I often write about the need for focus in strategic planning.
Experience has shown me that while it is tough for companies to say no during the formulation of the plan, it is even more challenging when it comes to implementing the plan.
Recently, I heard Netflix co-founder Mitch Lowe tell a story of about Netflix CEO Reid Hastings that demonstrates how radical focus can appear---and ultimately how much value it can create for an organization.
In the early days of Netflix, when the primary business model was shipping DVDs, the company built a department to sell ads on the envelopes their product was shipped in. This was a potentially lucrative revenue stream for Netflix, and seemed to fit well with their business model. A sales team was hired and the list of advertising clients quickly grew. After several months, there was a hiccup. An advertiser didn’t approve the art on an envelope and the back and forth resolution of the issue caused a one day delay in the shipment of DVDs. So how did Reid Hastings respond to this one time, one day delay? He told the head of that department that nothing was going to threaten Netflix’s core business---shipping DVDs on time-- and he immediately shut down the entire advertising operation.
For an early stage company to give up a profitable revenue stream was radical, especially when ads were estimated to potentially be $30-$40M opportunity. Reid Hastings’ decision communicated to everyone in his organization, from his executive team down to the most junior employee--that Netflix was operating with laser like focus.
As you think about your organization, where is your focus compromised? Do you and your fellow executives have a clear strategic vision for the company? Are decisions that reinforce focus made frequently and communicated freely?