Navigating Change: A Lesson from Netflix & Facebook

People hate change.
If you’ve ever been responsible for leading people, you know that’s the truth.
When my daughter was born, she hated having her diaper changed. She literally cried and screamed when we tried to do take the dirty diaper off her.
Recently two media giants have come under a certain amount of scrutiny because of change: Netflix and Facebook.
Netflix announced a few months ago that it would be doubling it’s price for the majority of it’s customers. Netflix separated it’s DVD and streaming packages and charged the same price for both. What was eight bucks was now sixteen
Facebook unveiled today a new format for it’s home screen. They’ve unveiled some tiny updates to their product over the past few weeks, but the rollout today is a massive overhaul of the primary user interface.
One important thing to note: Netflix amp; Facebook made no significant changes to their products; they simply changed how their product is being delivered.
The resistance to their change has been significant.
The changes announced by Netflix in mid-July have been catastrophic for the company. Some consumer surveys are reporting that as many as 30% of their subscription base could be leaving in the next few months. It’s been reported that they have lost as many as 600,000 subscribers since the end of June, representing a 4% loss in revenue.
In Netflix’s case, we’re only talking about eight dollars a month. I can’t even have a burrito for lunch at Moe’s for that (except on Mondays, of course).
Here are a few things we just need to accept about change:

  • Change is benign: It’s not always good; it’s not always bad.
  • Change is necessary: Healthy things grow. Growth involves change.
  • Change requires adjustments: Adjustments are always uncomfortable.

Since change always requires an adjustment, it’s our job as leaders to navigate it carefully.
People don’t hate change. They hate adjusting to change.
Netflix and Facebook are both guilty of two of the most significant blunders leaders make as they navigate change:
First, they didn’t establish a need for the change.
Secondly, they didn’t communicate that need before the changes were made.
This past week Netflix mailed all of its patrons a letter from it’s CEO, Reed Hastings. It opened with this statement: “I messed up. I owe you an explanation.”
Hastings went on to apologize for not personally giving an explanation of why Netflix needed to increase their prices.  He states that it wouldn’t have changed their situation (the prices still needed to increase), but it “would have been the right thing to do.”
As you process change in your organization, understand that people will always resist change because it will require them to adjust to it. However, if you take time to establish a need for the change and communicate the change prior to it’s implementation, you will dramatically increase your ability to navigate it with your people in tow, which is, after all, the goal.

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