Introduction
Change management is the process through which an organization transitions from one state to the next. The main objective of such actions is the enhancement of the current status of an institution and its position to achieve future goals and objectives. The change management process facilitates the alignment and integration of strategies, employees, structures, and culture. Netflix is renowned for its unique strategic agility which is defined by tactical responses to a variety of issues in a proactive and preventative manner (Song, 2021). The organization’s continually changing business model is designed to address emergent consumer needs and shifting market dynamics. The entertainment service provider was established in 1997 and is present in more than 190 countries globally (Chowdhury, 2020). The company experienced explosive growth after it changed the DVD rental industry and allowed consumers to access the content they needed over the internet. The increasing number of subscribers meant that streaming content from its data centers was becoming increasingly difficult. There was a real risk that the quality of its services would decline and its success in the market would be eroded.
Analysis
Image of the Type of Change
Netflix was forced to deal with a number of issues that emerged regarding the delivery of its services to consumers. The increasing number of subscribers meant that the company’s servers were struggling to manage the high load of data traffic, which increased the number of disruptions. The company also experienced an exponential rise in maintenance costs as it struggled to keep up with the increased demand for streaming services. It is worth noting that it was not always feasible to construct data centers in all the regions the company hoped to expand its services, which adversely affected its growth plans. The company recognized the need for change and it adopted the Amazon Web Services (AWS) cloud computing model to deliver services to consumers (Song, 2021). The move was meant to accommodate the large subscriber base and ensure the delivery of quality services.
Culture
Netflix often uses its corporate culture to foster resilience among its employees as a means of bolstering growth in a highly competitive market. The cultural system adopted by the organization is geared towards the realization of its value proposition as well as the maintenance of a competitive edge. (Anderson, 2019). The organization’s cultural framework facilitates the maintenance of a business philosophy, core values, and behaviors that motivate employees to support innovation and creativity. The exploration of new ideas is a key aspect of Netflix’s corporate culture. In order to compete with other players in the industry, the company creates an environment that allows employees to develop innovative strategies to combat emergent challenges (Anderson, 2019). The increasing subscriber base and resultant pressure to cope with high data traffic required the implementation of an innovative solution. AWS had the potential to address the company’s data and efficiency challenges at a fraction of the cost associated with the construction and maintenance of numerous data centers around the world.
First or Second Order vs. Adaptive or Transformational Change
There are different types of change in an organizational context. First-order changes are often reversible and incremental in nature, while second-order changes are permanent (Cockrell et al., 2019). The change at Netflix was a second-order change in view of the fact that it was multidimensional, qualitative, and radical in nature. The organization had to alter its data infrastructure, re-organize its organizational structure and implement new measures are controls designed to incorporate new technology and protocols in its business model. The changes were transformational in nature because they reshaped the entire organization. Netflix altered its business model as well as its approach to the streaming market in response to its adoption of AWS technology.
Methods for Implementing Change
Netflix applied Lewin’s three-step model to implement its change to the AWS platform. The method is considered to be one of the most influential approaches in the management of organizational change (Burnes, 2020). The three steps that Netflix implemented were unfreezing, changing, and refreezing. The unfreezing step involved the recognition of the need for change. This was evidenced by the fact that the company was experiencing a high volume of data traffic as a result of a high number of subscribers. This negatively impacted its ability to address consumer needs and limited the provision of quality services. Once the need for change was established, the company proceeded to implement the change process. The transition required the full participation of all employees and the demonstration of the potential benefits. After the transition to the AWS platform was complete, the refreezing step was implemented. The new behaviors were reinforced and incorporated into the organization’s work routine.
The Vision for the Change
The vision for the change was the transformation of the organization’s ability to meet consumer demands. Netflix needed to adopt a strategy that would effectively manage its exponential growth across the globe. There was a need to increase market share without compromising on the quality of services offered to consumers. The company needed a platform that could facilitate the use of online resources from numerous locations without the associated burden of managing information technology infrastructure (Khatri & Kale, 2021). Cloud computing services were the perfect fit for Netflix because they would allow the organization to focus on its core business functions while cloud service providers, such as Amazon addressed information technology operations.
The AWS platform provided numerous advantages to the company and was suited to address its immediate and long-term challenges. For instance, Netflix was now able to scale up services without having to make significant investments in infrastructure (Khatri & Kale, 2021). In addition, the time to market was significantly reduced, allowing the company to implement product launches quickly. The new AWS platform was characterized by increased flexibility because the company was in a position to use its resources and infrastructure when needed (Khatri & Kale, 2021). The institution was also able to reduce its overall operational costs and alter its infrastructure to suit the demands of specific markets. The AWS platform allowed the company to implement strategic initiatives such as the personalization of content in a bid to build individualized relationships with its users (Siles et al., 2019). The new platform has allowed the company to effectively adapt aspects of its subscribers’ experiences to create unique viewing experiences. The adoption of the AWS platform helped the company realize its vision by increasing its reach and its ability to deliver quality services.
Communication
The communication culture at Netflix is defined as broad, open, and deliberate. In order to ensure effectiveness in communication, the organization prioritizes the efficient dissemination of information. The need to address its growth-related challenges needed the creation of innovative ideas capable of guiding management initiatives as well as strategic decisions (Anderson, 2019). The flat corporate structure adopted by the company allowed for the quick and efficient spread of information regarding the change initiative (Anderson, 2019). As a result, Netflix experienced minimal communication challenges that would otherwise have negatively affected the implementation of the AWS platform. The ease with which employees communicated change-related challenges facilitated the implementation of remedies designed to ensure the success of the change initiative.
Overall Evaluation
The adoption of the AWS platform revolutionized the entertainment streaming industry. The change agent’s actions were commendable in view of the fact that the necessity for the implementation of the AWS platform was clearly highlighted. The challenges the organization faced with regard to the need to improve services in the face of rapid expansion were demonstrated. The change agent implemented the AWS incorporation process seamlessly, and focused on addressing challenges teams faced at each step. The prioritization of open and effective communication allowed the change agent to monitor progress, address difficulties and anticipate stumbling blocks. Finally, the change agent’s actions with regard to the institutionalization of the new processes have made Netflix one of the leading entertainment companies on the planet.
Recommendations
The decision to adopt an AWS platform using Lewin’s change model has numerous benefits for the company. However, there are various steps that the organization could have taken to increase the success of the project. First, the company should have implemented measures to ensure it has a higher degree of control over service infrastructure. Secondly, the organization could have prioritized the recruitment and employment of in-house professionals capable of addressing issues associated with cloud-based technology. Finally, the company could have implemented a more streamlined communication framework to address employee complaints effectively.
References
Anderson, D. (2019). Netflix Inc.’s organizational culture & its strategic implications. Rancord Society. Web.
Burnes, B. (2020). The origins of Lewin’s three-step model of change. The Journal of Applied Behavioral Science, 56(1), 32–59. Web.
Chowdhury, M.F. (2020). An Analysis of Netflix’s business strategy and how the company is coping with the challenges posed by the coronavirus crisis. AIUB Journal of Business and Economics (AJBE), 17 (2), 239-256. Web.
Cockrell, C., Mcburnett, D., & Ellinger, A. D. (2019). Transformational organizational change as projects: exploring the actions taken by project managers when leading and implementing change. Project Management Scientific Journal, 1(5), 67–74. Web.
Khatri, S. & Kale, S. (2021). A study on role and application of cloud engineering & cloud computing in business reengineering with reference to Netflix. Turkish Online Journal of Qualitative Inquiry, 12(3), 4409-4419. Web.
Siles, I., Espinoza-Rojas, J., Naranjo, A., & Tristán, M. F. (2019). The mutual domestication of users and algorithmic recommendations on Netflix. Communication, Culture & Critique, 12, 499–518. Web.
Song, M. (2021). A comparative study on over-the-tops, Netflix & Amazon Prime Video: Based on the success factors of innovation. International Journal of Advanced Smart Convergence, 10(1), 62–74. Web.