Netflix’s Bold Disruptive Innovation – Adam Richardson – Harvard Business Review

Every now and then, the business world presents us with a lab experiment that we can observe in realtime. Netflix’s announcement that it is splitting off its DVD-by-mail business from its streaming business is just such an experiment. The DVD business will now go by the name Qwikster, and the streaming business will stay under the Netflix brand.

Like its 60% price increase did earlier this year, this move is understandably causing consternation amongst some customers. It’s a bold move, one that will cost them in the near term, but Netflix I’m sure has done the calculus and is looking at the endgame 5-10 years out, not 5-10 months.

In his blog post about the split, Hastings says:

“For the past five years, my greatest fear at Netflix has been that we wouldn’t make the leap from success in DVDs to success in streaming. Most companies that are great at something — like AOL dial-up or Borders bookstores — do not become great at new things people want (streaming for us) because they are afraid to hurt their initial business. Eventually these companies realize their error of not focusing enough on the new thing, and then the company fights desperately and hopelessly to recover. Companies rarely die from moving too fast, and they frequently die from moving too slowly.”

via Netflix’s Bold Disruptive Innovation – Adam Richardson – Harvard Business Review.

Two takeaways: first of all, reality has more moments of truth than we (scientific researchers) want to admit. Sometimes it is just a matter of direct observation that ought to be enough for finding truth. Secondly, blogs have made much previously unavailable or blackboxes available or visible now, like Hastings of Netflix. This is why ecological research is ripe to do now!

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