouldn’t be too structured that it takes away improvisation capabilities of the managers who are working on the fronts. Secondly it shouldn’t be too loosely defined that people at the execution level can take it away from the desired vision and objectives.

Netflix PESTEL / PEST / STEP & Porter Five Forces Analysis

Step 6 - Plan for and create short term wins

Initially the change efforts will bring more disruption then positive change because it is transforming the status quo. For example new training to increase productivity initially will lead to decrease in level of current productivity because workers are learning new skills and way of doing things. It can demotivate the employees regarding change efforts. To overcome such scenarios the change management leadership should focus on short term wins within the long term transformation. They should carefully craft short term goals, reward employees for achieving short term wins, and provide a comprehensive understanding of how these short term wins fit into the overall vision and objectives of the change management efforts.

Step 7 - Consolidate improvements and produce more change

Short term wins lead to renewed enthusiasm among the employees to implement change efforts. Management should go ahead to put a framework where the improvements made so far are consolidated and more change efforts can be built on the top of the present change efforts.

Step 8 - Institutionalize new approaches

Once the improvements are consolidated, leadership needs to take steps to institutionalize the processes and changes that are made. It needs to stress how the change efforts have delivered success in the desired manner. It should highlight the connection between corporate success and new behaviour. Finally organization management needs to create organizational structure, leadership, and performance plans consistent with the new approach.

Is change management a process or event?

What many leaders and managers at the Netflix Blockbuster fails to recognize is that – Change Management is a deliberate and detail oriented process rather than an event where the management declares that the changes it needs to make in the organization to thrive. Change management not only impact the operational processes of the organization but also the cultural and integral values of the organization.

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Case Study - NETFLIX

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Description of change management at Netflix in the year 1999 and 2007. References taken from multiple case studies and articles available (open source) online. The contents include change timeline, perspectives on change, forces of change, change methodology and change levers.

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• 1. Presented by Aryan | Nupur Jha | Prachi Singla | Prajjwal Vij | Surabhi Dutta 17/03/2022 12 Slides
• 2. ABOUT Netflix TABLE OF CONTENTS 01 What the company says about itself 02 Changesin Netflix Timeline of Change at NETFLIX 03 Perspective on change Cognitive Approach of NETFLIX 04 Forces of change External Forces of Change 05 Change methodology Lewin’s Change Management Model 06 Change levers NETFLIX Interdependent Change Levers
• 3. “At Netflix, we want to entertain the world. Whatever your taste, and no matter where you live, we give you access to best-in-class TV shows, movies and documentaries. Our members control what they want to watch, when they want it, with no ads, in one simple subscription. We’re streaming in more than 30 languages and 190 countries, because great stories can come from anywhere and be loved everywhere. We are the world’s biggest fans of entertainment, and we’re always looking to help you find your next favorite story.” About Netflix
• 4. Break-up of NETFLIX Audience 2022 MALE 57% FEMALE 43%
• 5. Formulation DVD by Mail Reed Hastings and Marc Randolph Personalization Recommendation System using members’ ratings on past titles to accurately predict future choices Change #1 Change as Growth Pay-For-Use Model into a Subscription Model IPO 1M subscribers 1998 2000 1999 2002 TIMELINE of Change in netflix
• 6. Partnerships NETFLIX Button on Remote Controls Change #2 Change as Transformation Streaming allows members instant entertainment On the gO Download feature is added for offline and on- the-go viewing 2011 2007 2016 TIMELINE of Change in netflix 200M+ Members 2021
• 7. NETFLIX used Cognitive Approach to Change. In this approach, the Managers think outside the box in this approach. Diagnosing the problem through a series of experiments and processes. The mindset of managers changes cognitively before engaging into a change process for the organization. PERSPECTIVE ON CHANGE
• 8. Online streaming in 2007 was technically viable Social CustomerDemad Faster and cheaper entertainment needs Competition Competition like Blockbuster was trying to catch up Technology Demographic Economic The social media revolution of that time Globalization in entertainment Cost of tramspostation of DVDs had to be cut Forces of Change
• 9. Change Methodology Netflix organizational change is a real-life example of Lewin’s change management model. Unfreezing • Persuade employees to accept the change Changing • Support Employees in embracing change Refreezing • Employee adjust to new working environment Especially, in 2007 (change #2), the leadership had to convince the employees (U shape structure of company) to venture into streaming as the DVD rental business was working exceptionally well at that time.
• 10. Change Levers Leadership Strategy The leadership was open to change, though Marc Randolph left Netflix in 2002 Structure 1 2 3 Blue Ocean Strategy- Creating New Unique Business Market Flat Organizational Structure facilitating Quick Decision Making
• 11. Change Levers People Management Technology Avoids Top-down Decision-making 360-degree Feedback System Marketing 4 5 6 Pioneer in online entertainment with contant developments like Personaized Recommendation System Multi-channel personalized marketing campaigns that market experience
• 12. Change Levers QuALITY Costs Use of Total Quality Management to maintain content which created loyal audience. 7 8 Customer centric content + quick adaptation of tools like machine learning to cut costs.
• 13. Thank You !

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Netflix: we got it right.

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There is no doubt that organizations need to be more agile given the rapidly changing business environment that they face. In our 2012 book, Management Reset , Chris Worley and I argue that one key to making the human capital side of organizations more agile is adopting what we call a “travel light” talent management philosophy.

The literature on talent management has often argued that the best way to assure an organization has the right talent is to internally develop it, invest in it and have relatively long term employment relationships with individuals. One advantage of this is that it builds loyalty and the willingness of individuals to sacrifice for the good of the organization.

The problem with the career approach is that change often requires new skill sets and new approaches to dealing with business issues that aren’t quickly learned and developed. This is where the “travel light” approach is superior. It argues strongly for “temporary” relationships between individuals and organizations. Responsibility for an individual’s career and skills shifts from the organization to the individual. Employment is “guaranteed” for only as long as an individual has the skills the organization needs.

When writing our book, we searched for a good example of a company which was agile and committed to a travel light approach to talent management. Eventually, we found what we thought was a great example, Netflix . Its approach to talent management was best summarized by a comment their HR VP made to us during an interview, “The reward for doing a good job today is having a job tomorrow. We cannot guarantee work. It’s up to individuals to have the skills that the organization needs. If they have them, they have a job. If they don’t have them, they don’t have a job.”

Shortly after we sent the final version of our book to our Publisher in 2011, Netflix became the object of a great deal of negative publicity. Their CEO did a major restructuring and rebranding of the company with the respect to their two lines of businesses, DVD home delivery and video streaming. To say the least, it was poorly handled and in October of 2011, Netflix announced that it had lost 800,000 U.S. subscribers as a result of the poorly handled change. Imagine our disappointment given that our book was about to be released praising them for their agility.

It didn’t matter of course that the change was made by the CEO and was not particularly relevant to their “travel light” talent management model. We were very much in the position of being business authors who praise a company only to find that it is not worthy of the praise. At the very least we had good company. The same thing has happened to Tom Peters and more recently, Jim Collin.

However, maybe we weren’t so wrong in praising the agility of Netflix. Recent news from Netflix suggests that they have made a rather amazing transformation. They have gone from being a home deliverer of discs to a producer of video content and streamer of video content to the homes of global subscribers, including a voice recognition system named “max” that quizzes subscribers and gives them movie suggestions. They have produced an original series, “House of Cards,” revived “Arrested Development”, and recently announced a deal that calls for DreamWorks to produce more than 300 hours of original programming for them. By one count, Netflix has more subscribers now than HBO. This is from a company, which only a few years ago, was a leader in distributing DVDs that were made by others to the homes of people on a subscription basis. Needless to say, in order to make this transition, they needed people with radically different skill sets and different management approaches.

It’s too early to declare that Netflix is a dominant force in the entertainment industry, but it’s not too early to acknowledge that they have successfully changed their business model in a very short period of time. They have done what many other companies in the entertainment industry have been unable to do: execute a major change. One of their earlier competitors, Blockbuster, is essentially gone because they were unable to make the change that Netflix has made.

In retrospect, Netflix looks like a good example of a company which has a talent management model that allows major changes in the technology it uses and in its business model. It reinforces the view that the “travel light” model is a valid and appropriate one for certain companies. It fits particularly well with those organizations that are in very rapidly changing environments and where technology is moving at a rapid pace.

Edward E. Lawler III  is a distinguished professor of business at the  University of Southern California  (USC) Marshall School of Business and founder/director of the University’s  Center for Effective Organizations  (CEO), one of the country’s leading management research organizations. He’s authored or co-authored more than 40 books, including his most recent –  Effective Human Resource Management   (Stanford University Press, 2012).

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Netflix organizational change and structure

Case study 2022.

2022 – Netflix is an online video streaming platform that allows users to watch movies, TV shows, documentaries online.

Workplaceinnovation

Netflix shows itself to be an innovative company that has achieved a competitive advantage by changing its business model a few times to better meet customer requirements, using new technologies. Netflix has a flat organizational structure that provides ample freedom for employees. It is also known as a decentralized organizational structure that allows the respective person to make quick decisions. Netflix’s organizational structure avoids top-down decision-making strategies to create a conducive working environment for employees. It also focuses on creating a favourable environment to promote employees’ work performance. Netflix has a labour division that works to improve performances. The authority review the performance regularly. They opt for a multi-rater feedback system that is also known as a 360-degree review method.

The application and adoption of new technology is an inevitable answer to the customer demand that develops through the use of a computer, laptop or smartphone also for relaxation.

Netflix has used the ‘blue ocean strategy’ to innovate. That is, they have opened up a market for a new product and business model.

How the employees are included in this is not explained in the article.

Netflix is one of the most successful international companies.  A result in terms of improvement of quality of work, is not mentioned.

Kobiruzzaman, M. M. (2022, January 08).  Netflix Organizational Change & Structure Case Study 2022 . Newsmoor- Best Online Learning Platform. https://newsmoor.com/netflix-organizational-change-organizational-management-change-examples/