Netflix: A Shining Example of Leadership Transparency

I realize yesterday’s blog entry (and associated email) from Reed Hastings wasn’t really a personalized piece intended just for me.  And I realize it was likely drafted and edited heavily by a skilled team of PR professionals.  Yet, its tone was perfect.  Honest.  Humble.  Genuine.  It was everything that makes for top-notch leadership communication.

For those of you non-Netflix customers, as CEO, Reed Hastings reached out this weekend to the millions of us angered (or at least annoyed) by the recent pricing split & increase for DVDs vs streaming video from the movie rental giant.  With this one decision (and the method used to communicate it to customers), the recognized leader in its industry succeeded in alienating and losing hundreds of thousands of previously loyal customers.  In a clear damage control effort, Hastings was compelled to address the controversy.

The blog (and email) starts off with a simple statement, “I messed up.”  The intestinal fortitude it takes to publicly embrace one’s mistakes as a leader is a rare quality these days.  Rather than dance around the issue and unpopularity of Netflix’s decision, he opted to immediately and fully take responsibility.  Enough said, as far as I’m concerned.  With those three words, he won back my loyalty.

Is carte blanche forgiveness a mistake on my part, as a discerning and often demanding consumer?  Perhaps, and yet it is unusual enough to witness the genuine transparency and humble humility demonstrated by this one sentence that my emotional commitment to Netflix is restored.  After all, it’s that emotional commitment that means the most in a relationship between any company and its customers.

Sure, we can point out other similar situations in which executives have unhesitatingly taken immediate responsibility for mistakes.  Johnson & Johnson did it back in 1986 with the Tylenol scare.  Leaders at Dow Corning similarly stepped up when questions of consumer safety were raised about their silicon breast implants in 1992.  These were both issues of safety issues.  Netflix’s blunder was not.

How easy would it have been for Netflix executives to have simply hunkered down amid the public outcry, staunchly stuck to the company policy decision, and ignored pressure for even further explanation?  It’s a reaction many companies would have had.  Hastings did not, however.

Mind you, Netflix is not reversing its pricing decision.  In fact, the decision itself was not the basis for Hastings’s  apology.  Rather at issue is the way in which Netflix failed to communicate its decision (and rationale) to its customer base.  The self-proclaimed arrogance of Netflix, Hastings admitted, blinded the executive team from providing the original message in a caring, genuine, and open manner.

In any case, the handling of this negative situation by the CEO of Netflix is worth pondering.  How would your organization handle a similar customer reputation blunder?  Would your leaders (or you) be willing to publicly apologize in such a way, or does your corporate culture shy away from such transparency?

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