What We Can Learn From Netflix’s Failed Social Strategy and Why You Believe The Things You Do

What We Can Learn From Netflix’s Failed Social Strategy and Why You Believe The Things You Do

Introduction:

In this article, we will explore two seemingly unrelated topics - Netflix's failed social strategy and the reasons behind the beliefs we hold. While these topics may appear disparate, they share a common thread: the biases and judgments that cloud human decision-making. By understanding the lessons from Netflix's failure and the psychology of belief formation, we can gain valuable insights into making better decisions and evaluating our own beliefs objectively.

Lesson 1: Don't Let Past Investment Inform Future Investment

When evaluating investment decisions, it is crucial to remain objective and not let past investments cloud our judgment. Netflix's failed social strategy serves as a perfect example of this. Despite small wins and a rising proxy metric, Netflix failed to recognize early on that social would never be big enough to make a significant impact on customer retention. The company persisted in its efforts due to biases and the CEO's passion for the idea. This highlights the importance of reevaluating investments based on current information rather than relying on past investments.

Lesson 2: The Influence of Beliefs on Decision-Making

Our beliefs are not solely based on truth but are influenced by various factors, including how much we want them to be true. This desire for certainty can lower the bar for us to believe something, even if it lacks evidence or rationality. As Visa Founder Dee Hock once said, our capacity to believe things is infinite when those beliefs are advantageous for us to hold. This concept explains why we may hold onto certain beliefs despite contradictory evidence or opposing viewpoints.

Lesson 3: The Role of Memory and Social Signals in Belief Formation

Our beliefs are heavily influenced by our experiences, memory biases, and the desire to eliminate uncertainty rather than seeking truth. The leveling and sharpening effects in memory, as described by psychologists Gordon Allport and Leo Postman, demonstrate how our recollection emphasizes certain memories while discarding others. We tend to remember experiences that confirm stereotypes, create compelling stories, and connect dots between other experiences. Beliefs also serve as social signals, indicating how we established our beliefs, our confidence in our intelligence, and our ability to convey reliable information to others. This social aspect of belief formation further complicates our pursuit of objective truth.

Conclusion and Actionable Advice:

To make better decisions and evaluate our beliefs objectively, we can take the following actionable advice:

1. Establish Clear Objectives: Set clear goals that guard against youthful enthusiasm and subjective biases. By defining objective goals, we can avoid the pitfalls of pride of ownership and evaluate investments based on their merit rather than past decisions.

2. Embrace Change and Intellectual Flexibility: Adopt a scientific mindset that welcomes new information and is open to changing beliefs when faced with contradictory evidence. Avoid intellectual inertia and recognize that changing beliefs is a sign of growth rather than weakness.

3. Seek Truth Over Certainty: Shift our focus from eliminating uncertainty to seeking truth. Be aware of the biases and influences that shape our beliefs and strive to base our beliefs on evidence, rationality, and critical thinking rather than personal desires or social pressures.

In conclusion, the lessons learned from Netflix's failed social strategy and the psychology of belief formation remind us of the importance of remaining objective, evaluating investments based on current information, and critically examining our beliefs. By incorporating these insights into our decision-making processes, we can make more informed choices and develop a more accurate understanding of the world around us.