Embracing Change: Lessons from Netflix for Small Business Success
Feb 17, 2025
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Feb 17, 2025
By Bob Rogers of SBTDC Asheville
Did you ever wonder why Blockbuster failed while Netflix grew into a $39 billion business?
In 2004, Blockbuster was thriving, boasting 9,000 stores and $6 billion in revenue, far surpassing Netflix’s $500 million. Yet, just nine years later, Blockbuster filed for bankruptcy while Netflix’s revenue had surged to $4.37 billion.
While several factors played a role, the primary reason was Blockbuster’s failure to anticipate and respond to change—changes in customer preferences, technology, competition, and delivery models.
Blockbuster remained committed to its brick-and-mortar model, believing that its past success meant there was no need to innovate.
In contrast, Netflix studied changing consumer preferences, recognizing that people preferred shopping from home and valued the convenience of home delivery. Consumers also preferred a monthly subscription plan to a per-movie fee model. Netflix also recognized the untapped potential created by advances in streaming technology.
Netflix designed their model to capitalize on these changes. In 2007, they were one of the pioneers in entertainment streaming services. At the time, the only widespread streaming services were iTunes, YouTube and Amazon Unbox. There was no Amazon Prime, Disney+, Hulu, Apple TV, or Peacock.
Innovation became a core company value. Netflix pursued global expansion and is currently in over 200 countries with local content and languages. They began creating original content including hits like “House of Cards”, “Orange is the New Black”, “The Crown” and others. They were also one of the first to use data analytics and machine learning to personalize content and tailor original programming.
The result: a staggering 7800% growth in 20 years! In 2024, Netflix revenue was $39 Billion dollars. Their Net Income: $8.7 Billion dollars.
How can small business owners learn from Netflix’s success??
Business owners must leverage strategies that focus on:
Since we cannot cover all these strategies in one article, let’s focus on one essential tool that every business, regardless of size, should implement immediately—an “Embracing Change Committee.”
The purpose of an Embracing Change Committee is to ensure the company consistently and intentionally evaluates opportunities and challenges related to change. Even sole proprietors can incorporate this concept into their business planning.
The committee should include a diverse mix of employees from all departments and levels, including the CEO/owner. Business owners should also consider including younger team members, who often bring fresh perspectives and openness to change. The committee should meet at least quarterly, dedicating a half-day to discussions.
To maximize effectiveness, committees should concentrate on key areas of change that impact businesses. Below are 11 major areas that should be regularly assessed:
At each quarterly meeting, the committee should analyze developments in each of the above areas, focusing on how changes create new opportunities. For example, the Market Conditions discussion should focus on economic trends, shifts within the industry and emerging competitors. What is happening in the economy now and in the future? What new competitors have emerged or will emerge? Which competitors have left the market?
More importantly, they should discuss how these factors will affect their company and what new opportunities are now available.
To optimize the process, assign an individual to be responsible for each of the eleven areas. In smaller companies, one person may oversee multiple areas. Prior to the quarterly meetings, each individual is responsible for gathering current data about their area of change.
For example, the individual in charge of Market Conditions would gather information about economic forecasts, new competitors and industry trends. Having current background information enhances the effectiveness of the meetings.
I encourage business owners to implement recommendations generated by the Embracing Change Committee. One of the biggest demotivators for employees is seeing great ideas discussed but never acted upon.
The Embracing Change Committee provides a structured way for businesses to proactively monitor shifts in the marketplace and leverage change as an opportunity rather than a threat. The SBTDC can help your business think like Netflix—not like Blockbuster!