Corporate Communication

Netflix Organizational Change & Organizational Structure 2024

Netflix Organizational Change. Netflix Organizational Structure 2024. Case Study Netflix Change Management. Organizational Structure of Netflix.

Netflix

Netflix is an online video streaming platform that allows users to watch movies, dramas, TV shows, and cartoons. The user can watch all these videos through a subscription service. Netflix regularly adds new films, series, and TV shows to the chart so users can watch them instantly.

It ranks top 50 sites, following Google, YouTube, Yahoo, Facebook, and Twitter. Thus, Netflix has become the most popular video streaming site or web portal in the world now.

What is Organizational Change?

Organizational change means business transformation in which a company changes its business tools, such as policy, strategy, operation, structure, and culture. The critical reasons for organizational change are technology, globalization, new market condition, poor performance, and customer demand.

The management changes enable the company to cope with the digital era. Therefore, many organization has accepted technological changes to adjust to the digital age. It assists the company in changing old systems with new tools to achieve the business goal.

Organizational Change Examples

Netflix is one of the best examples of management change. It accepts the changes to cope with the new context. Netflix’s organizational change is a real-life example of Lewin’s change management model. The management needs to pass a few stages to complete the full process. Technology, culture, and environment are the most significant factors that foster an organization to accept change.

Netflix’s Organizational Change has replaced the old procedures with new techniques to adjust to the current situation. So, Netflix is the most general example of management change. Additionally, Wipro, Infosys, Samsung, and Amazon accepted the change to achieve business success.

Netflix Change Management Case Study

The Netflix change management case study includes the organizational change at Netflix. Additionally, It describes the history of the Netflix business change model. The author presents a change management case study of Netflix for students.

Netflix Organizational Change

Technology has changed the world in many ways, including education, business, sports, entertainment, etc. Many renowned companies have been closed due to new technology such as computers, smartphones, and social media. Some have managed to cope with the force of change by applying sophisticated strategies and accepting organizational change.

Netflix is one of the best examples that has changed its business model and strategy to survive. It has handled the force of organizational change to achieve a competitive advantage. Hence, it has become netizens’ most popular video streaming site.

Netflix was founded in 1997 in California, USA. However, In 1998, Netflix started its business by selling DVDs and rentals by mail. The product was a rent-by-mail DVD, and the payment system was the pay-per-rental model.

The following year, in 1999, Netflix launched its new subscription feature for customers to rent DVDs at a monthly rate. This service allowed the subscribers to enjoy unlimited DVD rental with monthly payments. So, the change was from the pay-for-use model to a monthly subscription model. The subscribers choose the movie and video titles from Netflix’s official website. After that, the distributors send the shows in the form of DVDs to the subscribers.

Netflix Change Management Case Study

In 2007, Netflix introduced a new video streaming feature for films and television series. The proper utilization of the force of change has helped to achieve success. However, it is believed that Netflix is one of the most popular platforms for watching new movies, drama series, TV shows, and so more. They have achieved competitive advantages by adopting new features as per audience demand.

The three main divisions of Netflix management are functional, geographical, and product teams. The operational division includes the CEO, content, communication, talent, finance, legal, etc. Additionally, the geographical team consists of local and international services. Finally, the product team controls and ensures quality content.

Additional Change Management at Netflix

In 2011, Netflix introduced its mobile apps and ios service for smartphone users. Smartphone users can download the apps free from the play store.

Recently, Netflix changed from HTTP to HTTPS encryption to ensure viewers’ privacy.

In 2016, Netflix launched its offline playback system to cache the contents. Therefore, Netflix mobile app users can watch high-quality cache content without an internet connection.

In 2018, Netflix added “the Skip Intro” option for customers to avoid intros of the shows. So, the users can skip the video if they want.

In 2022, Netflix started alerting customers to share their account IDs and passwords with others.

In 2022, Netflix intended to extend its business into the video gaming industry. The 200 million subscribers of Netflix can reach with a bundle of games like Apple Arcade. Video games play a significant role in attracting potential customers.

In 2023, Netflix launches a new advertising tier for subscribers. The new AVOD tier increases revenue. Users can buy a subscription at a lower cost but must encounter ads while watching videos.

Over the years, Netflix has navigated numerous organizational changes to stay competitive and meet the evolving needs of its customers in the rapidly changing entertainment industry. These changes have been driven by factors such as technological advancements, shifting consumer preferences, and global market expansion. Let’s delve into some key organizational changes that Netflix has implemented:

Shift to Streaming Services

One of the most significant organizational changes for Netflix was its transition from a DVD rental service to a streaming platform. This shift was propelled by the growing demand for online streaming content and the declining popularity of physical media. By investing in streaming technology and acquiring digital content licenses, Netflix successfully repositioned itself as a leading provider of on-demand streaming services.

Emphasis on Original Content

Recognizing the importance of exclusive content in attracting and retaining subscribers, Netflix made a strategic decision to invest heavily in original programming. By producing hit shows like “House of Cards,” “Stranger Things,” and “The Crown,” Netflix aimed to differentiate itself from competitors and create a compelling value proposition for subscribers. This organizational change required significant investment in content production capabilities and talent acquisition.

Global Expansion

Another key organizational change for Netflix was its aggressive international expansion strategy. Realizing the potential for growth in untapped markets, Netflix launched its streaming service in numerous countries worldwide. To support its global expansion efforts, Netflix localized its content offerings, established regional offices, and formed partnerships with local content creators. This expansion into new territories diversified Netflix’s revenue streams and solidified its position as a global entertainment powerhouse.

Data-Driven Decision-Making

Netflix leverages data analytics and machine learning algorithms to inform decision-making across various aspects of its business. By analyzing user behavior, viewing patterns, and content preferences, Netflix can personalize the user experience, optimize content recommendations, and inform content acquisition strategies. This data-driven approach has enabled Netflix to stay agile and responsive to changing market dynamics, driving innovation and growth.

Organizational Culture

Netflix fosters a unique organizational culture characterized by freedom and responsibility. The company operates with a flat organizational structure, empowering employees to make autonomous decisions and take ownership of their projects. Netflix values innovation, creativity, and risk-taking, creating a dynamic and entrepreneurial work environment. This culture of experimentation and continuous learning enables Netflix to adapt quickly to market changes and drive innovation across its business.

In conclusion, Netflix’s organizational changes reflect its commitment to staying at the forefront of the entertainment industry by embracing technological innovation, investing in original content, expanding globally, and fostering a culture of creativity and experimentation. These organizational changes have been instrumental in Netflix’s success and its ongoing evolution as a leader in the streaming entertainment landscape.

Netflix History Timeline

Netflix has become one of the most famous American production companies worldwide. It was established in 1997 by Reed Hastings and Marc Randolph in California. However, Marc Randolph left Netflix in 2002. In 1998, Netflix introduced its official website with 925 items. These items were available to rent for a pay-per-month approach. It started its journey with only 35 employees.

Netflix launched its operation with the first and largest online DVD rental store. Since 2012, Netflix has produced and distributed its original content, including film and television series entertaining many viewers. This variety of content has been stored in the online library for viewing by subscribers. Since 2016, it has been providing services in around 190 countries. This company has established its office globally, including in Brazil, the Netherlands, France, the United Kingdom, Japan, India, and South Korea. In 2023, Netflix owned more than 231 million subscribers globally involved in a pay-per-month payment.

However, Netflix is available worldwide except in China, Syria, and North Korea. According to a report in 2020, Netflix earned $1.2 billion in operating income for its excellent performance with updated tools.

Netflix Organizational Structure

Netflix has a flat organizational structure that provides ample freedom for employees. It is also known as a decentralized organizational structure that allows the respective person to make quick decisions. Netflix maintains the unitary organizational structure, also known as the U-form organizational structure. It influences the employees to be more responsive to their duties. Netflix’s organizational structure avoids top-down decision-making strategies to create a conducive working environment for employees. It also focuses on creating a favorable environment to promote employee performance. Netflix has a labor division that works to improve performance. The authority reviews the performance regularly. They opt for a multi-rater feedback system that is also known as a 360-degree review method.

Netflix’s management team always focuses on practicing and maintaining the principles of total quality management tools. The TQM helped to become the most popular company worldwide.

According to McGraw Hill, Netflix wanted someone as HR director who prioritizes business first, clients second, and talent third. It also did not require Competencies For HR Professionals in SHRM certificate, change agent, or organization development practitioner. The authority considers three core issues such as who is good for the company, how we communicate with that employee, and ensure high performance.

Netflix Organizational Structure 2023-2024

Netflix CEO in 2023

Netflix Founder Reed Hastings stepped down from his CEO role and joined as the company chairman in 2023. Ted Sarandos is the current CEO of Netflix. In 2020, Ted Sarandos joined Netflix as co-CEO. Initially, Reed Hastings and Marc Randolph were the co-chief executive officers of Netflix. Marc Randolph left Netflix in 2002.

Netflix Organizational Transformation

First-Change in 1999

(Pay-For-Use Model Into a Subscription Model)

Netflix has made two significant changes since its launch. First, it began the subscription option in 1999 to store DVD rentals. This change allows clients to rent unlimited DVD rental without late fees. It was the first change in the business model in the history of Netflix.

Second-Change in 2007

(Streaming Service)

Later, in 2007, Netflix made its second change by launching an online video streaming service. Consumers have accepted this change. It is believed that it has become the prime business pillar of income.

Purpose of Netflix Organizational Change

Netflix is becoming famous daily for its ease of access, quality, and updated tools. After all, new technology adoption is necessary to exceed customer demand. The technology adoption models and theories, including TAM, ETAM, UTAUT, and DOI, have described why and how people accept the changes. In the 21st century, people do not want to spend extra time in the cinema hall.

People used to go to the cinema hall to watch new movies before watching movies at home on Netflix. New technology, including computers, laptops, and smartphones, easily entertain people through internet service. In addition, the social media revolution changed the way we communicate with each other. It has become an excellent site for sharing user-generated content, including photos and videos.

Most people globally use social media in many perspectives, such as in education, entertainment, and marketing. Netflix’s authority had perceived the upcoming market demand. Therefore, they have changed the business model to watch movies and television series on computers and smartphones. The management of Netflix realized that consumers do not like to store video, so they changed the business model.

Additionally, Netflix is always aware of the approaches of competitors. Blockbuster is a crucial Netflix competitor; hence, they added a new feature to distinguish it from competitors. The reason for changing the business model of Netflix was appropriate and effective to bring success.

How Netflix Handles the Organizational Change Forces

Organizational change refers to the adjustment and transformation of a company’s operations. The company brings a minor or significant change to improve productivity and cope with the new context. There are two types of forces of change in a company: external forces and internal forces. External forces include technological change, social and political change, and managing ethical behaviors.

For example, technological change is the primary external force that compelled Netflix to change the feature.

New technology changes people’s expectations and behaviors, changing the company product or service’s features, tools, and patterns. Netflix handled the forces of change effectively to bring success and prosperity to the company. Internal forces influence the organization to change management, such as changing managerial personnel, work climate, effectiveness, employee expectations, and crisis.

For example, Netflix realized that watching movies at home would reduce the entertainment budget and transportation crisis. Therefore, Netflix accepted the organizational change.

Conclusion

Netflix started its journey as an ordinary company. Now but it has achieved a competitive advantage by changing its business model to fulfill customer demand. The authority of the company changed its feature to cope with new technology. It made two changes in 1999 and 2007. However, the video streaming service brought immense fame and income to the company in 2007.

The author mentions some critical points for other companies that want to change business. Firstly, changing the business tools is significant to exceed customers’ demands. Additionally, digital technology must be accepted by employees and customers. Finally, the company must add updated tools for better function, such as Netflix starting its online video streaming in 2007. “The measure of intelligence is the ability to change” -Albert Einstein.

Netflix has followed the blue ocean strategy to achieve its business goals. The Blue Ocean strategy refers to creating a new business market. The red ocean strategy refers to competing with other companies in the same market. Blue Ocean’s strategy creates a unique market context. It also designs a new feature to attract new customers.

Hence, Netflix accepted the blue ocean strategy and has become one of the most successful companies worldwide.

Citation For This Article(APA 7th Edition)

APA	Kobiruzzaman, M. M. (2024). Netflix Organizational Change & Management Structure 2024. Newsmoor. https://newsmoor.com/netflix-organizational-change-organizational-management-change-examples/

Red Ocean & Blue Ocean Strategy Examples & Difference in 2023

Red Ocean Strategy and Blue Ocean Strategy Examples & Difference in 2023. Difference Between Blue ocean and Red ocean strategy. Examples of Red Ocean and Blue Ocean Strategy. Also, Blue Ocean Strategy Four Action Framework.

Red Ocean Strategy

Red ocean strategy refers to the traditional marketing strategy to compete with the competitors. It is demonstrated when many companies compete to achieve a competitive advantage in the existing market. These companies contest in the same marketplace to beat their opponents. Red ocean strategy influences the company to provide better service to buyers. It mainly focuses on the existing customers and buyers rather than creating new customers. So, they provide better services and products to attract customers.

Characteristics of Red Ocean Strategy

Firstly, the red ocean strategy focuses on competing in the existing market. So, multiple companies compete with each other to achieve competitive advantages. The marketing team pursues both product cost and differentiation to beat other companies. Additionally, the company intended to provide better service to buyers—finally, they pay more attention to the current customers instead of looking for new clients.

For example, Malaysia and Air Asia Airlines follow the red ocean strategy to beat their competitors.

Red Ocean Strategy Examples

Air Asia is a renowned airline company in Malaysia. It always tries to compete with other airline companies in Malaysia, for example, Firefly, Batik Air, and Malaysia Airlines, to achieve competitive advantages. Air Asia offers low prices on domestic and international flights to beat the competitors. On the other hand, Malaysia Airlines also reduce the price to beat Air Asia. So, they fight each other in the same marketplace. It is a real-life example 0f the Blue Ocean Strategy.

Suppose we infer these giant companies with sharks and the marketplace with the ocean. So, imagine what will happen if all these sharks fight with each other. The ocean gets bloody due to the fierce fight of sharks.

Advantages of Red Ocean Strategy

Firstly, the market has already existed, so no need to create a new marketplace.

Secondly, the services and products have good demand by the customers. Many customers want the products so the new companies can utilize the existing consumers.

Additionally, the company can quickly recruit skilled employees with deep experience in the sector.

Finally, the new companies can get ideas on how to improve the business from their competitors.

Disadvantages of the Red Ocean Strategy

Firstly, competitors are experienced in this market, so it is difficult to beat them.

Secondly, the company needs to focus on cost and differentiation, which is difficult for a new business.

Blue Ocean Strategy

Blue ocean strategy refers to the uncontested marketing policy focusing more on innovation to reinvent the business than the head-to-head competition. W. Chan Kim and Renée Mauborgne introduced the Blue ocean strategy in 2005. It is a simultaneous process of opening a new business market and creating new demand; therefore, competition is irrelevant.

Blue Ocean Strategy Examples

There are several examples of the blue ocean strategy worldwide. Many industries had accepted it to get benefits, such as Netflix, Canon, iTunes, Cemex, Philips, NetJets, Curves, JCDecaux, Quicken, Polo Ralph Lauren, etc. iTunes solved the problem recording industries when it started the business. Before launching iTunes, consumers download a song illegally from the internet platform. ITunes’s blues ocean strategy created a new way of legally selling music, where consumers and artists mutually benefited. They managed to make a new category of music selling through digital music platforms for listeners. Still, it is dominating the marketplace of music platforms for years.

Netflix’s organizational change is the most appropriate example of the Blue Ocean strategy. Netflix changed its business plan to create an uncontested new market. It is one of the most successful companies that accept the blue ocean strategy to achieve competitive advantages.

For example, Netflix, Canon, and iTunes follow the blue ocean strategy to achieve the competitive goal.

Blue and Red Ocean Strategy Examples

For example, you put some sharks in a pond. Now, they are fighting each other. The sharks are trying to kill others. A few hours later, you can see the water has been red for the shark’s blood. We can infer this pond to the red ocean where many companies are competing with each other.

On the other hand, you put a shark in a separate pond. There is no other shark that can fight, so the water is blue and fresh. We can infer it to the blue ocean strategy where only one company controls the marketplace.

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Red Ocean vs. Blue Ocean Strategy

Red Ocean Strategy	Blue Ocean Strategy
The contest is in the same market.	Create an uncontested new market.
Many Companies compete with each other in the existing market.	One Company dominates the new Market.
Beats competitors.	Competitors are irrelevant.
The company pursues both cost and differentiation.	The company chooses between cost and differentiation.
Make the value-cost trade-off.	Break the value-cost trade-off.
Capture new demand.	Exploit existing demand.
Focus on rivals within its industry.	Focus across the alternative industry.
Intend to provide better service to buyers.	Redefine the buyer group.
Focus on current customers.	Focus on new customers.
The market is already established.	Need to make the new market.
For example, Ryanair and Air Asia Airlines.	For example, Netflix, Canon, and iTunes.

Difference Between Red Ocean and Blue Ocean Strategy

Red Ocean Strategy and Blue Ocean Strategy- Difference Between Red and Blue Ocean Strategy.

1. Focus on Current Customers vs. Focus on New Customers

Most industries focus on attracting existing customers to sell more products and services in the red ocean strategy. Thus, they focus on the current customer to make benefit by selling products and services.

In contrast, in the blue ocean strategy, the industry tries to change the business pattern to yield something new for the customers. The company also broadens the business area to develop new products or services; therefore, customers are irrelevant here. Thus, this strategy allows the company to focus on business patterns rather than customers.

2. Compete in Existing Markets vs. Create New Markets

From the red ocean strategy perspective, the industry is doing business with customers where some industries gain more clients, and some other sectors lose clients. They are doing business with the same customers and competing with each other to get more customers. The company will earn more money if it can bring more customers under its umbrella.

The blue ocean strategy never suggests the company compete because it makes a new uncontested marketplace. The product and service are unique; therefore, no company will come to compete with you. So, this strategy creates an uncontested market to serve its customers.

3. Beat the Competitor vs. Make the Competitor Irrelevant

The competition must exist in the company’s marketplace that follows the red ocean strategy. They compete to sell more products and services to increase profit margins. So, they always intend to beat the competitors through marketing policy, product quality, and services.

The blue ocean strategy makes the competition irrelevant because they need not compete with other industries to sell products and services. It makes a new marketplace for the industry.

Key Points of Blue Ocean Strategy

The eight critical points of the Blue ocean strategy are as follows;

It’s grounded in data.
It pursues differentiation and low cost.
Blue ocean creates an uncontested market space.
It empowers you through tools and frameworks.
Blue Ocean’s strategy provides a step-by-step process.
It maximizes opportunity while minimizing risks.
Blue ocean also builds execution into strategy.
It shows you how to create a win-win outcome.

Blue Ocean Strategy Four Action Framework

Chan Kim and Renée Mauborgne developed the four-action framework to destroy the trade-off between low cost and differentiation and rebuild an industry’s strategic logic. The four Actions Template determines whether the investment money is used correctly to maximize consumer gain and minimize consumer pain. It also assesses the gains with this template and the pains that matter for your product. It is the best way to get the most benefit with the lowest price within the total product market.

Four Action Framework Examples

**Figure 3:** Blue Ocean Strategy Four Action Framework

How to Use Four Action Templates

Eliminate

Firstly, you have to identify the factors of the industry that need to be eliminated because of defectiveness. Find out the elements where you give significant investment and effort but get very little output. These factors can also be made more contributions in the past but are now useless, so you need to eliminate them because of becoming obsolete.

Reduce

Secondly, you need to identify factors that are unnecessary for the industry and cannot correctly benefit the industry. These factors are well below the industry’s standard. For example, the higher cost of manufacturing can reduce the product.

Raise

These significant factors need to be increased to fulfill the industries well above standards. For example, the company needs to rebuild the features to exceed the customer’s challenges.

Create

These are the new features that the company never provided. To create these new features, you must investigate the customer’s desire to fulfill them. The industry can also create new products or offer innovative consumer services. It will help the company to create a new marketplace distinguished from the competition.

Conclusion

In short, the Red ocean strategy refers to competing for the existing marketplace, whereas the blue ocean strategy denotes making a new uncontested marketplace. Based on the discussion, it is safe to say that the blue ocean is a better way to bring fewer risks, more success, and increased profits. In addition, the four action templates appear as the best solution to identify the industry’s investment is properly or not. Hence, the blue ocean strategy and the four action framework have become innovative business innovations.