What We Can Learn From Netflix’s Failed Social Strategy and the Predictability of Human Behavior

What We Can Learn From Netflix’s Failed Social Strategy and the Predictability of Human Behavior

In the fast-paced world of business, it is crucial to learn from past mistakes and adapt to new information. One such example is Netflix's failed social strategy. Despite initial hopes and investments, the strategy did not yield the desired results. So, what can we learn from this failure?

One important lesson is to not let past investment inform future investment. Just because a company has already invested a significant amount of time and resources into a certain strategy, it doesn't mean that it is worth continuing. Instead, companies should ask themselves, "Given what we know today, how much should we invest going forward?" This objective approach allows for a more accurate assessment of the strategy's potential.

In the case of Netflix, small wins clouded judgment. The proxy metric used to measure the success of their social strategy kept going up and to the right. However, Netflix failed to recognize early enough that it would never be big enough to matter. It is important to remember that success in one area does not guarantee success in another. Companies must carefully evaluate the impact and potential of each strategy, rather than relying solely on small wins.

Netflix's persistence in pursuing social integration raises the question of why they failed so frequently. Two reasons can be attributed to this. Firstly, there are many biases that cloud human judgment. It is easy to become attached to an idea, especially when the CEO is passionate about it. In Netflix's case, they assumed that the failure was in the execution, not in the idea itself. This bias prevented them from objectively evaluating the strategy's merit.

Secondly, it's hard to invent the future. Companies often struggle to let go of ideas, even when they are not working. The pride of ownership and the desire to build can cloud judgment. Netflix, like many other companies, found it difficult to kill projects, even when they were not delivering the desired results. It is crucial for companies to temper their pride in ownership and objectively evaluate the merits of a project.

So, how can companies avoid falling into these traps and make better investment decisions? The first step is to establish clear objectives. Setting a goal guards against youthful enthusiasm and ensures a disciplined evaluation of the strategy's merit. By having a clear objective, companies can assess the potential impact and make informed decisions.

Additionally, companies should take stock of their pride of ownership. As builders, companies love to build stuff, and nobody likes to kill projects. However, it is important to separate personal attachment from objective evaluation. By acknowledging the pride of ownership and being aware of its potential influence, companies can make more rational decisions.

Lastly, companies should ask themselves, "What should we invest in today, regardless of past investment decisions?" This question helps to strip away any biases or attachments and focuses on the present and future potential of a strategy. By taking a moment to reevaluate and discounting both executive-level support and conventional wisdom, companies can make more objective investment decisions.

In a separate study, network scientists from Northeastern University found that human behavior is 93 percent predictable. Regardless of demographic categories such as age, gender, language groups, population density, and urban versus rural locations, most people follow a simple pattern in their movements and have a strong tendency to return to locations they visited before. This predictability remains true even for those who travel far distances regularly and those who prefer to stay close to home.

While this may seem obvious, it is interesting to note that human behavior is highly predictable. This insight can be valuable for businesses in various ways. Understanding the predictability of consumer behavior can help companies tailor their marketing strategies, anticipate customer needs, and optimize their operations.

In conclusion, the failure of Netflix's social strategy and the predictability of human behavior provide valuable lessons for businesses. By remaining objective, establishing clear objectives, tempering pride in ownership, and asking the right questions, companies can make better investment decisions and adapt to the ever-changing business landscape. Ultimately, it is important to learn from past failures and embrace new insights to thrive in today's competitive environment.