REV: FEBRUARY , 2017
FRANK T. ROTHAERMEL
Its not Netflix thats makingthe changes. Its the Internet
– ReedHastings, Netflix CEO
At the 2017 Golden Globeawards, Netflix CEO Reed Hastings applauded from his front row seat as hewatched screenwriter Peter Morgan approach the podium. Netflix contentexecutives Ted Sarandos and Cindy Holland were seated beside Hastings. PeterMorgans Netflix-produced original series The Crown had just won the awardfor best television drama. The biographical series about Queen Elizabeth IIprevailed over formidable competitors including HBOs Westworld and Game ofThrones. With a budget of 100 million British pounds, The Crown was also oneof the most expensive dramas ever made. Thisfact was not lost on Hastings. Standing behind the microphone, Morgan lookedout into the audience for the Netflix executives. Ted, Reed, CindyThank you,he began the acceptance speech.
After returning to hishotel that evening, Hastings reflected on the career that had taken him, aformer vacuum cleaner salesman, onto the red carpet. His thoughts quicklywandered back to Netflixs business matters. The annual report would bereleased in two weeks. With Netflixs stock trading at record highs, investorswere looking for numbers to justify Netflixs $55 billion marketcapitalization. Winning Golden Globes is noteworthy, but Netflix lived as muchon Wall Street as it did in Hollywood and Silicon Valley. Netflix had anegative free cash flow of $1.7 billion in 2016. How could Netflixensure that it was spending money on the right content? Netflix was nowoperating its streaming service in 190 countries worldwide and needed to caterits licensed and original content to a much more diverse audience than everbefore. Also on Hastings mind was Netflixs sometimes contentious relationshipwith internet service providers (ISPs). Netflix relied on ISPs to deliver itshigh-bandwidth content to subscribers. How could Netflix ensure that the ISPswould provide the high-speed connections required to deliver streaming contentto its subscribers? Finally, Netflix was facing tougher competitors. Amazon,HBO, and Hulu were investing heavily in streaming content too. As Netflixapproached its twentieth year, how could Netflix keep subscribers loyal andacquire new ones?
Professor Frank T. Rothaermel and Research Associate AustinGuenther prepared this case from public sources. Research assistance by HassanEl-Majidi is gratefully acknowledged. This case is developed for the purpose ofclass discussion. This case is not intended to be used for any kind ofendorsement, source of data, or depiction of efficient or inefficientmanagement. All opinions expressed, and all errors and omissions, are entirelythe authors. by Rothaermel and Guenther, 2017.
Use the template to:
Describe the mission, vision, values, structure, and culture of the company. Each description should be 75-100 words.
Based on your advanced organizer and further research on your company, analyze the degree of alignment between what the organization is currently doing (actions) and their mission, vision, values, structure, and culture. Think about what your company is doing right and on-brand and where there is room for improvement. Your analysis should be 500-750 words.