As we get older, we tend to get attached to our comfortable routine. We find a way to do things that works for us. For example, my mother makes a great chicken cutlet. Matter of fact, she taught me how to make chicken cutlets. But, I use fresh parsley now and make my own breadcrumbs, using fresh bread. I even grate the parmesan myself… who do you think has the best chicken cutlets now? Complacency is a killer. Maybe using my mother’s chicken cutlets as an example will get me in trouble, so let’s talk about something else, like Netflix and its recent troubles. Is complacency their underlying issue?
Don’t Get Too Comfortable up on Your High Horse
There’s no doubt that Netflix led the charge in content streaming, but what has it changed or innovated since 2007? There have been some improvements to the user interface, and they have developed algorithms that help with content selection, but nothing that makes them stand out as the premier streaming platform. Now, everyone and their mother has developed their own streaming platform and Netflix has become part of the pack rather than its leader.
Here are some other examples of companies that fell into a pattern of complacency that ultimately led to their demise. Is Netflix going to do the same?
Kodak: The Prehistoric Age of Camera
Kodak was the premier film company. “A Kodak Moment”, someone would say when their kid took his first steps. Digital cameras and online photo sharing eventually crushed Kodak into a microscopic form of what it once was. Kodak developed the first digital camera. They even bought Ofoto, an online photo sharing website. But they failed to realize people didn’t want to print pictures anymore, they wanted to share them online. While Kodak tried to use these websites and their digital cameras to push more photo prints, other companies saw that printing film was going the wayside. Online photo sharing was and is the new business model. They ignored what was happening because they were still making so much money printing film. They were complacent; focused on what they knew was making them money instead of the rise of cellphones and online photo sharing. By the time they realized they were outdated, other companies had already made themselves household names and no one needed Kodak to print pictures anymore.
Sears: From Domination to Abomination
As a kid, I remember circling toys I wanted for Christmas in the Sears Catalog. Sears was an innovator before the turn of the 20th century. Their business model was strong for the better part of a century, with everchanging ideas. So, what happened? For one, competition from the discount store, Wal-Mart. Wal-Mart slowly stole away Sears’ customers by using discount prices and betting on their online shopping. Sears ended their catalog shopping the year before Amazon was created, but Sears’ website paled in comparison to what Amazon is. Sears was going in too many directions, trying to develop eCommerce, selling off its brick-and-mortar stores to focus on online shopping, and marketing clothing to increase store visits. Companies like Walmart and Target were increasing their store count, realizing that is what drove people to buy from them. Sears was a Master of One and in attempt to become a Jack of All Trades, it became a Master of None. And an example of how complacency allows you to fall behind. Trying to play catch up, is a recipe for disaster.
Vine: The Original TikTok
Vine was a social media platform that was similar to TikTok. It allowed users to upload 6 second videos to the platform to be viewed by followers. It was extremely popular but ended up failing shortly after its rise in popularity. Unlike the competition, (e.g. Instagram and Snapchat), it didn’t allow for advertising options or for content creators to profit off of their own content. They were the biggest video platform in the 2010s and they didn’t want to change how they earned their money. Similar to Kodak, they were happy with how they were currently making money, but couldn’t see how it wouldn’t last. Vine’s biggest stars ended up leaving and promoting their content on other platforms that allowed them to make money, while Vine eventually shut down in 2016.
History repeats itself is a phrase that comes to mind when we look at Netflix. We all remember blockbuster, the store we used to go to when we wanted to rent a movie. When your company becomes as large as Kodak or Sears, it’s hard to see that you’re doing something wrong or falling behind. Hindsight is always 20/20 when we study failed companies in retrospect.
Netflix is attempting to maneuver out of this downward spiral as it is developing its own original content. But unfortunately, developing content now might be a little too late. Apple TV is an example of a company that only has its own original content on its platform, but they charge a third of the price that Netflix does. The model isn’t sustainable. They are now playing catchup with the rest of the streaming services available and unless they disrupt the market with innovation, Netflix can kiss the throne goodbye.
To learn more about how MAi Research and Pathfinder Analytics work with clients to creatively address challenging business questions, including complacency, please check us out online at www.mairesearch.com