Playing Netflix Chess

I read publications, punditry and blogs focused on a number of different industries.

I hope you do as well. Reading only the trade publications from your industry is dangerous, dangerous, dangerous.

For example, there’s an awesome blog post by Ken Doctor based on comments made by Netflix founder Reed Hastings“. Go read it (< 1000 words) and slide back here. The link will open in a new window.

I don’t have a digital business

Some of these things might be perceived as applicable only to a “digital business”. As you read “Savor the economics of digital distribution” or “presentation revolution is still to come”, you might wonder how these could impact your blacksmithing business.

I think if you look hard enough – every business probably has a digital (ie: tech-related or internet-enabled) component.  If yours doesn’t, maybe it should…

I see you out there bouncing up and down in your chair. You disagree.

If you’re a guy whose office is a F-250 full of tools, think a little about estimates, appointment scheduling, material ordering / delivery, drawings, invoices, training and safety.

Enough of that…Let’s discuss Reed’s lessons.

Spend your time on tomorrow, not today

This is all about being strategic. Delegate today, as much as possible. If you get bogged down in the “crisis of the urgent”, you’ll have a very difficult time focusing on the long-term strategic needs. You can’t (shouldn’t, at least) manage your business “paycheck to paycheck”, even if your cash flow currently feels that way.

Savor the economics of digital distribution

In All the President’s Men, it was “follow the money“. In your business, it’s “follow the paper”. As you read about the $600 million Netflix currently spends on postage and the labor involved in DVD quality control, consider the costs and labor you incur by shoveling paper around.

Even if you are legally obligated to keep that paper, you can make changes that allow you to handle it ONCE and thereafter refer to digital copies until the paper copies are (possibly) needed. Leroy Schulz suggested I get a ScanSnap several years ago. I finally did. UNREAL. If you deal with a lot of paper, just get one. That’s just one example of a small, but substantial change you can make to unchain yourself from the paper.

Don’t sweat the timeline

The time to be visionary about what your clients need is NOW. It is NOT when they (finally?) realize they need that great idea you had years ago.

That said, you should expect to have to educate your customers and your industry about why that visionary thing is so important. It will take time. Take advantage of the visionary advance while you can and sell it as soon as you can show value for it.

No one asked for an iPhone, yet Apple has sold millions, transforming their financials and leveraging what they’ve learned throughout their product line. Visionary. Again.

Everyone reading this is capable of being that visionary in some aspect of your industry. You just gotta put yourself in the customer’s place.

Play chess, not monopoly

Strategy, strategy, strategy. Sure, you can fill a lobbyist’s wallet and invent a monopoly, but eventually that advantage will somehow end. It’s tough (though not impossible) to legislate innovation out of business. I’m pretty confident that entrepreneurial innovation is smarter than the collective intelligence of Helena or DC. It’s certainly easy to move faster than any legislature.

If you put the customer and their wants/needs at the center of your strategic thought, you *will* succeed. Good chess players think 2-3-4 moves ahead. Great chess players are thinking a dozen or more ahead. Think about your business that way.

The best way to create what appears to be a monopoly (in the eyes of inferior competitors) is to deliver amazing every single day and improve with every interaction, every hour, every shipment, etc. Chess is no different. The best can play and innovate in their head, during the game.

The presentation revolution is still to come

For many of you, this is about mobile, mobile, mobile. Yes, kinda like “Location, location, location.”  But it isn’t just about that, so don’t think solely in that way.

How many ways can what you do be delivered? If your business seems immune, think about the overhead of doing business with you. Are you causing more of it? Do you invoice on paper or PDF? Do you mail a check (requiring a trip to the bank) or do you pay some other way? Do you invoice (or pay) manually every month when it could be automated? (ditto for payment) What about ordering? Stock inquiries? Appointment scheduling?

Do easier, faster, smarter. Without cutting quality.

Culture counts

Working in a place with people you want to work with and people who value excellence. It’s easy to slough off as “touchy-feely”, but if you’ve worked in an environment that values quality and improvement, you’ll never again feel comfortable in anything else (well, unless you’re a slacker).

And finally, Walmart.

Ken’s comment about Hastings’ response to why Walmart didn’t kill Netflix – and why it shouldn’t kill your business – speaks volumes: “Itâ??s not the stuff, itâ??s what you do with the stuff to please customers. Netflix isnâ??t about simply getting you a movie. Itâ??s the recommendation engine and lists, the customer-pleasing, no-late-fees (remember when this was a huge issue?), its easy-to-use interface and its social/sharing emphasis, among other features that let it distinguish itself in consumersâ?? minds.

If that quote doesn’t spawn thought processes to revolutionize your industry, then you just aren’t thinking hard enough.

Can video stores compete with a robot?

Yesterday, I received an email from someone whose clients are video stores. Because they subscribe to my print newsletter, I asked them to put me on their email list.

Part of today’s email to their video store clients included this comment:

I had a customer ask us how to compete with RedBox (emphasis mine). I’ve been doing some thinking and asking questions about this. I’ve watched people in our Albertsons store waiting in line to get a $1.00 movie from a machine. I kept thinking how impersonal it was.

So xxx went down and rented at Redbox to see how it worked. He rented a movie. Then when he got home, he got a receipt for the movie in his email. When he returned the movie, he got a receipt again in his email. Later on he got some offers for a free movie and information about new releases soon to be available.

I *love* that they noted right off the bat that this kind of rental was impersonal and created a line – but also noted the smart things RedBox does as well.

Warp speed - Revolve around a center photo credit: fabbio

2 strikes against RedBox, right off the bat. Impersonal. Lines. Every store has lines now and then, but will people stand in line to wait for a machine? Maybe an ATM, but a video dispenser? Time will tell.

If 10 people are in the video store, think about how 10 of them would mill around a RedBox machine (it’s about the size of a Coke machine).

I’m sure you can think of some things to pick on regarding Netflix – while noting that you (you being the video store owner) can clearly see their primary advantage (no late fees).

What’s easy to overlook is the primary advantage to Netflix: No matter how many videos you watch, they get their monthly fee, month-in, month-out. As I’ve noted in the past, you should be looking for ways to implement this model in some part of your business.

Our goal is to give you the tools to compete with RedBox, Netflix, Blockbuster, and anyone else. But, there is one thing you have to do… use the tools!

No doubt. Kinda like all the things we talk about here.

Implement them. Otherwise your time here is largely wasted, don’t you think?

I was listening to Gary Vaynerchuk on Donny Deutsch’s The Big Idea last night and he repeated what Dan Kennedy says regularly: “Money loves speed.”

He means speed of implementation. Do it today. Not next month or next quarter, or “someday”.

P.S. I’m testing Windows Live writer to write posts for the next few days (it works on WordPress blogs too) so if you see anything funny (other than that photo of me up on the right), please let me know.