Escaping the Build Trap

Part III. Strategy

A good strategy is not a plan; it’s a framework that helps you make decisions. Product strategy connects the vision and economic outcomes of the company back to product portfolio, individual product initiatives, and solution options for the teams. Strategy creation is the process of determining the direction of the company and developing the framework in which people make decisions. Strategies are created at each level and then deployed across the organization.

In 2005, Netflix had more than four million subscribers and 50,000 movie and TV show titles in its DVD catalog, which represented significant growth in the six years it had been around. The entire company had rallied around the vision its founder had set, after he had been embarrassed by a $20 late fee at Blockbuster: “To provide movies and TV shows in the most convenient and easy way for customers.” With its customer-focused vision, Netflix set out to completely disrupt the way the market consumed entertainment.

At the time, the company was heavily invested in the DVD space, where it had been incredibly successful. But it didn’t see DVDs as the end point. In an interview in 2005 with Inc. magazine, Founder and CEO Reed Hastings said this:

DVDs will continue to generate big profits in the near future. Netflix has at least another decade of dominance ahead of it. But movies over the Internet are coming, ...