A few months ago, I wrote a blog called Your Business is Your People where I gave three real examples of people structure fails. I wanted to continue this topic in greater detail after it stirred up lots of conversation!
When I ask people what makes a successful business, the most common answer is a good product with market demand. While this is true, I stand by that business, both success and failure, boil down to people.
A good product with market demand does not maintain long-term success without great people behind it. The product needs to be developed, the market demand analyzed, and people who have the foresight to predict the future development.
Let’s look at some examples, shall we?
HD DVD vs Blu-Ray
Toshiba thought it had the next best thing in DVD tech. Their people probably worked tirelessly with the business team to produce better DVD quality. Sadly for them, Sony had developed Blu-Ray, a far superior product. Many people would say this is proof that the product deems the success, but I say it is due to the people. The Sony team didn’t seek to only improve the DVD. They wanted to overhaul it with the expansive realm of new technology being developed every day. In this case, a new blue laser. They didn’t keep the blinders going, only looking into their DVD design; they looked at the possibility to go further.
Sony’s move was actually really bold. They gambled that people would buy a completely new, and significantly more expensive, DVD player in order to have their Blu-ray technology. And they were right! They knew their market, and they knew the technological possibilities. When BlockBuster tested HD movies against Blu-Ray, they found over 70% of rentals were Blu-ray. People preferred the quality. Even with the streaming options we have now, Blu-ray technology has kept up with the ultra high definition TVs, and still holds a top place for video quality after 10 years on the market.
NETFLIX vs Blockbuster
As Blockbuster pushed the cost of renting movies higher and higher, at one point renting for up to $7.00 a day for new releases, a group of people had a better idea. They felt that the consumer would wait for a mailed DVD rental, for a lower cost, over instant gratification at blockbuster. They could offer this less expensive option because they did not require expensive retail space. Meanwhile, Blockbuster’s people thought they were competing with movie theaters and priced themselves competitively in that market space. They did not have the foresight for what was coming.
Hastings (founder of Netflix) is often quoted saying that he decided to start Netflix after being fined $40 at a Blockbuster store for being late to return a copy of Apollo 13
The assumption the creators of Netflix gambled on was right. People absolutely would rather wait for shipping over renting a movie for $7. By 2005, Netflix was shipping out over one million DVDs each day, building a strong revenue pipeline with little overhead compared to their retail store counterparts. They started in one area in California and eventually expanded to 190 countries.
But they were not close to being done. They scaled themselves appropriately and allocated funds smartly. They knew anyone could enter their space for mailing DVDs, but they had a secret weapon. They understood it was only a matter of time before internet connectivity could allow them to do something completely new, streaming live video.
Fast forward a few more years, other streaming companies were on their heels like Hulu and Amazon (oddly, the Netflix people were originally inspired by Amazon’s business model), but Netflix had brilliant people working for them. Those people knew competition would grow. They had saved their revenue to create their Netflix Originals production team, something only they would and could offer.
With everything Netflix does, they seek to hire the best people to stay ahead of their competition. They didn’t seek to make mediocre network TV productions; they sought to blow major Hollywood production companies out of the water. And they achieved it. Prime time TV shows do not come near the production quality of House of Cards or Orange is the New Black. The closest TV network with quality productions is AMC. What did Netflix do? Partnered with AMC have their shows like Breaking Bad and The Walking Dead on Netflix.
These brilliant and calculated business plans with R&D and straight up creative minds….it is all people. The best damn people they can find.
And blockbuster? Did you already forget about them? Their people never saw it coming.
APPLE
Steve Jobs will go down in history as one of the most brilliant minds for economic markets, business savvy, and product development. In everything he did, he wanted to be the best and was never willing to compromise quality or innovation.
If you still think that people are not the most impactful part of your business, then let’s take a closer look at Steve Jobs.
While everyone knows he was the founder and CEO of Apple, many do not know he left Apple in 1985. Apple saw great success in their early years with the development of the Apple I and II personal computers as well as the Apple Lisa. But in 1985, Steve Jobs was pushed out of the company because of a power struggle. And while it may have seemed to everyone that he lost this struggle, he ultimately won. Steve Jobs went on to create NeXT and play a significant role in Pixar’s start. By 1997, Apple was facing bankruptcy without him. Steve Jobs returned as CEO of Apple in 1997 and immediately began developing the Apple brand we know today.
I remember in the early 2000s when computer companies were all working tirelessly to make a cheaper computer with more and more discount brands hitting the shelves. Suddenly news reports started to blow up with computers catching on fire, security risks, and consumer advisories. And while hundreds of people were focusing their energy on making a $200 computer, Apple was making a $2000 computer that was stylish, well made, secure, strong, with cutting edge features.
The most significant change, though, was the newly created Mac OS X which took Steve Jobs’ NeXT unix-based platform into the hands of the masses. For a while, people all thought they were crazy. Why would anyone buy something for $2000 over $200 that did the same thing? But Steve Jobs knew what they had.
Steve Jobs was successful in everything he touched. Because at the end of the day, your business really is your people.
Want more on Netflix’s people policies? Check out their 125 slide presentation on their brilliant people culture.