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The 'Netflix' case describes how Netflix created the business model of delivering DVDs using mail services. Essentially, Netflix exploited a whitespace that other players, such as Blockbuster, could…

  • Length: 20 page(s)
  • Publication Date: Feb 3, 2010
  • Discipline: General Management
  • Product #: 909M93-PDF-ENG

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The 'Netflix' case describes how Netflix created the business model of delivering DVDs using mail services. Essentially, Netflix exploited a whitespace that other players, such as Blockbuster, could not engage in primarily because they were constrained by their own business models. The case allows the instructor to develop the details of the capabilities that have allowed Netflix to deliver the values its customers desire. The case can then explore the competitive dynamics between Blockbuster, Netflix and Wal-Mart, a new entrant, in this space. Finally, the case describes future technologies, such as Video on Demand (VOD), that in turn pose a threat to Netflix's business model.

Learning Objectives

This case is suitable for a capstone strategy course or an advanced elective in competitive strategy at the MBA level. This case has been used with MBAs and executives (both in the United States and in Europe) in classes dealing with strategic management. This case has been written: to teach students to understand how the different components of a strategy combine to create a competitive advantage; to demonstrate that, although competitors may be able to copy one or more parts of a strategy, it is the holistic manner in which the different parts combine that creates the most difficulty for others attempting to copy the strategy in its entirety; to learn how to shift through different options going forward. This case is best used in a case discussion format. The case is an excellent vehicle to develop the notion of capabilities as the means for achieving a competitive advantage.

Feb 3, 2010

Discipline:

General Management

Geographies:

United States

Industries:

Film and video industry

Ivey Publishing

909M93-PDF-ENG

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netflix hbr case study

Reinventing HR: The Netflix Case

  • Industry Leaders
  • Market Insight

In the early days of Netflix, Reed Hastings, Co-Founder and CEO, asked Patty McCord (Chief Talent Officer) to write out the company’s core values, which led to  – quoting Sheryl Sandburg, COO of Facebook –  “one of the most important documents ever to come out of Silicon Valley”.  In this interview series, we will talk with Human Resources leaders about Netflix’s famous innovative HR practices.

Episode 2: A discussion with  Heiko Wieprecht , Managing Director at Singularity HR

1. What do you think about offering employees unlimited paid holiday allowance?

I am actually a fan of giving employees as much flexibility and holidays as possible. As long as the performance is there, as long as the work is done and done right. I am fine with employees taking as many holidays as they want. I know some start-ups in Germany which – although do not have a formal unlimited paid vacation policy – are extremely flexible in regards to employees taking long and spontaneous vacation periods. I believe the whole market is moving in this direction, based on the evolution of my interactions with trade unions. Some companies have even already implemented a 4-day work week, and the results seem to be good (i.e. no decrease on productivity). 

2. Rather than submit reports detailing money spent on mileage, meals, hotel rooms, and office supplies, employees are expected to spend money “acting in Netflix´s best interests”. What’s your take on this no limits travel and expense policy?

I believe it´s in principle good to treat your employees as shareholders of the company and have them acting as if the company´s money was also their money. However, from my experience, I know how difficult it is to make this work in practice. Employees might abuse this rule or/and use it to justify questionable expenses. I remember in one of my past assignments how our employer had a reasonable expense policy and relied on employees acting in the best interest for the firm. It didn´t work out so well, including an incident of company card heavy usage in the Red light district in Hamburg. Consequently, we had to dissolve the employment contract with that individual.

3. Netflix chose to ditch formal performance reviews and rely on informal 360-degree reviews. “We asked people to identify things that colleagues should stop, start, or continue.” They also don´t pay performance-based bonuses. What is your opinion about these measures?

This is quite an interesting topic, as I am aware that a number of firms have adopted the continuous feedback process method. I think this is definitely good for many roles. Why? Because sharing feedback on a regular basis improves the immediate performance. On the other hand, I don’t think it makes sense for certain type of roles, like heavily performance-based positions in sales, where a clear target is set, and there are reliable parameters to judge the employee’s performance effectively. Regarding individual “Performance Improvement Plans”, I reckon it´s positive to separate the underperformer from the others and try to solve the situation. Unlike Netflix, I wouldn´t directly let them go with a generous severance package, although that would be the next course of action if the PIP does not work. 

Thank you  Heiko  for sharing your thoughts. Stay tuned for the next episode! If you have any questions about this series of interviews or you need support hiring, contact  Alberto Villar .  

If you enjoyed reading this interview, please also have a look into  Episode 1  &  Episode 3 . 

References: • Reed Hastings & Erin Meyer – “No rules rules: Netflix and the culture of Reinvention” (2020)• Patty McCord – “How Netflix reinvented HR” – Harvard Business Review, January 2014

  • Harvard Business School →
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  • July 2020 (Revised November 2020)
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Pricing at Netflix

  • Format: Print
  • | Language: English
  • | Pages: 33

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netflix hbr case study

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  • Pricing at Netflix  By: Elie Ofek, Marco Bertini, Oded Koenigsberg and Amy Klopfenstein

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Research: Negotiating Is Unlikely to Jeopardize Your Job Offer

  • Einav Hart,
  • Julia Bear,
  • Zhiying (Bella) Ren

netflix hbr case study

A series of seven studies found that candidates have more power than they assume.

Job seekers worry about negotiating an offer for many reasons, including the worst-case scenario that the offer will be rescinded. Across a series of seven studies, researchers found that these fears are consistently exaggerated: Candidates think they are much more likely to jeopardize a deal than managers report they are. This fear can lead candidates to avoid negotiating altogether. The authors explore two reasons driving this fear and offer research-backed advice on how anxious candidates can approach job negotiations.

Imagine that you just received a job offer for a position you are excited about. Now what? You might consider negotiating for a higher salary, job flexibility, or other benefits , but you’re apprehensive. You can’t help thinking: What if I don’t get what I ask for? Or, in the worst-case scenario, what if the hiring manager decides to withdraw the offer?

netflix hbr case study

  • Einav Hart is an assistant professor of management at George Mason University’s Costello College of Business, and a visiting scholar at the Wharton School. Her research interests include conflict management, negotiations, and organizational behavior.
  • Julia Bear is a professor of organizational behavior at the College of Business at Stony Brook University (SUNY). Her research interests include the influence of gender on negotiation, as well as understanding gender gaps in organizations more broadly.
  • Zhiying (Bella) Ren is a doctoral student at the Wharton School of the University of Pennsylvania. Her research focuses on conversational dynamics in organizations and negotiations.

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COMMENTS

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  7. Case Study: Breaking Tradition: How Netflix Reinvented HR ...

    A case study on how the streaming giant rewrote the rules of human resource management. Background: Netflix, the global streaming powerhouse, has emerged as a notable disruptor.

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    Netflix's Bold Disruptive Innovation. by. Adam Richardson. September 20, 2011. Every now and then, the business world presents us with a lab experiment that we can observe in realtime. Netflix ...

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    Investors have faced the biggest loss; even big companies have withdrawn their shares from Netflix. The founders of Netflix, led by Reed Hastings and pioneered by Marc Randolph, were in trouble. Though Randolph pioneered Netflix, Reed Hastings, the co-founder and the most decisive leader of Netflix, has played a prominent place in its growth.

  10. Netflix

    The 'Netflix' case describes how Netflix created the business model of delivering DVDs using mail services. Essentially, Netflix exploited a whitespace that other players, such as Blockbuster, could not engage in primarily because they were constrained by their own business models. The case allows the instructor to develop the details of the capabilities that have allowed Netflix to deliver ...

  11. Netflix

    Abstract. Reed Hastings founded Netflix with a vision to provide a home movie service that would do a better job satisfying customers than the traditional retail rental model. But as it encouraged challenges it underwent several major strategy shifts, ultimately developing a business model and an operational strategy that were highly disruptive ...

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    From its earliest days, Netflix leadership had fostered a workplace characterized by such values as excellence, maturity, transparency, accountability, candor, and autonomy. The Culture Deck, later dubbed the Culture Memo, documented how Netflix's culture had evolved and enabled the organization to repeatedly innovate, disrupt, and pivot.

  13. Reinventing HR: The Netflix Case

    Reinventing HR: The Netflix Case. HR. Industry Leaders. Market Insight. December 25, 2020. In the early days of Netflix, Reed Hastings, Co-Founder and CEO, asked Patty McCord (Chief Talent Officer) to write out the company's core values, which led to - quoting Sheryl Sandburg, COO of Facebook - "one of the most important documents ever ...

  14. PDF Strategic Innovation Management at Netflix: A Case Study

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    In spite of the heightened competition in the streaming industry, some analysts and customer willingness-to-pay surveys suggested that Netflix had the opportunity to implement another rate hike in the near future. By May 2020, Netflix must decide whether to increase prices again, or whether it should consider a different pricing model altogether.

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    Save. Summary. Netflix's model has been undeniably successful to date. However, fighting the blockbuster content-acquisition and creation battle is becoming ever more expensive, and it involves ...

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    Discover 100 years of Harvard Business Review articles, case studies, ... Welcome to HBR On Strategy, case studies and ... It is already on Netflix. In fact, when we taught the case a number of ...

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  21. Research: Negotiating Is Unlikely to Jeopardize Your Job Offer

    Summary. Job seekers worry about negotiating an offer for many reasons, including the worst-case scenario that the offer will be rescinded. Across a series of seven studies, researchers found that ...