92 | theceomagazine.com
KILL
YOUR
Consumers move fast, so
you need to move faster if
you want to stay ahead.WORDS • FI BENDALLT
here is a popular phrase among fiction writers, attributed to the English author Sir Arthur
Quiller-Couch: “Kill your darlings.”
That’s exactly what Netflix CEO Reed Hastings did in 2011 when he spun off the still
extremely profitable DVD-by-mail part of the Netflix business and turned it into a thing
called Qwikster, which died a quick death.
Hastings showed an appreciation for the unravelling story of digital transformation and the need to
ruthlessly shed dead skin when required. Netflix could have clung to its DVD business while trying to
gear up for the disruption to come as streaming services gained traction among consumers, but instead
Hastings embraced the Red Queen Hypothesis of evolving in order to survive. The brand launched its
streaming service in Canada in 2010 and Hastings could see from its success that this was the way of the
future. He saw DVD-by-mail was an anachronism in the making, so the only thing left for him to do was
move faster than any of his competitors to make streaming happen.
“In 2010 or 2011, out of 30 VPs, we had five people who were still focused on DVDs. We had to
kick them out of the executive team meetings because we needed to eat, sleep and breathe streaming,”
Hastings told LinkedIn founder Reid Hoffman in an interview.
Having been the industry disrupter that put Blockbuster to the sword, Netflix was now disrupting its
own business model in order to stay ahead. It was reinventing itself in direct response to advances in
digital streaming technologies and consumer broadband uptake. It wanted to be where its customers
were going before they got there. Netflix could not afford to drag with it the operational costs or cultural
baggage of the DVD part of its business. It had been working on streaming since the early 2000s, but
the technology was finally in place along with the audience numbers to make the model work.
Consumers move fast; Netflix had to move faster.
Hastings knew that for effective digital transformation, Netflix would have to consider the way
its operations, culture and business model would be changed. All three of those elements had to beDARLINGS