Harvard Business School Case Study: Netflix
Brief Description: Netflix is an example of a challenger who disrupted a strong incumbent through a superior business model. At the original time of the writing of the case, it was not at all apparent the company would deal such a crushing blow to Blockbuster, as its value proposition appeared to be inferior. However, its focus on tailoring its service to a job that its customers had and the tight integration with a sophisticated operational model that had vastly superior economics made it the winner in the DVD rental market. The emergence of video-on-demand poses a new questions and challenges for the company’s long-term survival: How can or should Netflix respond to a seemingly new disruptive challenge?
Main learning objectives:
- Understand how disruptive innovations and sustaining innovations may be framed relative to the context in which they exist.
- Examine the concept of deliberate vs. emergent strategies and how Netflix has successfully created emergent strategies using experimentation and the collection of consumer data.
- Observe how Netflix management researched, hypothesized, and tested strategic theories and approaches to the marketplace.
Preparation & Analysis
- Before reading the case, review the provided reading materials (folder below) and / or go online, research, and take down a few notes on the concept of disruptive vs. sustaining innovations.
- After completing your research, then I suggest reading the brief Fast Company article, ”Experimentation is the New Planning” found in the second reading materials folder below or use this link: http://www.fastcompany.com/3001275/experimentation… We will discuss these concepts in the context of deliberate and emergent marketing strategies as a focal point for the case study.
- Read the Netflix case and prepare for a class discussion of the case by answering the following questions in an overall 2-3 page brief essay format submitted through ULearn.
- In providing their services, did Netflix do the same jobs for consumers that Blockbuster did? How did this evolve over time?
- How many strategy revisions did Neflix have to make in order to become successful? What caused them to make each shift? Were Netflix’s strategic shifts driven from top management or from the bottom-up?
- Did Reed Hastings make the right move in trying to separate the DVD-by-mail business from the streaming business? How do you think he should proceed now?
- In your opinion, in the long run – will video streaming prove to be a disruptive or sustaining strategy for Netflix? Why or why not? Think about this question in relation to the above “Experimentation” article.
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