At times, it’s been a larger company than Disney. Netflix has grown quickly—from “that quirky mail service you’re not quite sure how to use” in 2000 to “essential streaming service” in 2018. As a stock, it puts the “N” in FAANG: those major tech companies like Facebook and Google that make up a sizeable portion of the U.S. stock market.
But all that success doesn’t mean the smaller companies can’t learn from Netflix, too.
Netflix earned its way into living rooms—and into consumers’ hearts—through innovative business practices. While the company has grown too large to relate to most small businesses, there are still plenty of lessons any entrepreneur can glean from Netflix’s rise to power:
1. Place a Premium on Talent
Netflix is serious about talent. Very serious. “Elite NFL team vying for a Superbowl” serious.
Netflix even “reinvented” HR, according to the Harvard Business Review, by taking on a unique approach to its talent and company culture. Rather than focus on lame universal company policies, they empowered their employees. “If you’re careful to hire people who will put the company’s interests first, who understand and support the desire for a high-performance workplace,” wrote Patty McCord, “97% of your employees will do the right thing.”
The focus was simple: talent and leadership in individual employees mattered more than any single one way of doing things. Netflix rewarded positive results for the business, allowing the talented employees to self-select by taking charge of their teams—along with responsibility for the results.
2. Give Talented People Freedom
Netflix has essentially become the largest studio in Hollywood. The strategy? Give talented people the room to create, and they’ll eventually come up with meaningful content that resonates with Netflix’s customer base. The results speak for themselves: Netflix received 112 Emmy nominations, potentially putting an end to HBO’s recent dominance.
The lesson for small businesses: keep focused on the consumer experience, and reinvest. Keep building. Keep giving your customers a reason to stay with you—and to recommend you to their friends.
To do this, give your talent the freedom to work. You don’t have to produce movies or television series to see which leaders in your organization create results by satisfying clients and customers. Continue to reinvest in that talent and they’ll reward you with growth.
3. Adapt with the Times
Netflix is older than you might imagine. It goes back to the days of video stores—when Blockbuster still ruled the world. Netflix even offered itself up to Blockbuster for a sale in 2000 for the paltry price of $50 million; Blockbuster refused.
Why? No one can predict the future. But Netflix did ride the wave of evolving consumer demand. Outside the brick-and-mortar of retail video stores, the world changed. Netflix changed with it. By focusing on its customers first, Netflix continually invested in new methods to offer its services in convenient ways. Eventually, Netflix settled on a streaming service (once an afterthought to the rental subscription). Once popular, this service wiped out the need to rent DVD’s at all.
Your business should also adapt with the times. In some cases, the times change very slowly—your plumbing expertise in 2005 would probably work just as well in 2018. But stay on top of trends and pay attention to customer feedback to get a sense of the waterline. It may help you avoid mistakes like Blockbuster’s.
4. Know Your Customers
Netflix keeps close tabs on its customers, monitoring browsing behaviors and keeping tabs on what you’ve watched. That’s why Netflix has been responsive with new features like the ability to skip through television credits as you “binge-watch.”
Your best innovations don’t always come as the result of brainstorming sessions. Sometimes they come as a result of a firm dedication to hard data.
Ask yourself whether you know your customers. Do you know how they use your product or service? Do you know what kind of user experience they prefer? Do you collect any feedback at all that might help you improve your services in the long-run?
Netflix is known for spending minimal money on advertising; by focusing on a great user experience, they’ve expanded through the quality of their offerings. This isn’t possible without knowing your customers very well.
Implement systems and analytics to gather data on your customers, including:
- Feedback. Incorporate online surveys into your product or service and let customers tell you exactly what they want. GetFeedback is a great option here.
- Analytics. What do potential customers come to your website looking for? Here’s a guide to setting up analytics if it’s your first time.
5. Get Out in Front of Your Competitors
Part of the reason for Netflix’s success: who’s competing with them? Sure, there are plenty of streaming services the world of 2018, but Netflix’s consumer-centric focus has kept them ahead of plenty of major trends. Even as the streaming world catches up to the technology, Netflix is still out in front, loading billions of dollars into their home-grown content.
Netflix got ahead of Blockbuster because it saw a sea change in the world of home video. It stayed ahead of competitors because it did streaming better than anyone else. It currently sits the throne because it wins the most Emmys—and people notice.
How can you get out in front of your competitors? In addition to research and knowing your customers, you can always remember the Netflix rules. Attract talent to your organization by empowering them. Adapt to new technology and stay up-to-date on consumer demand. Continually re-invest in what your company does well so that there’s no replacing you.
That irreplaceability currently has Netflix on top of the media world. But you don’t have to be a media company to utilize the same principles with your business. Keep a few of these lessons in mind and you can put your own company on the fast-track to higher customer satisfaction, niche-defining innovation, and plenty of future growth.