Leading Apple With Steve Jobs: Management Lessons From a Controversial Genius

Missteps

Companies that are not focused on their customers, or that lose this focus, can get in trouble quickly. A couple of prime examples took place around the time I was writing this book—instances when users of the company’s offerings quickly decided that the offerings had not been well thought out. In both cases, the issues had to do with the overall product and how it was being used. One of these companies was Netflix, which had quickly become a huge success by offering to have a DVD reach you in two days or less, which you could then keep as long as you wanted, with no late fees.

This was a great deal for consumers but a tough challenge for long-established Blockbuster, with local stores in neighborhoods all across the United States. In fact, for Blockbuster, the delinquency fees accounted for a startling amount of money, about 40 percent of overall revenues. So the Netflix concept of no delinquency fees sounded golden.

But after a few years, Netflix decided on a new strategy that represented the company turning its back on its customers. The company announced that it was splitting its operation into two separate parts by creating a new entity, Qwikster. The new structure, it said, would enable the company to focus on providing streaming content—downloading movies directly over the Internet to your home—to replace the less profitable DVD-by-mail service. Customers who wanted both streaming and DVD rental, for games as well as movies and TV shows, would have to have separate ...