Masters of Capacity Netflix

by Rita Trehan

In my forthcoming book, Unleashing Capacity: The Hidden Human Resources (Charles Pinot, 2015,) I speak a lot about HR’s ability to build corporate capacity, that the tools that lie within our ranks are uniquely designed to build and manage company agility. There are plenty of companies that exemplify that seemingly ninja-like ability, and in this series I’d like to highlight them here. We’ll start with one of the masters of the new service economy: Netflix.

Netflix, if you can recall, started in 1997 as a mail-based subscription service that delivered DVDs right to your door. For a small fee a month, you could adjust your plan to receive one or up to five of the newest releases without ever having to leave your house. You could keep the DVDs as long as you wanted without a late fee. No more trips to your local video store. You could just return the DVD by slipping it into its self-addressed, postage-paid mailer sleeve and popping it into the mail. In a few short days, your next selection would arrive.

That all but put video stores out of business. Subscribers soared to 20 million, raking in hundreds of millions of dollars for the company.

The next offering? Online streaming. TV shows, movies – the selection of options grew and grew as the company continued to evolve its plan toward original content. No longer satisfied with offering the content of others, it decided to play in the content creation arena. Suddenly, lightning-fast Internet created a new phenomenon called “binge watching,” and Netflix was right there to serve the need. House of Cards was nominated for awards, with actor Kevin Spacey winning the top actor award at this year’s Golden Globes.

According to a new article in The New York Times, the company expects to essentially break even on their streaming and original content plan sometime this year, with DVDs still representing a large chunk of the income for the business even though subscribers have fallen to 5.3 million. The management of Netflix realizes that you don’t abandon the steady income stream for the shining water of opportunity until the waters are essentially safe for long-term travel. But with 65 million streaming customers and climbing, they’re well on their way to a strong future.

Netflix is a master of capacity due to their acceptance of change as a constant and their ability to react to the needs of their customers. The company is viewable on all platforms, and plans full global expansion by 2017 to meet the demands of the global marketplace. Their internal operations have shifted in the DVD arena so processing is mostly automated but with a few workers in processing facilities that work through the night so the mailers are ready to ship in the mornings. The dedication to the demand for original content hasn’t been without its missteps, but their devotion to high-quality production keeps memberships surging. They drop entire seasons of shows at once, so subscribers can watch whatever they want whenever they want. Netflix is agile enough to be wherever you are, and they’re focused on anticipating your next need before you even have it.

When it comes to corporate agility, there are some companies who do it better than others. Netflix is a great model for capacity because it understands that it must remain fluid operationally to meet the ever-changing demands of the on-demand marketplace. Somewhere within those ranks is an HR team dedicated to ensuring the resources needed to meet that demand are appropriately connected to the overall corporate goal and ready to serve the customer.

It’s for this reason that Netflix is a Master of Capacity. Who will be next? Stay tuned…

Read more about About Rita Trehan