August 17, 2023 by Mike Manazir – (4-5 minutes)
In the early 2000s, Netflix was a DVD rental service that offered customers the convenience of renting DVDs online and receiving them by mail. However, with the rise of digital technology, the company faced a critical decision that would shape its future.
In 2007, as online streaming technology began to gain traction, Netflix’s co-founder and CEO, Reed Hastings, had to make a tough decision about the direction of the company. He recognized the potential of streaming as the future of media consumption, but it would require a radical shift from their DVD rental business model.
At the time, the majority of Netflix’s revenue came from DVD rentals, and the company was thriving in that space. However, Hastings and his team foresaw that the DVD rental market would eventually decline as streaming gained popularity. They understood that embracing streaming was crucial to stay ahead of the curve and remain relevant in the rapidly changing media landscape.
Reed Hastings made the bold decision to invest heavily in streaming technology and shift the company’s focus from DVDs to digital streaming. He believed that streaming offered greater for customers, lower distribution costs and the potential for global expansion.
The transition was not without challenges. Negotiating streaming rights with content providers was difficult, and convincing customers to switch from DVDs to a new and unfamiliar platform required strategic marketing efforts. Additionally, the shift to streaming meant a decline in DVD rental revenue, which could have negatively impacted the company’s short-term financial performance.
Despite the initial difficulties, Netflix’s decision to embrace streaming proved to be a game-changer. The company’s streaming service became immensely popular, attracting a large customer base and revolutionizing the way people consume media. By 2010, streaming had become the primary focus of Netflix. They expanded internationally, reaching millions of subscribers worldwide.
The Netflix’s story has many lessons for leaders such as redefining the winning business strategy, assessing risk, accurately forecasting where the targeted market is headed and forming the business cases for change, but let’s focus on demonstrates the significance of making tough decisions based on a clear enhanced vision of the potential futures. By anticipating market trends and being willing to take risks. Reed Hastings and his team transformed Netflix from a DVD rental company into a global streaming powerhouse.
Just as Netflix did, today’s leaders encounter a myriad of tough decisions that can include:
- having to downsize or restructure the workforce;
- choosing where to allocate limited resources to best sustain the organization;
- taking on the risk of entering new markets or the launch of an innovative product;
- making an acquisition or merging with another company;
- making crucial decisions during times of crisis;
- deciding when to promote, demote or replace team members;
- confronting moral and ethical challenges and conflicts of interest;
- balancing short-term gains against long-term sustainability;
- deciding whether to pursue risky ventures that could lead to breakthrough success or devastating failure;
- recreating a product strategy;
- balancing stakeholder interests;
- budget cuts and cost reductions;
- choosing whether to expand into new markets or to pull back from existing ones;
Regardless of the decision, is there a defined process you can use to navigate difficult decisions? I think there is. Following is a recommended process for processing issues and making tough decisions.
Step One: Assemble a tiger team. Assign the task of building recommended courses of action to get subject matter experts people (I recommend no more than ten – maybe 9 or 11 if things come to a vote and you need a tie-breaker). Designate a leader you can trust to get to a decision for you.
Step Two: You, as the leader create the vision. Post a visual statement of the desired outcome on a screen at the front of the room. “My desired outcome for this task is for this team to decide ___________.”
Step Three: Provide the group with a verbal briefing of what the issue is, why it’s important, what the consequences could be and why a decision needs to be made.
Step Four: Allow members to ask clarifying questions. (NO SOLUTIONS ARE TO BE PRESENTED AT THIS TIME. ONLY CLARIFYING QUESTIONS.)
Step Five: Walk out the room once the clarifying questions have been exhausted. Your team lead should now, allow members to reflect on what they’ve heard and write their proposed solutions on a 4×6 index card with their name and date at the top. Collect the cards.
Step Six: Your team leader then goes around the room and allow each individual to advocate for their proposed solution without interruption or rebuttal. Write their solution on a white board or paper or screen at the front of the room. Ask if anyone else has written that solution on their card. Write the number of how many people shared that solution.
Step Seven: Now that all the proposed solutions are accounted for on the screen at the front of the room, select the top 3 solutions. One at a time, ask a team member who proposed the solution to advocate for it. Ask another team member to debate the downside of the solution. Debate the plus and minuses of each of the top 3 solutions.
Step Eight: Once the debating is done, take a vote to select the number one solution.
Step Nine: Discuss next steps. Who is going to do what when to implement the decision?
Step Ten: Map out a communication plan to inform the organization and win buy-in.
In any moment of decision, the best thing you can do is the right thing,
the next best thing is the wrong thing,
and the worst thing you can do is nothing.
-Theodore Roosevelt
Lead from your heart. Lead to Win.
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