On Netflix and Inflection Points Part 2

In part 1 I looked at changes to Netflix pricing but there’s a broader point here. Netflix thrives on inertia. They spend a fortune to get you to sign up knowing that inertia will keep you from leaving. You’ve checked the box and mentally you’re off on to other things.That’s why they (and a ton of other companies) spend a lot of money incentives for new customer acquisition, even though it makes existing customers feel ignored. 

But then something happens that makes customers reevaluate that decision and that’s really bad for inertia.

In my world, when companies put in a new ERP system people quit, leave or retire. Sometimes folks get canned. In most cases it has nothing to do with the new system. It’s simply a big enough change to overcome inertia. The change gives people an excuse to do things that they’ve been thinking about doing either consciously or subconsciously.  Typically folks have been ready for a change for a while, they just need something to get them off the couch.

In the case of Netflix, we’ve wound our queue down to zero a couple of times over the last year. When really want to see a new release outside of a theater, we would drop the $3.99 to see it on demand via our cable company. In short, we were kind of bored but we didn’t have an incentive to quit paying our $10 a month. Now we do.

The new Netflix pricing takes effect September 1 leaving Netflix a pretty short window to get us to change our mind. Then they’ll spend a fortune trying to get us back. Breaking inertia is expensive.

Hilton’s Top Chef Marketing Fail

For whatever reason I’ve gotten into Bravo’s Top Chef D.C. this season. Hilton is a huge sponsor. The competition has been held in the Hilton Washington D.C. and Hilton Singapore. The marketing includes hotel key cards when you check and in room promos. They just missed one thing…

In most cases, you can’t actually watch the show in Hilton hotel because they don’t have Bravo…FAIL!

The pay per view section in some hotels offers a few free episodes but you can’t watch the current episode in real time or near real time. I’ve been in a number of Hilton hotels when the show airs on Wednesday and I’ve always had to wait until I get home and watch the DVR version. (The family is monopolizing the DVR that has the Slingbox attached so I can’t stream it. It’s a long story.)

Talk about a lost opportunity.

There is No Divine Right of Success in Business

There is no divine right of success in business. It used to be that if you got a Chrysler or GM dealership and were moderately competent (okay, even moderately incompetent) you could pretty much guarantee a nice living. It used be that lawyers and CPA’s at big firms didn’t get laid off. It used to be that becoming a doctor would guarantee success if you didn’t screw up too often. If litigation hasn’t killed that idea, universal health care will. It used to be that was hard to lose money owning the sole newspaper in a major city. Phone companies and yellow pages yellow pages have also joined the list of slow death industries.

It seems like the mean time between unstoppable and out of the game is getting smaller. It took a long time for newspapers and phone companies to be irrelevant but MySpace has already rocketed, peaked higher than the value of a slew of newspapers and is sliding down the chute toward irrelevance. ebay managed to kill newspaper classifieds (with help from Craig’s List), put a dent in phone companies with Skype and is now hitting big bumps. Don’t be surprised to see ebay slowly slip from the from the average person’s radar pretty fast.

There is no divine right of success in business. It takes constant creativity and flexibility. Now more than ever complacency will kill a business. Fast. Andy Grove was right. Only the paranoid survive.

Our Unwillingness to Confront

Several of us recently were lamenting the replacement of confrontation with generic communication. Specifically, we were discussing those situations where people deal with an individual issue by addressing the group. For example, when a passenger boards an airplane with their identification in hand, I’ve seen the gate agent stop the boarding process to make a general announcement to all passengers that they don’t need their ID to board. This isn’t effective communication. It’s a smack down.

Another example is when an employee questions an expense report policy and the response is to simply reissue the policy to the whole company. Don’t insult us, we can read. We’re trying to understand.

Dress codes are another example. Rather than confront an improperly dressed employee, managers reissue the dress code and hope the right person gets the hint. Unfortunately, an awful lot of properly dressed people feel that this is directed toward them and companies end up offending a whole group.

In most cases I attribute this to cowardice. People are unwilling to confront the individual and address the specific issue so they make blanket pronouncements and hope folks think it was targeted at them. Instead, one of two outcomes results. Either the target individual is blissfully unaware that this communication is targeted at them so the rest of the recipients are simply insulted or the individual gets the hint and feels that everyone else knows that they were the target. This gives companies the double whammy of really annoying one individual AND alienating everyone else. Good Job!

Get up off of your behind and go have a conversation for heaven’s sake!