#11: A Case Study: Netflix 2020 - Missionaries vs. Mercenaries: Building Strong Product Teams

11: A Case Study: Netflix 2020 - Missionaries vs. Mercenaries: Building Strong Product Teams

In the fast-paced world of technology and startups, it's crucial for product leaders to think long-term and think big. One company that has successfully implemented this mindset is Netflix. With the GLEe Model (Get Big, Lead, and Expand) as their guiding principle during their startup phase, Netflix has become a household name in the entertainment industry.

But what sets Netflix apart from its competitors? How did they manage to become a global streaming giant? The answer lies in their focus on delighting customers in hard-to-copy, margin-enhancing ways, as outlined in the DHM Model (Delight, Hard-to-copy, Margin-enhancing).

Netflix has been able to achieve this through four key strategies: personalization, original content, a better watching experience, and interactive storytelling. By tailoring content recommendations to each individual user, Netflix keeps its customers engaged and coming back for more. The company's investment in producing original content has paid off, as it sets them apart from other streaming platforms and creates a unique selling point. Additionally, Netflix constantly strives to improve the watching experience by enhancing features and functionalities. Lastly, they have embraced interactive storytelling, allowing viewers to actively engage with the content and have a more immersive experience.

To continue their growth and success, Netflix has adopted the GEM Model, which force-ranks growth, engagement, and monetization. With a focus on year-over-year member growth, lifetime value, and monthly retention, Netflix ensures that they are constantly evolving and meeting the needs of their customers.

However, retaining customers in a highly competitive market is no easy task. The product team at Netflix faces the challenge of finding a suitable proxy metric for retention, as it is a hard metric to move. One potential solution is to track the percentage of members who watch at least 40 hours per month, as it indicates a high level of engagement and satisfaction.

But beyond the models and metrics, what truly sets Netflix apart is its focus on building teams of missionaries, not mercenaries. This concept, popularized by John Doerr, emphasizes the importance of having engaged and motivated teams who have a deep understanding of the business context and tangible empathy for the customer.

Unfortunately, many organizations struggle with this concept due to a few key challenges. Firstly, leadership plays a crucial role in fostering a culture of empowerment and accountability. Many executives and stakeholders believe they have all the answers and are resistant to discussion and debate. To overcome this, it is essential to educate the leadership team and encourage open dialogue.

Secondly, staffing is a critical factor in building missionary teams. In some cases, leaders understand the importance of missionaries but inherit an organization filled with mercenaries. This can be further complicated when there is significant outsourcing of designers or engineers. Raising the bar on the staff and aligning them with the missionary mindset is essential for long-term success.

Lastly, process plays a significant role in shaping the culture of an organization. Many product development processes are built around the mercenary model, even if they claim to be designed for the enterprise. It is crucial to adopt processes and techniques that allow teams to showcase their capabilities and drive innovation.

To address these challenges, three actionable pieces of advice can be implemented. Firstly, educate the leadership team on the importance of missionary teams and the value they bring to the organization. This can be done through workshops, training sessions, and open discussions.

Secondly, raise the bar on staffing by hiring individuals who align with the missionary mindset. This includes product managers, designers, and senior engineers. Building a team of passionate, empowered individuals will drive innovation and customer-centricity.

Lastly, adopt processes and techniques that enable teams to showcase their abilities. This starts with a compelling product vision combined with measurable business outcomes for both the organization and individual product teams. By setting clear objectives and key results, teams can align their efforts and work towards a common goal.

In conclusion, Netflix's success can be attributed to their focus on the GLEe Model, DHM Model, and GEM Model. By thinking long-term, delighting customers, and prioritizing growth, engagement, and monetization, they have become a global streaming giant. However, their success is not solely based on models and metrics. It is the emphasis on building teams of missionaries, who are engaged, motivated, and deeply connected to the customer, that truly sets them apart. By addressing leadership, staffing, and process challenges, organizations can strive to build strong product teams and drive innovation in their respective industries.