A company’s culture is composed of its self-sustaining patterns of behavior, feeling and thinking. It determines “the way we do things around here.”
“The way we do things around here.” Let that sink in.
It’s a rigid response to an ever-evolving and increasingly complex world. Mantras like this have caused the extinction of many household name brands.
Take Blockbuster, for example. The executives believed that customers enjoyed perusing the aisles looking for films and picking up a bag of popcorn along the way. For them, that was the way films had always been rented, the business was successful (approximately US$8.4 billion market cap in the mid-1990s) and profits were healthy—why change anything?
The culture was risk-averse, and executives did not want to disrupt their traditional revenue model, which relied heavily on late fees. They failed to understand that the customer had bought into the experience of a night at home watching a movie—not a trip to their shops. They did not keep up-to-date with their customer base, who first had the option of films being posted to them without incurring late penalties, and then could simply stream films from the internet. Ironically, Blockbuster had multiple opportunities to purchase Netflix in the early 2000s.
Conversely, Netflix has now grown to a market cap of US$60 billion, expanding into 100 countries in less than a decade. Its CEO, Reed Hastings, understood the needs of the customer and that they could be better met. Rather than being rigid in the mode of delivery, they were focused on the customer’s core requirement—to enjoy a movie at home. Netflix started as a mail subscription service and then shifted to the online business we know today.
Hastings explained in a presentation that the key to his company’s success was the culture it was built on—self-driven and high-performing individuals....
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