Nothing can teach us more about Value Stream Management than the experiences of real-world practitioners so we are delighted to be able to share with you Netflix's VSM story in partnership with IDC.
The IDC Perspective research paper - ‘The Netflix Culture: Value Stream Management Exemplified’ follows an IDC webinar hosted by the Value Stream Management Consortium in February 2023.
Real-life examples are shared through the stories of Fonz Morris, Lead Product Designer for Conversion and Monetization at Netflix.
How a digital giant like Netflix operates helps us to understand the factors behind its success. While it's never advisable to simply 'copy and paste' such a corporate playbook, everyone can find sources of inspiration by relating them to their own organization and culture.
A Digital Business Culture is the Key to Success
Before introducing the five elements detailed in this case story, it's important to note that they are addressed from a cultural perspective. All dimensions, whether strategic or operational, whether they concern team dynamics, roles or skills, methods, technologies, or metrics are linked above all to the corporate’s digital culture.
Customer delight is the cornerstone of everything Netflix does. Customer obsession permeates every level of the company culture, from the annual definition of the strategic vision by senior leadership to the day-to-day operations of the teams and the continuous tracking of the customer experience.
“Company culture is what employees live and breathe every day in the workplace.”
– Mike Zani, CEO of The Predictive Index
VSM is a Foundation for a Digital Transformation
As Bob Multhaup put it so well, this example from Netflix perfectly illustrates the fundamental role of a Value Stream Management (VSM) approach in helping an organization reinvent its digital business culture.
“Value stream management (VSM) is a good foundation to help an organization reinvent its digital business culture where IT and the business become unified around creating customer value.”
- Bob Multhaup, adjunct research advisor with IDC's IT Executive Programs (IEP)
Let's take a quick look at the report's components.
1. Define Vision and Strategy Bets
It is primarily the responsibility of senior leadership (C-Suite) to define and share the company's vision through annual strategy bets. But the values of empowerment and collaboration involve everyone in translating this strategy into the actual creation of value-added products and services for customers.
The usual problem of strategic alignment is solved here by Product Managers translating these high-level strategy bets into products and services that customers are willing to pay for, i.e. into customer value streams.
The digital products and services managed by these value streams support the touchpoints of the customer journey for subscribers and non-subscribers alike. They thus create the value expected throughout the digital customer experience.
"Netflix focuses on the value streams that are most critical to delivering the high-priority strategy bets. When the problem is about users who are already Netflix subscribers, for instance, the value stream is all about engagement: How many programs do they start watching, and how long do they watch a particular program? Those metrics send signals to Netflix about the value the subscriber derived from the program. Revenue might not be a direct factor; some value streams are about customer joy."
- Fonz Morris, lead product designer for conversion and monetization at Netflix
2. Team Dynamics: Unify IT and the Business
Business and IT are brought together in autonomous, customer-focused product teams while taking care not to create new silos. To this end, the corporate culture is based on the values of transparency, flexibility, and accountability.
Fonz Moris talks about intersectionality and the need for collaboration between teams, mentioning examples of cross-functional teams such as the internal studio team, that could be likened to a platform team.
3. Exploit Value Stream Management Methods
VSM in day-to-day operations is about leveraging Lean principles and VSM practices like Value Stream Mapping to optimize the flow of value, getting all stakeholders to work together as a team, and immersing themselves in a deeper understanding of the problems to be solved.
Here again, cultural aspects are crucial to success, starting with respect between people to support effective collaboration between all Business and IT players.
4. Track Customer Research and Experience
Netflix's customer obsession is reflected in its extensive customer research, and culture of experimentation and continuous improvement of the customer experience.
Quantitative and qualitative research validates or refutes hypotheses and provides factual support for decision-making on features for customers.
5. Become Data Driven
Teams can rely on a wealth of data to first measure the creation of value for customers and make decisions based on various interconnected metrics (quality, engagement, retention, revenue, etc.). This allows them to constantly learn, review and improve the customer experience, which is what true value creation is all about.
"At Netflix, we're most focused on metrics that measure the customer value stream,
making sure that we're creating value and improving things."
- Fonz Morris, lead product designer for conversion and monetization at Netflix
Access the Full Report (for Members only)
As a member, you have access to the full story which you can read and download here (in the “Industry Research” course from the Member Portal) to use as you develop your own VSM capabilities and ways of working within your organization or with your clients.
Watch the Webinar on Demand
Access the webinar on demand and a complimentary copy of the IDC VSM Peerscape report to learn through real-world VSM stories from Netflix, Shutterstock, Defense Unicorns, and Comcast Business.
We'd Love to Hear from You
We would love to hear your thoughts so please feel free to comment.
We are also always looking for case stories and to learn more about how and why people are using VSM today so please do let us know if you would like to share your experiences with our VSM community.
Comments 0