Given the recent actions of Netflix, the DVD and internet streaming media giant, it’s easy to see why change management experts following this story are beating their heads against the wall. An article from Fast Company quotes the CEO of Netflix, Reed Hastings as saying their problems (including a 44% decrease in stock value) stem from “a failure to communicate”. Unfortunately for Netflix, they’ve got bigger challenges – how they manage change going forward – of which communication is only one piece.
The announcement of a 60% price increase two months ago and the ensuing customer backlash eventually led to an email from Hastings to all Netflix customers – but in change management – that’s too little too late.
Here are several key lessons learned:
1. Conduct ongoing risk assessments of what could go wrong with the consumers and always have a mitigation plan.
2. Understand that no one likes surprises and introduce the changes accordingly – Netflix should have known that a surprise rate increase, a new company name, etc. was too much within a short amount of time.
3. Communications should be executed early on to gain buy in – Netflix could have offered an incentive to consumers to ‘make the change’ vs. force feeding them with information.
Although we can’t predict how the outcome would have been different if Netflix had managed these changes differently, it’s a lesson to everyone that managing change is more than just communication.
*Contributor – Karen McIsaac, Managing Director
Great analysis! There couldn’t be a bigger CM failure than having the biggest change resistance come from your customers and stockholders.
A fourth lesson might be to segment the consumer audiences and tailor messages appropriately. Some attention to segmentation would also help them to tailor specific incentives by segment.