Discuss about the Innovation and Creativity in Organizational Improvement.
Creativity and innovation are significant parts of organizational development. It is considered as important pillar of innovation. Though creativity and innovation are often misinterpreted as the same aspect of organizational culture but the difference is indispensable. An effective organization is run by materializing certain ideas and creativity acts as the key driver for innovative ideas. Through creativity effective ideas are generated and the application of such ideas is referred as the innovation. In the global competitive market, for any organization, the innovation and creativity become key factors for achieving the desired successful performance. For any organization to be successful in the competitive market the innovation and creativity should be embedded in the performance strategies. Netflix is a successful global company that has been adapting the creativity and innovation as their organizational policies. This resulted in great organizational success for the company. Therefore the research on Netflix will explore the contribution of innovation and creativity in organizational success.
In recent years the organizations have been treating innovation and creativity as effective skills for their business. The problems and organizational strategies require more creative inputs from the management in order to achieve the performance goals. Creativity is the key force behind the innovation that leads the management to look at the operations from different perspectives (Goodman and Dingli 2017). It is undeniable that for any organizational success the implementation of creativity and innovation is an effective path. The creativity leads the organization to delve into new business and market territories. If it is managed well, it results in increased organizational productivity. The management leadership plays significant role in the process as he invests money to provide the company with resources so that it can explore new areas or incorporate innovative ideas (?erne, Jakli? and Škerlavaj 2013). The problem solving is largely improved by creativity. The company develops innovative ideas that place the company ahead of the competition.
Netflix, Inc. is an organization that has implemented various changes and strategies that have helped the company to achieve great success. Without innovation and creativity it would not have been possible for the company to survive in the digital era of rapid changes. In 1999 Reed Hastings, the founder-CEO of Netflix started this film rental services (Media.netflix.com 2017). Though it has gone through multiple modifications but the basic subscription based business model is still continuing. The company originally provided ‘DVD by mail’ service but in 2007 the company developed streaming services (Ani et al. 2016).
From the very first step Netflix has been applying certain business strategies that are creative and supported by innovation. Reed Hastings aimed to provide the consumers with the best movie rental services and for that he came up with the following business strategies.
The leadership successfully communicated with the employees regarding how the money is being made by the company and how they could contribute to continue the success. The management and employees at Netflix were spending huge amount of money to buy DVDs, developing distributing centers even before getting any money back from the new subscribers. The leadership made the employees realizes that though revenue was growing but it was really important to manage the expenses. The leader at Netflix not only developed an effective culture but also valued the subculture. The finance team of Netflix also planned to change the payment system to ‘direct deposit paychecks’ (McCord 2014). However there were hourly workers who did not have bank accounts so the management decided not to go with it. The leadership identified the problems, the changes, and the need of time and planned to incorporate new technologies and change in order to create a sustainable business for the future. The progress is measured easily for Netflix, the subscription rates, progress compare data among its competitors and recognitions are getting increased every year.
The CEO and cofounder of Netflix, Reed Hastings was driven by the desire to develop new products and fresh initiatives. The strategic leader identified the upcoming trend and utilized the full potential of digital revolution. He understood the movie watching experiencing of American consumers was changing and the traditional business structure of cable television was demanding a transformation (Snyder 2014). In order to watch a movie of their choice, the American consumers had to visit a movie renting store, rent it and come back. Blockbuster was ruling the movie rental market with 6000 stores. However Hastings identified the extra effort the consumers had to put in order to collect a DVD or VHS. He realized that the disc could carry a lot of data and the weight is very less. Therefore he implemented the idea of renting films through mail which gained success fast. With the internet boom he saw another opportunity to take the business to the next level.
The biggest asset of Netflix is its adaptation power. In various stages the company has proved that it can adapt necessary changes in order to enhance its business performance. They experienced the technological innovations and applied the necessary technologies in the business services (Jackson et al. 2015). Reed Hastings invested a lot in the research and development sector and a large segment of the annual profit was invested in the research for future plans. However the biggest challenge was to dump all the DVDs that they had bought and collected for so many years.
Netflix engaged in an organizational culture that is value added services, production selection and innovative styling. The company utilized all suitable technological advancement that took place in the contemporary time. Only in 2012 there were more than 120000 video titles available that were more than any other existing company at that time (Arthur and Thompson 2017). The management under the guidance of Hastings always focused on developing new content to provide the subscribers. Netflix made contracts with many studios through profit sharing to stream their content through Netflix.
Before the dominance of the Netflix on the video rental business Blockbuster was the biggest name in the market. Netflix was running the DVD rental business through mail which was an expensive service. Reed Hastings approached Blockbuster to become partners and they could by Netflix and they would be able to expand the business greatly as he believed that the stores would be relevant in near future, as it actually happened in the reality. Blockbuster refused to invest Netflix in the plan. Blockbuster was an old technology based services where basically the customers had to go to the stores and rent the films or shows. The customers had to experience that most of the top films are out of stock and they had to leave the stores unsatisfied. On the other side Netflix was developing a business culture where the customers can get whatever they want and whenever they want. Blockbuster did not extend their business online and did not utilize their resources for the online business (Voigt, Buliga and Michl 2017). The leadership failed to analyze the future market and did not spend any money in the expansion.
Blockbuster suffered from the “classic innovator’s dilemma” which the dilemma most established organization suffer from at certain point of time. Blockbuster felt that they had successful business with country wide video stores therefore they did not need to take the risk of entering in the online business world.
The analysis of the business practice of Netflix highlights that the organization followed the Innovation Creativity Execution model of business strategy. Business strategy of Reed Hastings has always given high preference to innovation (Hisrich and Ramadani 2017). Whenever a problem arose within the organization he created solutions and executed them. It is evident that he was creative while developing the business model of Netflix
Netflix has developed a business strategy that could be called “Bingening”. This can be defined as the process of replicating a book. Netflix offers a service where the spectator does not have to wait for Stranger Things or House of Cards but they can watch it whenever they want. The viewers do not have to watch any commercials and not one episode a day but as many episodes as they want. The company offered the viewers as much as they wanted. Ken Auletta compared this with the book as the reader can read as much chapter as he desires (YouTube 2014). The original contents have become the company’s most powerful asset in the sustainable business.
Netflix has implemented various innovative strategies in recent years User Interface Upgrading is one of them. The user innovation interface team has developed a design that would give the viewer almost television like feeling. The Vice President explained that once a television is turned on, programs automatically starts happening and they wanted to present similar feeling to the customers of Netflix. In 2016 December Netflix developed the User Interface upgrading that replaced the poster images that are static with ‘custom created preview videos’ (Fastcompany.com 2017). So when a viewer opens a page and scrolls the videos start playing automatically. This proved to be highly effective as the millions of Netflix customers to discover what to watch rather than browsing the catalog to decide what is worth watching. The upgrading process took three years to complete. The commitment of Netflix to provide its customers with best opportunities not only helped then to earn the consumer efficiency but also it stood out from its competitors.
The team of software developers in Netflix develops software that enables the users to play Netflix on diverse range of devices from iPad to smart TV. The chief developers develop the APIs that help the organization to get all resources and data. The software helps the developers to get user data, data related to the programs, their choice and recommendations.
Netflix has started Download and Go option that helps the customers to watch Netflix programs offline (Media.netflix.com 2016). The existing users worldwide are now able to download the shows of their choice without paying any extra fee. The management comes up with this idea considering the customers cannot always the shows at home. In places like airplanes and other places where internet is expensive or difficult to obtain, the viewers can now click on the download button and watch it whenever the viewers without any internet connection. Along with the online streaming the company is developing the ‘download and go’ option for most of the programs. More number of programs will help the customers to watch them offline more. Shows like Narcos, Orange is the New Black or The Crown s available under the download and go option. All customer-plan supports this option and viewers can watch it on tablets, phones on IOS and android. However to avail this download option, the consumers have to update Netflix in the latest version.
One of the most effective business strategies that Netflix adapted was the ‘proprietary software technology’ that helped the users to preview the programs based on various filters (Walker et al. 2017). The viewers also rated the programs they watched through this technology and they also receive recommendations based on their previous ratings. The recommended programs got huge success among the viewers.
Netflix changed its approach in human resource management and organizational culture most significantly during 2013. The number of American subscribers grew to 29 million, it won several Emmys. The main motivation was to sustain and expand the business. The digital revolution and world trade centre attack changed the organizational culture it was in. Prior to those incidents the company with its 120 employees was planning to develop an IPO but those occurrences made the company to hold their plans and lay off many employees (McCord 2014). However the DVD sales grew by 2002 and the company focused more on that. In 2010 the company started giving subscription based online streaming service to other countries like Canada and by 2011, citizens from 43 countries could avail this service. By 2012 Netflix had 23 million subscribers and they can avail more than 120,000 titles through online streaming.
Netflix has planned to produce 1000 hours of unique and original programs in 2017. The company is always coming up with strategies in order to surpass their competitors in the market. It is investing 6 billion to improve its library which is far ahead of their rivals like Amazon.
The company is leading the global market in online streaming services. Their main competitors are Hulu and Amazon (Reuters 2014). Now the company is operating in 190 countries and there are 93 million subscribers. The success rate is so significant that the company is determined to retain it and even expand the business more. The company creates and offers programs like drama series, films, documentaries that are licensed by distribution partners. However the business strategy of Netflix is different than traditional broadcasters who only try to expand the consumer numbers. Netflix rather aims to serve maximum number of audiences with the best quality film or show that they cannot ignore.
Like most other companies, Netflix also analyzed their growth spurt. The company utilized the transition of digital market and growing popularity of on demand services. Reed Hastings invested a lot of money in researching online streaming business and in buying the film and TV show rights. The streaming services allowed the customers to watch films directly on the television. Hulu, one of its competitors was charging the customer for each film or shows but Netflix was offering the viewers unlimited films and shows with monthly subscription. This helped them to create another S-curve and soon its position was at the top.
Netflix leadership was highly criticized because of their fast adaption of sudden market shifts but this proved to be extremely effective and they remain the market leader. The leadership took aggressive decision of cannibalizing the DVD rental business and promoting online streaming. In 2013 Netflix experienced valuation jump by 50%. In 2011-2012 the stock was nearly 60 dollars/share which increased to 150 dollars/share in 2013 (Hartung 2013). Netflix caught a very fast growing market of online streaming entertainment. This market of online streaming has grown at high speed and continues to grow that creates most favorable business condition for the company. Therefore for the stakeholders participating in the growth proves to be highly profitable. The decision was not only worth but also encouraged the management to get involved in newer business realms.
Conclusion
Reed Hastings has applied creativity and innovation that resulted in major success twice; once when they started the business and when they changed the entire business model. Netflix is expanding their business with a third innovative strategy for online streaming business. They are creating their own films and shows and charging money to other exhibitors for the rights. So this continuous expansion of business in diverse areas helps the company to stay at the top in the competitive market. With the combination of innovation, creativity and effective leadership guidance, the company will achieve more success. The creative innovation along with appropriate execution can lead to business wonder and Netflix is such an example.
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