The Innovation Imperative: Decoding the Netflix Model and Nokia's Missteps
An insight into what fuels innovation, from Agile-Leads founder and Enterprise Agile Coach, Rebecca Hudson.
I’ve had the benefit of working in lean, agile environments with the ability to pivot and innovate for most of my career. For the past 13 years I’ve worked in technology consultancies, digital creative agencies and software companies.
Prior to that back in 2002, when agile was in its infancy in the US, I had my first ‘proper’ job at Arla Foods. It started with a secondment during my second year of University, which expanded to a part-time role in the Marketing Team in my third year and then a full-time position on graduation.
I’ve always felt so fortunate that I worked for this Swedish / Danish FMCG company. The culture was very egalitarian, in a laid back Scandi style. As I’d climbed the ranks two out of three of my bosses were women. The CEO and VPs of our Marketing & Innovation teams were women, and an ethos of innovation and creativity prevailed.
In our department we had an R&D team who could roll out new products to a rather particular UK market. They worked closely with the Danish and Swedish teams to tweak products which were popular in Europe so that they might work for the UK palate.
After 3 years at Arla we merged with a large, traditional British dairy company. There was an influx of blue suited businessmen, intently focused on the bottom line. Revenue became the ultimate focus above all else. This culture shift wasn’t for me, and after 6 months I left and joined a creative agency.
19 years later and we live in a world where it’s sink or swim. Innovate or die!
Companies must have the right business environment in place, with the ability to be agile, to weather the storm and come out on top.
What fuels real innovation? Why do some household names fail to keep up?
In traditional organisations companies may adopt an accelerated innovation pipeline, or host Ideation competitions. Some incumbents build Greenfield digital teams to support rapid innovation. However, these models tend to have varying success and short-lived results.
Why do companies fail to innovate? I’ve looked at two starkly different examples: Netflix and Nokia
Nokia
The rise and fall of Nokia is a well known case study in how not to let rapid growth become your downfall. It is widely cited that the following characteristics of their business led to the sale of the handset division to Microsoft in 2013:
Lack of innovation: Nokia's failure to innovate quickly enough and produce compelling smartphone products contributed to its declining relevance in the industry.
Organisational issues: Hindering their ability to adapt rapidly to the changing smartphone market were issues with:
Internal conflicts
Bureaucracy
Cultural challenges
Netflix
Without values and principles such as those at the heart of the Netflix business model (see below), ones which are exemplified by a transformational leadership team, real innovation will not be a staple of an organisation.
How can incumbents harness innovation to stay ahead?
It’s perhaps unfair to compare Nokia to Neflix, as this is comparing an incumbent to a start-up.
More specifically we can look at three types of organisation:
Encumbered Incumbents
Lean Start-ups
Lean Incumbents
Features of Innovative Organisations
To build digital business agility and thus organic innovation, there are key elements that are essential:
Novartis is a great example of an incumbent harnessing agility to deliver true innovation. They have created what they term an ‘unbossed’ environment.
““The real value of human capital is the ability to innovate in extremely complex situations. Making sense of very complex situations requires a different type of leadership.””
Conclusion:
Innovation requires agility. Without engrained, enterprise-wide digital business agility companies will fail to create real customer value, find better solutions to complex problems, attract and retain the right talent and rapidly adapt to changing circumstances, such as the challenges posed by the COVID-19 pandemic.
Writing which provided insights for this article:
Unbossing Leaders at Novartis AG by Larry Emond
No Rules Rules: Netflix and the Culture of Reinvention by Reed Hastings and Erin Meyer