Netflix: Can A Company Really Be This Inept And Succeed?

NetflixIf you thought Netflix handled its earlier price increase badly, just wait till you hear the complaints about its latest move. In a letter to subscribers sent today, Reed Hastings, Netflix Co-Founder and CEO, opens with:

“It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming and the price changes.” – Hmm, perhaps a little bit of an understatement! (Read the full text at the end of this post.)

So members like me might be lulled into the false impression that this letter was going to be an apology in an attempt to smooth things over. Boy, was I wrong. Instead Hastings goes on to say the following (my paraphrasing, not his):

  • Because you are such a good customer, renting both DVDs and streaming, we’re going to degrade your service.
  • We know you like the fact that you can easily move movies between your online queue and your instant queue, which is why we’re going to stop you from doing that.
  • We know you liked the fact that a movie in your DVD queue is added to your instant queue automatically when it becomes available for instant viewing – so we’re going to stop allowing that.
  • We recognize that our website, with its easy-to-use features is one of the reasons you use our service, so we decided to give you twice the benefit by breaking it into two websites and asking you to use the two sites instead of one.
  • We won’t be increasing our prices as a result of reducing your service levels – we already did that.
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Define Your Social Ecosystem

One of the many interesting topics of discussion we get into in our Social Business Strategy workshops is around the social ecosystem. This is the name I have given the collection of business capabilities potentially enhanced by one or more social technologies.

First let me define social technologies. Note I’m using the word “technology” quite deliberately in place of the more common term “social media” because social media is too often associated with consumer-facing technology as deployed in support of marketing. In defining the entire social ecosystem I prefer the more generic “technology”. I define social technology as “any technology that enables one-to-many communications in a public forum (or semi-public if behind a security firewall)”.

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Are You Ready To Master The Customer Data Flow?

If you read my last research report and previous blog post, you’ll know that I’m working with Luca Paderni on a series of research reports examining the IT and marketing relationship. In particular, we’re examining what IT and marketing are doing to master the customer data flow (see Figure 1).

 IT and marketing must collaborate to master the customer data flow

At the upcoming CIO and CMO forum, Luca and I will be presenting a keynote examining the readiness of IT and marketing teams in today’s organizations to master the customer data flow. The really cool thing is that you can help shape the outcome by participating in a very short survey we are conducting in conjunction with Forbes. The survey asks a number of questions around the interaction between IT and marketing and can be answered by either IT or marketing professionals.

Don’t put it off, please take the survey now,  share this post, and receive a complimentary copy of the summary results.

If you are a CIO or CMO of a $1 billion+ organization, please also consider participating in our ongoing research by contacting our research associate Lauren Blackburn at +1 617.613.6500.

Is Marketing The Biggest Opportunity For IT Since The Internet?

In today’s fast-paced global economy, examples of how empowered customers and citizens use social technology to influence everything from brands to governments are all around us. The Arab Spring clearly shows the ability of technology to empower people. In this new digital age, marketing teams must react at the speed of the market: Product development life cycles that used to last many years are compressed into months or weeks; customer service expectations have moved from same-day response to instant response; public relations snafus must be handled in minutes rather than days; marketing campaigns are adjusted in real time based on instant feedback from social media. In this new era, mastering customer data becomes the key to success and, in my opinion, represents the biggest opportunity for IT to impact business results since the dawn of the Internet.

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How Successfully Is Your Organization Using Social Technologies?

Let's face it, there are plenty of examples emerging of organizations doing great things with social technologies -- but just how many are having a measurable impact on their organization's goals?

If you think your organization is already doing great things with social technology you may be right. If you are seeing measurable results, I encourage you to nominate your organization for a Groundswell award.

What's a Groundswell award? Josh Bernoff, one of the authors of Groundswell, explains the history of the award in his blog here. Each year we review multiple nominations across various categories of social technology use; we identify the examples we believe best demonstrate the criteria for winning each award. We have categories that include internal and external uses of social technologies, and we're especially interested to see examples of strong collaboration between IT and Marketing. This is the fifth year we are running these awards (you can see past winners here and a full list of award categories below).

The 2011 award categories include:
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Isn't It Time CEOs Were Held Accountable For Technology?

I realize I'm posting two rants in a row here (my last one was on marketing being a dirty word), but this is important! I just read in the WSJ that it's time more CIOs report to the top... my initial reaction was "oh come on, really, are we still on with this old chestnut?" -- the thing is, I couldn't agree more. But here's what gets me -- we were saying this in the '80s. The hope back then was that, as more CEOs stepped up who had grown up with technology, things would change and more CIOs would report into the CEO. Clearly this was pie-in-the-sky optimism ... so what went wrong?

Traditional wisdom (aka analysts) suggests that it's up to the CIO to "earn" a seat at the table by demonstrating leadership, delivering business value from IT, and lots of other hoops to jump through. While my colleagues and I work diligently on research to help CIOs achieve this, I can't help feeling there is an alternative perspective we are missing, and that's what drove me to write this blog post.

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When Did Marketing Become A Dirty Word?

I'm going to date myself here, but in the early 90's when I was working in IT, I created a new role: "IT Marketing and Services." In defining the role, I was quite deliberate about my choice of words -- especially in the use of "marketing." This role was responsible for all customer-facing aspects of IT -- that included IT business relationship managers (yes we had them back in the early 90's), help desk, training, communications (of the PR kind), demand management and planning. I chose the word "marketing" deliberately to reflect the fact that this was a customer-facing responsibility (both internal IT customers and end-customers of the business from a technology perspective).

Twenty years on, and the number of IT professionals who really understand marketing and recognize the importance of marketing as a key component of IT operating strategy has, if anything, declined. Why?

Often when I ask CIOs today about the role of marketing in IT they are overcome with concern about using the term "marketing" in the context of IT. They believe people across the organization will think there is no role for marketing in IT, and that having anyone with a "marketing" title will suggest IT has too much money. Why does this fundamental misunderstanding of marketing perpetuate throughout organizations? So many otherwise knowledgeable executives think marketing is simply advertising or worse "spin." Do "marketing" job titles in IT really suggest that CIOs are trying to "sell" IT to the rest of the business? I wonder if this is a problem for IT or if it is an issue created by the perception of others outside of IT.

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Do You Need An IT Execution Plan For Social Business Strategy?

Social technology is coming into every organization whether IT wants it or not. The adoption of social technologies to support business and customer needs has been fastest outside of IT — often with IT playing catch-up and struggling to provide value. CIOs are at a crossroads where they can either choose to lead IT toward social business maturity or sit back and watch as the rest of the organization pushes ahead, leaving IT in social business obscurity. The choice is easy, but the execution is difficult. A new report — Social Business Strategy: An IT Execution Plan — suggests CIOs should assess the organization’s current social maturity and implement a plan that positions IT to successfully support a social business strategy.

Organizations are broadly categorized as social laggards, internally mature, externally mature or enterprise mature. The approach recommended for CIOs differs based on the maturity level. For example, CIOs in organizations with strong internal maturity should focus on developing a partnership with marketing in order to extend the use of social strategy out to customers and business partners.

Understand your social maturity

While very few organizations are already at the enterprise maturity level, CIOs in these organizations can take an active role in developing social business strategy by supporting the creation of a social business council and dedicating staff to support social strategy.

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What Can CIOs Learn From Marketing?

Play House at Forrester Marketing Forum 2011This week I was the lone IT analyst attending Forrester's Marketing Forum (Twitter #fmf11). Although I was there because much of my research overlaps with my colleagues covering marketing roles, I can't help feeling CIOs are missing out by not attending this event.

For many years I have believed that a successful CIO must understand marketing -- especially if he/she ever aspires to the CEO or COO role. Although today's marketing professional is more dependent upon technology than ever before, marketing is too often the part of the business least understood by IT.

With awareness comes understanding: which is why I think it is essential for IT professionals, and especially CIOs, to attend conferences like the Marketing Forum. These events help develop a much greater understanding of the challenges faced by the marketing professionals in your organization -- and will no doubt stimulate many new ideas about how IT can help.

Here's just a sampling of some of the thinking heard at the Marketing Forum this week in San Francisco:

We heard from Practice Leader David Cooperstein that CMOs are suffering a crisis of confidence: most feel they don't have enough budget, executive support, or marketing technology to meet the new digital challenge. (The CIO message: your CMO shares your pain.)

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How Secure Is Your Dumbest Friend?

You are only as secure as your dumbest friendFunnily enough, this was the question that came up at a workshop on social technology strategy, which I ran to coincide with the publication of “Social Business Strategy.” To put it into context, we were discussing the development of social media policy guidelines and how secure Facebook is as a social network. One of the participants was suggesting that Facebook can be secure because you can restrict the content to be visible to just your friends. At this point another participant jumps in with this wonderful one-line response:

“Yeah, but you are only as secure as your dumbest friend!”

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