In this paper, we consider the analysis of two companies: Netflix and Blockbuster. It was a complicated issue, but that’s to be expected. Netflix’s rapid expansion can be attributed to poor decisions, technology advancements, and other causes. In contrast to Blockbuster’s spectacular demise (Netflix’s yearly net income was $161 million when Blockbuster filed for bankruptcy in 2010). This piece aims to provide marketers with a few takeaways from what I’ve learned about these two companies, similar to this one on Zoom’s narrative of success.
You may be surprised to learn, but there is no particular reason why Netflix overcame Blockbuster and became a household name. Netflix is one of the world’s most innovative and forward-thinking corporations, developing new business concepts and solutions via constant research and development. Blockbuster was a successful company from its beginning to its demise due to a lack of innovation and keeping up with new business methods and the shifting environment of technology.
Researching and analyzing the company’s organizational structure and culture
Organizational culture is a critical factor regarding how well individuals are integrated into an organization. Understanding the relevance of organizational behavior (OB) gives the organization a sense of direction and purpose. It’s a topic that’s pertinent to today’s economy. Promoting employees and cultivating business partnerships are critical components of any company’s success. “Promote independent decision-making by employees” and “present information honestly, broadly, and thoughtfully” are only two of Netflix’s five core values, but they’re not the only ones. It’s also possible for companies to illustrate how their principles, behaviors, and results are connected (MURA, 2019. Netflix encourages its employees to be open and honest with one another since it believes this helps us improve our technological abilities. The company’s philosophy of occasionally defying the laws is critical to its ability to remain adaptable in rapidly changing market conditions. Since its inception, Netflix has experienced explosive growth thanks to its adherence to these seven cultural tenets. Netflix does not make general announcements about their “integrity” or “respect,” as Hastings claims; instead, they demonstrate principles through the reward and promotion or even the dismissal of staff.
The Blockbuster culture, on the other hand, was quite conservative. In addition, male employees were not allowed to grow their hair long, and they were not allowed to speak to the media without permission from their employer. Organizational transformation necessitates input from internal stakeholders, such as management and employees when making a strategic decision to reposition the firm. For this study, I have come across stories in which Blockbuster’s senior executives were replaced multiple times in a short period, which indicates that the company lacked a clear business structure and plan.
The communication methods used by businesses
Netflix employs a combination of communication modes that work well within the company. Individuals at Netflix were encouraged to make their own decisions, share knowledge honestly and consciously, be truthful with one another, retain high-performing employees, and people’s participation was highly valued at all times and in all places. In some vast corporations, top-level management may have difficulty communicating internally. When it comes to internal control, Netflix has kept things simple, despite its well-deserved reputation for creativity. When it comes to bringing issues to management’s attention, Netflix has implemented an open-door approach.
Employees at Blockbuster were known to have been trained to welcome clients and lead customers to printed recommendations rather than their video recommendations. As with many other businesses, Blockbuster also ran into difficulties due to a lack of clear communication channels within the company (Widia et al., 2021). Inability to build flexible relationships with staff and execute effective channels of communication. Inconsistent communication from the leadership to the team resulted in people believing that their ideas and contributions were less critical than others. Overall, there was a lack of established communication channels or processes.
The management and leadership style
Founder and CEO of Netflix Reed Hastings, who once observed that if you want to build a large boat, you shouldn’t gather people together to gather wood, divide the duties, and give orders. Instead, the goal should be to inspire a desire for the vast and infinite ocean. The values of Netflix’s leadership and the entire organization are well-known (Akingbola et al., 2019). They will stop at nothing to keep their work free of inconsistencies. A role model is required for every member of Netflix’s senior leadership team. Netflix’s idealistic process is never-ending.
Poor management and an unwillingness to adapt to change are often to blame for the failure of businesses. When Blockbuster began selling movies and video games in its brick-and-mortar stores, they lost track of the industry they were competing in. Others believe that Blockbuster’s leadership team was to blame, which is why the company’s leadership was replaced. Businesses need to remain innovative and up to date at all times. Creating an environment that fosters innovation and creativity is a top priority for any CEO. To be successful in today’s world, CEOs must make their organizations adaptable to various external factors. To preserve a competitive advantage and increase innovation, employees should share their knowledge and assist.
Effects of organizational culture, structure, and management style on an organization
As a result of Netflix’s seven cultural elements, the company has grown tremendously since its inception. There are several things that we hold dear. By rewarding, promoting, or even letting someone go, they show their worthiness to the organization. On the other hand, ‘High performance’ refers to an organization’s desire to employ individuals capable of learning from and teaching others. They need also be self-motivated, alert, disciplined, and act as leaders to meet the “freedom and responsibility” requirement. Another responds, “Context, not control.” Instead of imposing their will on their employees, management aims to get the best results possible by establishing the proper framework. Netflix’s organizational style can also be described as “strongly affiliated but freely connected,” which refers to the company’s well-defined goals and strategies. It’s also important to note that they “pay top of the market,” which means they choose to pay one great employee over two adequate ones. The seventh and final pillar of Netflix culture is “promotion and development.” There is no room for error when staying on top and avoiding relegation.
Employees at Blockbuster’s local units were not allowed to make their judgments because corporate management controlled everything from the top down. As a result, employees and store managers had little influence on the long-term success of the company or its connections with its customers and prospects. When it comes to a company’s strategy, the management team relies on employees to make it happen. To be successful in their endeavors, employees must be included in the company’s problem-solving process. Blockbuster had a difficult time competing in this market.
The overall HR strategy
For the most part, a company’s overall success is used to gauge the effectiveness of an HR strategy. Recruiting from the world’s best universities is done with great incentive packages and a flat organizational culture that encourages people to improve and grow at Netflix (Zetlin, 2019). The company also distributes money for research and development, and services. In contrast to most companies, they do not have the compliance departments and procedures to enforce their policies. In the words of their vacation policy: “Go on vacation.” There are no set guidelines for how long to take a break or when to take it. According to the website: “You would think that such freedom would lead to a state of utter chaos. Nobody has ever come to work naked, but we don’t have a clothing code. It turns out that policies aren’t required for every action, as we’ve discovered. When it comes to hiring and selecting new employees, Netflix believes that the best way to ensure a productive workplace is to pick only those candidates whose goals are in line with those of the corporation.
Blockbuster does not have a sound HR strategy, which results in a more specialized hiring process and more minor employee advancement prospects.
Strategic plan for performance and management
First, Netflix was one of the first firms to entirely do away with the traditional performance evaluation process. As a result of Netflix’s remarkable success, many people pay close attention to how they manage their employees. Netflix’s overarching strategy appears to be demanding performance but allows individuals and teams to make their own decisions about how to get there (Suárez et al., 2019). Netflix’s policy for travel, entertainment, gifts, and other expenses is just five words long: “Do what’s best for Netflix.” On the other hand, Blockbuster lacked a solid strategy for managing performance and talent. This is a significant factor in its demise.
They could have restructured their organization to allow all of their employees to grow equally in the face of change and technology. When it came time to make promotions, they should have done so based on employee qualifications and the availability of fundamental necessities. Developing new products and services would have been easier if Blockbuster’s R&D department had been provided adequate funding and other support resources. Blockbuster’s pay performance and talent management plan should have considered employee complaints. Netflix needs to increase its research and development team to produce new products and services. Despite Netflix’s reputation as a top employer and recruiter, the company is always looking for new ways to attract the most outstanding employees.
The previous studies show that a company’s performance is significantly influenced by its management and overall culture and strategy. It is also vital for the leadership to have systems that can be implemented to help reach the goals and objectives that they have set for themselves. When new technology upsets the market, or your competitor introduces new business practices, it is even more critical to innovate to maintain a competitive advantage constantly. Businesses can fail even if their CEOs and senior management are not creative.
Akingbola, K., Rogers, S. E., & Baluch, A. (2019). Organizational Change. In Change Management in Nonprofit Organizations (pp. 1-35). Palgrave Macmillan, Cham.
MURA, C. (2019). Il cambiamento del mercato digitale: l’evoluzione dell’home entertainment da Blockbuster a Netflix.
Suárez-Cousillas, T., Martínez-Fernández, V. A., & Sánchez-Amboage, E. (2019, June). SVOD platform audience. The case of Netflix, Blockbuster, Hulu and HBO. In 2019 14th Iberian Conference on Information Systems and Technologies (CISTI) (pp. 1-6). IEEE.
Widia, F., Rosanensi, M., & Rahmawati, L. (2021). Netflix’s Strategy to Dominate the World’s Entertainment Media Market After the Death of Blockbuster. JBTI: Jurnal Bisnis: Teori dan Implementasi, 12(3), 155-171.
Zetlin, M. (2019). Blockbuster Could Have Bought Netflix for $50 Million, but the CEO Thought It Was a Joke. Inc. Com.