How not to introduce something new: learning from Netflix's mistake
<![CDATA[By William Seidman Is there anyone left who doesn’t know about Netflix’s recent disastrous move? Netflix announced it was separating its DVD business from its (much smaller) video streaming business. 880,000 subscribers (10 percent) dropped Netflix and that doesn’t include customers like me who downgraded their services. Netflix shares fell 72% between July 2011 and a few days ago. Ouch. I talk about this a lot: just because someone is good at running a business does NOT mean they know how to lead a transformation. The Netflix management team has made almost every change management mistake there is to make. The biggest one, though, is the simplest one: they announced a price increase without offering any benefits. The vast majority of Netflix customers are devoted to the service that sends them DVDs in those red envelopes through the mail. Streaming might be something they’ll be interested in later, or gradually, but it needs to be simple and painless. So Netflix confused customers, and then added insult to injury with a price hike. When you do that, people will leave you in droves. And then there’s Google, looking into pay TV.]]>
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