At a time when Netflix's earnings report has turned upside down for two consecutive quarters, the number of global subscribers has lost 200,000 yuan in the first quarter, and the stock price has fallen from the highest $700.99 touched on November 17 last year to $180.97 today, saying that the decline of "Netflix culture" may seem a bit "falling into the ground".
But recently, according to The Hollywood Reporter, one of the two major newspapers in the American entertainment industry, several important creators of Netflix have increasingly pointed out that the streaming giant's corporate culture is wrong.
For Netflix, why mention the impact of corporate culture on it?
That's because in the more than two decades since Netflix's inception, its eclectic corporate culture has been the key to its success time and time again.
Netflix founder Reed Hastings once commented:
"If there is any secret to Netflix's success, it may be our unique corporate culture."
Some media also commented: If it is innovation that helps Netflix defeat Blockbuster in business, and it is content that helps Netflix defeat HBO in the 2018 Emmy Award nominations and end its supremacy of the total number of nominations for 17 consecutive years, then corporate culture is the ultimate force that helps Netflix build a high-performance team with great innovation ability and content production capacity, promote the company's exponential development, and surpass the 92-year-old Disney at the age of 21.
Legendary Netflix: No disruption, no innovation
Netflix is a legendary company that has been in the market as a disruptor since its founding in 1997.
First it was born for subversion. Netflix was born out of a poor consumer experience for founder Hastings, when he rented a film from Blockbuster, which had dominated the disk rental industry for many years, and had to pay a high late fee for overdue payments.
Hastings felt that this business model that hurts the user experience must not go far, so he co-founded Netflix with partner Marc Randolph and tried online membership, adjusting the single-piece rental to a monthly subscription. This business model was immediately successful, and Netflix suddenly became the leader of the rental market.
Then it was subverting itself. After becoming the leader of the rental market, Hastings was keenly aware of the threat that streaming video site YouTube posed to the entire DVD rental industry. After streaming media became the outlet, Netflix actively transformed, announcing its full entry into the streaming media business in 2007, and in 2011, it was all in the streaming media business, and completely dismantled the DVD rental business that started.
It still adopts a membership system, with ad-free high-quality video resources, attracting a large number of members, so that the revenue doubled.
Then there is the subversion of the global film and television industry. After the success of All in Streaming's strategy, in recent years, Netflix has realized the importance of content and begun to invest heavily in self-made dramas, and "House of Cards" has become a hit, and new quality content has continued to emerge, thus attracting more members and generating more revenue.
Although Netflix is in the ever-changing media market, it relies on subversive business transformation to stand in an invincible position, creating countless business myths in just over two decades, and once becoming the world's highest market value media company, together with Facebook, Amazon, and Google, known as the "Four Musketeers of the U.S. Stock Market".
"Netflix Cultural Handbook": Demystifying the Genetic Code of Culture
Behind the legendary business path of Netflix is inseparable from the founder's keen business insight and excellent risk decision-making ability, but it is more related to the overall extraordinary execution and creativity of Netflix.
Behind this is the corporate culture code of Netflix.
Netflix's corporate culture is mainly composed of "freedom" and "responsibility", the core means to return power to employees, so that they can fully exert their abilities and fulfill their responsibilities in a free environment.
It is also under the blessing of excellent talents and such culture that Netflix, who has transformed from a content distributor to a content producer, can contribute such excellent works as "House of Cards" and "Love, Death, and Robot Season 1".
In fact, Netflix has long found that the corporate culture system established in the 20th century can no longer meet the needs of its own growth. It takes the initiative to subvert and innovate the old cultural system, and constantly promotes the evolution of the new system, creating a new cultural system suitable for the current Netflix style.
In 2009, Netflix circulated a PPT about its corporate culture, revealing its cultural genetic code.
Compiled by Netflix founder Hastings and Patty McCord, a 14-year chief talent officer at Netflix, the document went viral in Silicon Valley, with more than 15 million reads and downloads. Sheryl Sandberg, Facebook's chief operating officer, even said, "This is the most important document in Silicon Valley." ”
Later, the document also quickly spread to China, causing a great sensation and once becoming a model for domestic startups to follow.
In 2018, Patty McCord reintegrated and integrated this document to launch a new and upgraded Netflix Culture Handbook, which summarizes the eight principles of Netflix's corporate culture.
Including adults only.
Implicit here is the symmetrical relationship between freedom and responsibility. Treat employees like adults, trust them to be capable of self-management, give them enough space, and they can grow and take off. Therefore, Netflix does not have a leave system, and employees can take time off when they think it is appropriate, as long as they consult with the manager.
Freedom enables people to be more creative and enjoyable in the performance of their responsibilities, but those who enjoy freedom must be self-disciplined and able to assume corresponding responsibilities.
Including absolute candor.
Meeting at Netflix to discuss work can always be straightforward and frank in expressing opinions, without bending over backwards and without considering the subtle psychology of the participants. Because Netflix believes that only absolute honesty can get truly effective feedback.
The Netflix Cultural Handbook writes: One of the most important requirements of Netflix is that employees openly discuss issues. Whether it is for grass-roots employees or senior managers, it is the same requirement, and it is hoped that all employees can communicate frankly and honestly in the company anytime and anywhere.
Netflix doesn't want someone to criticize others behind their backs, let alone office politics, not only because it's dirty, but also because it's so inefficient. Therefore, Netflix requires managers to be honest and exemplary, not only to be honest about achievements, but also to be honest about problems and frank mistakes. There will certainly be people unhappy about this process, but they believe in the value of transparency.
Including that only facts can defend an opinion.
Netflix executives love to debate and encourage employees to be good at defending their positions on the basis of facts. There is a great danger in the marketplace that someone wins an argument because of their own strong persuasiveness, rather than relying on the opinion itself. Therefore, the Netflix debate requires that everything be based on facts, and there is sufficient evidence to support this fact, and "user experience" is always the most fundamental starting point.
In addition, as an Internet company, the "fact-driven" emphasized by Netflix is not "data-driven". As a premium content producer, when Netflix decides whether to launch a film, it does not end with audience reaction data, but uses this data as a starting point to torture its own understanding of these reactions.
Speaking with works: "Netflix culture" is wrong?
Ultimately, culture is a strategy for how employees work, and it helps companies think more deeply and experiment. Therefore, the corporate culture will eventually fall on the behavior of employees, displayed in products and services, and get feedback from the market.
In other words, whether the corporate culture is in trouble, the simplest and most direct thing is to speak with the work.
At the end of 2021, Netflix released a New Year film "Don't Look Up", from the lineup, the director/screenwriter and actors of this drama are impeccable, it is not difficult to see that Netflix has high hopes for this ironic social comedy, but the word of mouth after the release has backfired.
Rotten Tomatoes rating
The reason is that industry insiders believe that Netflix did not fully abide by its corporate culture when making this movie.
As the fourth article of the Netflix Cultural Handbook: only facts can defend opinions, and data is not exactly facts. This data should inform directors and screenwriters, not dominate and make directors and screenwriters invisible.
The laughs of "Don't Look Up" are dense, but basically in a shallow taste, as if the algorithm is urging the director: the audience is about to get bored, hurry up and make them hi! In the end, the content and rhythm of the whole work fell into the cliché.
Although Netflix is deeply aware of this and written in its own cultural manual, in the face of the temptation of rapid returns, Netflix, which is not bad money, is still drifting away on the road of big data pleasing the audience.
There is some truth to this view. Netflix's "House of Cards" is the winner of big data, and Netflix is also happy to strengthen its data labels to the outside world. In the end, Netflix will use machine learning algorithms to integrate the user's movie viewing data and the labels played by the professional team, and under this set of rigorous algorithms, Netflix is convinced of its technical ability.
But big data is not everything, from the perspective of works, although occasionally can contribute to the "Squid Game" such a masterpiece. But there are still many films such as "Love, Death, Robot Season 2" and "Red Notice".
Previously, after Netflix's earnings report on April 20 caused the stock price to plummet by more than 25%, Tesla CEO Musk tweeted that the "awakening spirit virus" made Netflix's program impossible to watch.
Musk has said that the "woke mind virus" is "one of the greatest threats to modern civilization." In an interview with the conservative satire website BabylonIan Bee last December, Musk criticized the "awakening" phenomenon, calling political correctness one of the greatest threats to civilization and slamming the "awakening agenda" and "dismantling culture."
Musk says:
"Humor should be okay, 'Awakening' basically wants to make comedy illegal, which isn't cool at all," "Do we want a society without a sense of humor, full of condemnation and hatred?" ”
Analysts commented that Netflix's success stems from the pursuit of quality talents and a culture of freedom and responsibility. But the directors, screenwriters and actors who are led by big data have neither freedom nor responsibility.
Internally, Netflix: Forced to embark on a profound corporate culture change
Returning to the beginning of the article, the Hollywood Reporter claimed that several important Netflix creators pointed out that there was a problem with Netflix's corporate culture, which they believed was related to the departure of Cindy Holland, the founding vice president in charge of original content in early September 2020.
Holland played a key role in the launch of Netflix's originals, such as House of Cards, Women's Prison and Stranger Things, which were excellent, but often costly.
The Hollywood Reporter quoted the sources as saying that Holland has built strong relationships with talent and spends a lot of time providing thoughtful development notes while making them feel safe and supported in pursuing projects they love.
Important people who have worked at or worked with Netflix said that it was Holland, not Ted Sarandos, who was Netflix's chief content officer at the time, that allowed Netflix to continue to produce popular high-quality programs. One of the people said:
"These are based on Holland's taste, and I can name a list of people who are willing to lie on the rails for her." Sarandos is, in a way, just a great cheerleader. ”
For a while, as Netflix launched more original works, it seemed to become an unstoppable force, with membership growing, though some questioned the potential economic benefits of its business.
But a former insider said sarandos' sales strategy was beginning to prove destructive to the company's culture and the quality of its service products.
"Sarandos is good at performance growth management, but the company has reached a stage where it needs to take a different approach to management," the person said. Holland's big investment is a question of sustainability, but several creators argue that Netflix lost much of its early fame because it overstepped to cheaper, less curated and less compelling shows (the company might call it "broader themes"), while leaving some subscribers feeling overwhelmed and bored.
According to multiple sources, Bela Bajaria, a former CBS and Universal Television executive, became Netflix's unscheduled and international content chief in 2016, representing a huge turning point. At the time, Holland was in charge of 80 TV series, while Bajaria was in charge of 60. "What company can shoot 140 films a year?" A creative asked. "It's crazy. It was then that a culture of fear began to prevail. ”
Since then, the demand for larger quantities has not diminished. A well-known supplier of Netflix said that under the leadership of Bajaria, Netflix began to "Walmartize" (cheap streaming).
Some of Netflix's executives began to worry about the rapid growth in the number of shows, the sources said. One former insider said: "The idea was, 'Hey guys, don't you think that's enough?' Because we're making garbage. ’”
Then there are concerns about the lack of quality control. A key creative talent who has worked with Holland to succeed thoughtfully says:
"I suspect, for example, that a chimpanzee throwing feces on a whiteboard full of creative project names to decide which project to make is more successful than 'decision makers' who think they know what shows users want or don't want."
Holland's last TV series for Netflix was "The Queen's Gambit," an expensive historical drama that was derided by some insiders as "Holland's Folly," according to sources. According to sources, Bajaria and her team are dismissive, or even dislike, the team working on the project. But when the series became a phenomenal work, Bajaria was often praised in the media.
Sources said Holland expressed dissatisfaction with the overall strategy, but received a response that if one in ten shows worked, things would go smoothly.
"It was one of the things Holland and Sarandos had disagreed on for a while, and she was the only one who would say no to Sarandos. Holland also objected to sarandos' expensive publicity for the Academy Award for Best Picture, holland saying: 'You're losing the city.' The Oscars can't be bought for money. It was another thing that made Sarandos angry. ”
In July 2020, Sarandos was promoted to co-CEO of Netflix. In September 2020, Sarandos personally "invited" Holland, replacing her with Bajaria.
Bajaria underwent a major restructuring after taking office, and the departure of some senior executives profoundly affected Netflix's original content production department and created an unstable working atmosphere.
At that time, an executive who worked in Netflix's original drama department said bluntly: "It wasn't like this in the past, but who is the next (person to be fired)?" Do I still have any work to do? What does the future hold? Many employees also revealed that the morale of Netflix Company was declining and people were restless.
Holland has been criticized for spending money too haphazardly, while Bajaria is known for cutting budgets. Multiple sources said the Netflix practice had been going on for at least a year and was clearly intensifying.
Another key Netflix talent agreed that "Holland's departure opens up a profound corporate culture change," but he also added an important caveat:
"Netflix culture is a culture of adventurousness and mavericks. But now more cautious, often indecisive. But another fact is that there was no cost control in the Holland era. Therefore, this business model is not sustainable. This is a fact. ”