Netflix is an American company established in 1997 by Marc Randolph and Reed Hastings. It specializes in providing on-demand internet streaming media and serves the United States of America, Latin America and Canada. Its headquarters is in Los Gatos, California. By 2009, it had approximately 10 million subscribers and distributed a collection of 100,000 DVD titles. By April 2011, Netflix had 23.6 million subscribers. The company is famed for its excellent worker-oriented culture, which includes unlimited vacation time and enabling staff to take paychecks in stock options. Netflix rates as among the most successful technology based ventures serving the United States, Canada, and Latin America. The topic of change management is a sensitive one, especially for Netflix. This is given the company has a very large clientele who can be negatively provoked by any negative venture by the management. Netflix has recently had some problems and lost a big amount of subscribers because of the increase of prices among other things. This occurred during the company’s shift from physical DVD rental to video streaming. Thus, extra caution should be taken in managing the activities of Netflix.
There are various change management models proposed, for instance Kotter’s 8-step model, Bridge’s Change model, Kubler-Ross’s 5-stage model among many others. Let us use Kotter’s 8-step model and Bridges Change model for this crisis audit. In its undertakings, Netflix has used some aspects of Kotter’s model that emphasize urgency. For example, Netflix management has been quick in responding to its market shift. This is through expansion of the DVD rental business to include video streaming. This made a lot of sense, as the firm kept the same customer base, fulfilled the same needs of the customers, but most importantly in a different format. This is outstanding when compared with, for instance, Blockbuster, which despite its physical retail locations could not make such daring market shifts. Netflix saw the urgency of migrating to electronic video streaming from physical video DVDs.
William Bridges, on the other hand, proposes a theory of change that involves a three-phase process. These are mainly based on contrasting the change with transition (Green, 2002). When looked at using Bridges’ ideas, Netflix is deficient in some aspects. The introduction of video streaming in the established DVD rental business was confusing to customers. This could have been done better through separating the two business ventures and supporting them fully. By not doing this, Netflix did not afford clients’ the transition envisaged by Bridges. The company’s website became a mixed up entity of choices between getting instant services or joining long queues of waiting for physical movie DVDs.
Netflix added the video streaming service for free. On one hand, the company used the Kotter’s idea that emphasizes the creation of short come wins. However, this was ignoring the expectations of customers, which are central to both Kotter’s and Bridge’s models. By introducing streaming freely, some customers were made to believe that future services of Netflix would be free. In essence, this would never happen.
Kotter argues that it is important to convince the stakeholders that the proposed change is necessary. This was overlooked by Netflix by introducing a service for free (streaming)and offering incentives for them to move from physical to electronic, instead of taking the time to explain the need and advantage of the change.
Netflix change management deficiencies even took a greater nosedive when the company hiked the price for DVD rental and streaming service. Customers could not understand this increment of price because of a service they did not originally ask for. Netflix further went on to introduce a separate website for the two services and made it clear that the Netflix brand only applied to the streaming service. Instead of concentrating of removing obstacles (as proposed by Kotter), Netflix added more barriers. These careless decisions motivated customers to try out alternatives to Netflix.
Change can make a firm remain relevant in today’s dynamic world. Taking advantage of new trends may enable a company to earn more income and grow. Change may also enable a company to solve immediate problems or evade future troubles. This can be elaborated by the example of Netflix, whose decision to venture into a virgin field of DVD marketing enabled it make a lot of profit (Green, 2002). Netflix has remained relevant today because of adopting new technologies, for instance video streaming. Netflix should continue to shop for cutting age technologies in order to remain relevant. A good shift would be adopting model-driven development in providing on-demand internet streaming media.
A decision to pursue positive change may bring Netflix out of its current mess. Applying Bridges and Kotter’s change models may bring the desired future in the company. The company should refocus on the expectations of its clientele. This involves determining and addressing their complaints. Key challenges faced in managing change are lack of support from stakeholders, lack of foresight and communication barriers. In the case of Netflix, the clients-who are the stakeholders in this case- did not get proper communication about the need for change, thus failed to support or resisted the change to video streaming. The managers of Netflix failed to foresee the problems of merging physical DVDs and Video streaming services. Netflix should learn from this oversight and in future, adopt public relations ventures before introducing new ideas to the market.
Change and change management should be planned. There should be wide consultation with both managers and clientele on the change proposed. In addition, change should be looked at from the long-term benefits rather than the short term wins.