Case Study Reed Hastings Leadership & Governance of Netflix

Question: 1. Analyse the following questions based on the case scenario. You need to present and EVALUATE the facts and explore the hidden leadership principles behind these facts? How did Hastings change his use of communications in sending and receiving messages from Pure Software to Netflix? How did Hastings change his use of feedback from Pure Software to Netflix? How did Hastings change his use of coaching guidelines from Pure Software to Netflix? Which conflict management style did Hastings tend to use at Pure and Netflix? In making a deal with Epix, which conflict management style was most likely used by Netflix? 2. How would you improve Netflixs product offerings (i.e., what things cant you watch that you would like to watch) or processes (i.e., how can it improve its delivery or service)? 3. Which level or levels of analysis and leadership paradigm are presented in this case, and did Hastings use the management or leadership paradigm? 4. How did Hastings Big Five model of personality leadership traits change from Pure Software to Netflix? 5. Which University of Iowa leadership styles did Hastings use at Pure Software and Netflix? 6. Explain how power, organisational politics, networking, and negotiation are, or are not, discussed in the case? Answer: 1. Introduction Effective leadership is the key to success for all organisations (Armstrong Stephens, 2005). No organisation can survive in a long run without having a clearly defined and realistic vision and this vision is created by a leader who lives by the values that supports his vision. Leaders possess the inherit charisma with which they influence their followers to live by values. The case depicts various leadership styles and theories practiced by Reed Hastings, CEO Netflix. It studies how change in leadership style helped Hastings in making Netflix the worlds leading internet subscription service that enable customers enjoy numerous movies and TV shows. Founded in year 1997, Netflix today operates in around 50 countries and has above 50 million subscribers (Netflix, 2014). Reed Hastings is cofounder of Netflix which he started after his former company Pure Software was acquired by Rational Software. Hastings is an active educational philanthropist and had been one of the board members of companies like Face book and Microsoft. Hastings communication style at Pure Software and Netflix Effective communication is the greatest strength of an effective leader (Bass Bass, 2009). Communication is the process by which sender transmits its message to the receiver through verbal, non-verbal or written signals (Blundel Ippolito, 2008). In order to maintain a healthy relationship with employees it is essential that all important information are effectively communicated to employees which further helps enhancing job satisfaction and reducing uncertainty. Effective communication is primarily responsible for building a knowledge sharing workplace culture (Fielding, 2006). At Pure Software Hastings used autocratic leadership style wherein he imposed his wishes on his people. He preferred one-way communication wherein he never encouraged his people to openly share their views and ideas. He never asked his people for their input and made all decisions by himself. He used negative verbal and non-verbal communication style wherein he rolled his eyes and passed critical comments wh en he found that ideas shared by employees were not useful. This way of communication greatly de-motivated his employee who refrained themselves from participating in any discussions. Authoritarian leadership communication style result in creation of task culture where people are judged based on their level of productivity and not quality (Murithi, et al., 2011). However this communication style result in an increase in productivity in presence of the leader only and when the leader is absent productivity tends to decrease. It results in high level of aggression among employee which ultimately leads to high attrition rate. At Netflix Hastings wanted to develop a workplace culture where people enjoyed coming everyday thus he preferred participative leadership style. Participative leaders encourage two-way communication where employees are encouraged to openly share their views and participate in decision making (Daft, 2014). Hastings encouraged his employees at Netflix to provide inputs and used positive communication style like further questioning them over their ideas. The main advantage of this communication style is that employees display high productivity and quality even when the leader is not present. Culture at Netflix is similar to entrepreneurial culture where people are highly motivation and display high degree of creativity and innovation. However leaders using this form of communication is at times taken for granted as they do not make use of their powers to direct employees. Hastings choice of feedback method at Pure Software and Netflix Feedback is a process where in one party gets the input from other party on the work done by first party for second one (Bakliwal, 2011). There could be different way of communicating feedback, however most effective and constructive way depends upon the time and basis on which it is given. Generally every manager or supervisor should provide feedback immediately to their employees as soon as the work gets completed and it should always be given on the basis of some facts and statistic (Fox, 2007). It should not always be subjective, but good mix of objective and subjective contents. It also depends on the leadership style, as we can see that in Pure Software, Hasting followed Stop, Start and Continue approach to provide feedback to its employees. It represents or similar to autocratic leadership style where in manager gave his employees step by step directional order, like when to stop, start and when to continue. In this feedback process, there is only one way of communication proc ess which flows from boss to its employees. Drawback of this process is that employees decision making process becomes dull and they just followed the order given to them by their supervisors. However, in Netflix he followed participative approach wherein he showed respect to its employees as well. He adopted Feedback Sandwich method, where in process start on constructive note and then discussion goes on how to improve things and again end with on a positive note. Hastings choice of coaching guidelines at Pure Software and Netflix Coaching is defined as the process by which leaders provide motivational feedback to their employees which further helps enhancing their overall performance (Hellriegel John W. Slocum, 2011). Choice of coaching guidelines depends on leaders choice of leadership style. At Pure Software Hastings used autocratic leadership style where followers are forced to follow the path showed by the leader. However in case of Netflix he used participative leadership style where followers are encouraged to choose their own ways of working and the leader acts as a part of the group. He uses his skills and expertise to support employees in making their own decisions. At Netflix Hastings focused on developing a supportive working relationship by supporting his employee in finding right solutions. He stopped blaming and embarrassing his employees and started praising them and recognising their efforts. He stopped focusing on productivity of the employees and started emphasizing on their behaviour and p erformance quality. Employee where empowered enough to make their decisions and evaluate their outcomes. He emphasized on providing timely but flexible feedback that was specific and descriptive in nature. At Netflix he used job instructional training so that employees feel confident about their decisions. They were no more criticised if their solutions were not up to the mark. Hastings choice of conflict management style at Pure Software and Netflix Conflicts are very common in a human environment and leaders choice of conflict management style determines the culture of an organisation (Hall, 2008). Forcing conflict management style was used by Hastings at Pure Software where his ultimate goal was to get the tasks done by his employees according to the ways directed by him. Aggressive and uncooperative behaviour characterises forcing conflict style where the leader is just concerned about satisfying his personal interest and has no concern about interest of his followers (Bakliwal, 2011). This style helps making tough decisions that are more effective than decisions made as a result of compromise to meet the expectations of all. Excessive use of this style creates a negative image for the leader. Collaborating conflict management style also called as problem-solving style is used by Hastings at Netflix. Assertive and cooperative behaviour characterises collaborating conflict style where the user assertively tries to resolve the conflict by involving other people and solves the conflict in a way that it satisfies interest of all members involved (Blundel Ippolito, 2008). All members involved in decision making are more concerned about their own interest however emphasis is made to solve the issue in a way that its benefits all. This style delivers the best possible solution for an issue as it involves assertiveness. This style however requires more time, skills and efforts to resolve a conflict. Hastings conflict management style for making a deal with Epix Negotiating conflict management style was used by Hastings to win the Epix deal with Netflix. This style resolves the conflict by using the principle of give and take (Daft, 2014). The solution is beneficial to both the parties involved and they take advantage of each others expertise. It is also referred to as compromising style which maintains a balance between assertiveness and cooperation. This style consumes comparatively less time and efforts and also helps in maintaining healthy interpersonal relations. The main disadvantage of this style is that people involved many times play games by making demands that are not justified (Armstrong Stephens, 2005). Hastings made a choice of this conflict management style as the deal was complex in nature and he wanted to decide on terms that favoured both the parties. 2. Recommendations for improving product offerings and processes of Netflix Netflix should make further attempts to improve their customer services. They should conduct online surveys and other campaigns to collect as much customer feedbacks as possible. Existing customer comments on online forums reveal that they feel Netflix services are overpriced. They should conduct competitor analysis to find out ways by which they can provide their services at comparatively affordable prices. They should focus more on their marketing strategies and promotion techniques so that they can reach more customers and spread brand awareness. They can use various sales promotion techniques like discount coupons and customer loyalty cards in order to retain customers. They should try uploading latest videos and movies in order to meet customer demands. DVD-by-mail service is expected to grow in near future thus Netflix should focus more on improving this service. In order to become more social they should incorporate improved fan/ community features within their services. Netfl ix should not be treated as a service but a network that connects people with common interest. Attempts should be made to become a customer-oriented subscription service but meeting the demand of todays dynamic customers. They should keep track of their loyal customers and should update them when their desired videos and movie arrive. This will help them increasing brand loyalty. 3. Leadership paradigms presented in the case Classical and transformational leadership paradigms are the two paradigms presented in the case. At Pure Software Hastings displays the use of autocratic leadership style wherein he directs his followers to get the work done according to his ways. Hastings leadership style at Pure Software is an example of classical leadership paradigm where he is seen as a directive leader who is task-oriented and has no interest in growth and development of his followers (Fox, 2007). At Netflix Hastings chooses to change his leadership style to participative leadership style wherein he encouraged his employees to share their views and be innovative. His leadership style at Netflix is an example of visionary/ transformational leadership paradigm where the leader is people-oriented and is greatly concerned about the growth and development of his followers (Blundel Ippolito, 2008). Hastings had a vision for Netflix and used innovation as a means of achieving his vision. 4. Hastings big five personality leadership traits at Pure Software and Netflix Hastings displayed a completely different personality at both his companies. Openness: Hastings displayed high degree of creativity at both the companies however he was more open to new ideas and options at Netflix. Stability: Hastings displayed remarkable problem solving capabilities at both the companies however at Netflix he showed more stability as compared to Pure Software and never embarrassed his employee if their ideas where not up to the mark. Sociability: Hastings is seen to be an introvert at Pure Software and as an extrovert at Netflix. Thus his sociability has increased at Netflix as compared to Pure Software. Agreeableness: Effective leaders are always seen to possess low level of agreeableness. Hastings encouraged his employee to share their views however also asked them to show how their ideas will actually work. Thus he possessed low level of agreeableness. Conscientiousness: Hastings is always seen as a goal-oriented leader who puts in best efforts to achieve desired goals. At both Pure Software and Netflix he displayed high level of Conscientiousness. 5. Hastings choice of University of Iowa leadership style at Pure Software and Netflix Autocratic leadership style is used by Hastings at Pure Software where he never asked his employees for their inputs and made all important decisions by himself (Bass Bass, 2009). He is seen as a task-oriented leader who is not concerned about his employees and treats them as mere machines. However at Netflix Hastings used democratic leadership style and is seen as a people-oriented leader who is greatly concerned about the growth of his employees (Bass Bass, 2009). He encouraged his employee to provide input and considered them while making important decisions. At Netflix he is respected by his employees and is seen as a role model. He is the prime reason behind the remarkable success of Netflix. 6. Analysis of how organisational politics, power, negotiation and networking are discussed or not in the case The Reed Hastings-Netflix case depicts in a very effective manner how choice of leadership style affects the growth of an organisation as a whole. Hastings use of power has been effectively discussed in the way he embarrassed his employees at Pure Software and made them follow his rules (Fairholm, 2009). Throughout the case there is almost no mention of how Hastings handled issues like organisational politics. The case discusses about the contract between Epix and Netflix but does not go in details how Hastings used his negotiation skills to win the contract. Also there is no mention of how he used his negotiation skills with his employees and clients. Networking is discussed in the case but not in details enough to understand its role in the remarkable success of Netflix. Conclusion Leaders choice of leadership style and theories frame the culture of an organisation and is primarily responsible for the motivation of its employees. Leaders always act as a role model for their followers and tend to live by their values to achieve common organisational goals and performance objectives. An in-depth analysis of the case reveals that its Hastings change in his leadership style, communication, feedback and conflict management style that has made Netflix what it is today. It shows that people-oriented leaders always create a workplace where employees enjoy coming every day. References Armstrong, M. Stephens, T., (2005) A Handbook of Management and Leadership: A Guide to Managing for Results. London: Kogan Page Publishers. Bakliwal, V. K., (2011) Production and Operation Management. New Delhi: Pinnacle Technology. Bass, B. M. Bass, R., (2009) The Bass Handbook of Leadership: Theory, Research, and Managerial Applications. New York: Simon and Schuster. 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