Innovation Tactics

Develop innovation ideas you can be proud of

Netflix: the Vision and the Strategy

In a legendary 2002 interview with Wired.com, Reed Hastings, Co-founder and CEO of Netflix, laid out the vision for Netflix that still holds true.

“”What motivates you these days?” I ask. He lifts his mouth from his cup; a trace of foam clings to his upper lip. “The dream 20 years from now,” he [Reed Hastings] says, “is to have a global entertainment distribution company that provides a unique channel for film producers and studios.” He nods toward the mermaid logo above my head. “Starbucks is a great example. Howard Schultz talks about building the brand one cup at a time. I’d love to be Howard Schultz. As Starbucks is for coffee, Netflix is for movies.” Wired, 2002

This is a milestone that Netflix reaches as early as 2013 when they have the scales to start creating Netflix Originals. And it is only one of many milestones along the way..

Learn about the near-death experiences and the key battles on the journey to achieving their visions…

Subscription business model: Netflix the complete overview

Netflix is our in-depth, real-world example to get deep insights into one of the most powerful business models of our time: the subscription business model with its crucial metrics, accounting, microeconomic and strategy knowledge

Netflix Business Model Canvas

I have covered Netflix in great detail as one of the champions of the subscription business model. Our journey has covered the most important elements of the Subscription Business Model which are:

Crucial accounting metrics: Contribution Margin, Free Cash Flows
Crucial microeconomic metrics: Customer Lifetime Value/Customer Acquisition Costs, Economies of Scale, Diseconomies of Scale
Business Management: the Flywheel & the importance of the investment cycle
Customer Value Proposition: 12 Ways to make the Subscription Business Model work
Strategy: business model canvas (this article)

Join me to get a comprehensive overview of Netflix’s business model using the popular strategy tool of the business model canvas

Netflix Business Model: is the Flywheel humming or coming off?

This article is bringing the previously described elements of the business model together into the Flywheel model. You will see that the investment cycle consisting of
(1) Content;
(2) Technology; and
(3) Marketing
is the linchpin that in relation to the competitor moves will determine Netflix’s trajectory…

Gain in-depth, real-world insights into Netflix’s business model now (btw, you can easily adapt the Flywheel concept on your own innovation idea and I’m showing how)…

Crucial Metrics: Free Cash Flow in-depth real-world example Netflix

Cash flows are important events in your business and free cash flow is a great metric that Netflix and other innovators pay great attention to:
“We believe free cash flow is an important liquidity metric because it measures, during a given period, the amount of cash generated that is available to repay debt obligations, make investments and for certain other activities or the amount of cash used in operations, including investments in global streaming content.” (Netflix, annual report 2018)

Free cash flow is an important metric in any innovator’s finances as we are often using cash (typically from outside sources) to create assets and operate our business until it generates sufficient profits to hold itself. If you look at Netflix, you will see that pattern supercharged. Here are the free (hugely negative, -$7 billion) cash flows of the recent years which show outside funds being injected into the business to invest in technology and content:

Today you will learn:
– How to calculate free cash flows
– Asset creation via capex
– Depreciation and amortisation
– Working capital as a liquidity measure
– External funding sources

Platform Business Model

One of the biggest innovation opportunities right now is the revolutionary platform business model (click here for an overview) that fuels Uber, Airbnb, Facebook, Google, ... a great opportunity for start-ups and established companies.

Innovate like Uber & Airbnb

Get a knowledge burst on sharing platform business models (click here) with ebooks & infographics
sharing platform business model

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