What Can the Air Force Learn From Netflix?

[Majestik Møøse]

The link below is to a slideshow (stay with me here) describing Netflix's corporate culture strategy. Whoever put this together has a great grasp on how inflexible bureaucracies are created. Slides 44-77 are relevant.

http://www.slideshar...0&startSlide=44

There are a lot of points that parallel observations recently made about the USAF:

• Company starts out with focus and high performance
  
• High performance creates growth which leads to complexity and chaos
  
• Complexity is fought with procedures and regulations
  
• Too many procedures and regulations drive away talented people
  
• Everything still seems fine until the market (battlefield) changes
  
• The company is now filled with process followers that cannot adapt quickly enough to change
  
• And the best line: "Company generally grinds painfully into irrelevance"
  

Their solution is to focus on what they're good at and continually hire better people. Better people don't need as many procedures to do their jobs well. Netflix doesn't get distracted by additional duties (my words) and they let mediocre people go. They analogize their model to that of a pro sports team constantly looking for new talent.

I'm not saying the USAF should be run just like Netflix. It's a very laissez-faire company, to the extreme of not even having a vacation policy. You just leave whenever you feel like it. They've also made some pretty buffoonerous high-profile decisions lately that seem to show a lack of temperament at the top. Also, a few slides later they specifically state that their management culture is more suited to a creative company than organizations primarily concerned with preventing catastrophic error (such as crashing airplanes). We crashed a lot of jets in the past which begat today's voluminous rulebooks.

That said, I think we sure as hell could at least a learn something from this kind of thinking. It seems to say that inflexible, ineffective bureaucracy is inevitable and the best way to fix it is by raising the Lowest Common Denominator. The AF may be trying to do this with the RIF but unfortunately the stratification seems to be based on who's the best at following the damn processes.

Thoughts? Can we ever get out of this downward spiral of bureaucracy?

Edited September 24, 2011 by Majestik Møøse

[ClearedHot]

Netflix down $170.00 in just 8 weeks...an amazing example of CEO hubris.

[Majestik Møøse]

Being free from binding procedures allows them to make stupid decisions as well!

[hindsight2020]

Chaos and a get-it-done is acceptable during a contingency environment, such as the outbreak of conflicts (early 2002 et al). Ours has been a period of relative peacetime for the majority of AF members and as such, peacetime leadership abounds. This is where your bibles of regulations come from; monday morning quarterbacks with idle hands.

I don't think there's anything one could do to effect change of consequence during periods of peacetime. More importantly, I'm not about to propose wartime as a solution to it, though I very much recognize it is wartime that "fixes" your stated problem. When you're statistically more likely to become a casualty as a result of a training sortie than as a result of a combat engagement, normalized per capita, you simply have no imperative need for unconventional and creative change. Even in the Reserves I've witnessed this...

"Hey we have a deployment opportunity coming up, we could use your experience.."

'Oh yeah? We dropping?'

"Um, no."

'Meh, pass.'

Wartime has always been the incentive to fix your problem. It's a catch 22.

[zach braff]

Current Netflix situation aside, this is good. My favorite part? "No ranking against other employees. We avoid "top 30%" type rankings amongst employees. We don't want employees to feel competitive against each other"

[DC]

It's not the flying rules and regulations that are bogging the AF down. I rarely think anything in the 11-202, 11-2MDS, etc etc are "in my way". As said above, we used to crash a lot of airplanes and now we have these regs to keep that from happening.

Instead, it's the rules/regulations culture that we've imposed on ourselves for EVERYTHING else.

Creativity is completely stifled in the Air Force today. As our "market" is changing from the Cold War era to post-9/11 challenges and rapidly reducing pots of money, we need innovation and our culture is killing it.

[addict]

One of those slides roughly translates into:

"Is this GOOD for the company?"

[nsplayr]

Ironic that you highlight Netflix as an ideal to look up to when they've recently pissed away much of their customer good will in the last few months.

Perhaps they're really geniuses and think that they are cutting off their soon-to-be unprofitable and obsolete DVD mail service before it drags down the whole company. Only time will tell, but in the near-term their stock has taken a royal beating and their customers are pissed off.

To your point, I think we (the government) could learn a lot from the most creative and innovative businesses that consistently attract the best talent in the country, but then again it's a different ballgame. The reason we're a 1-mistake Air Force is because some of the mistakes we can potentially make are much more serious than sending the stock price down the tubes.

[DFRESH]

So glad you posted this, I keep forgetting to cancel my netflix account!

[Majestik Møøse]

One of those slides roughly translates into:

"Is this GOOD for the company?"

Yeah, I noticed that, too. "Act in Netflix's Best Interest", just like Initech! But, according to this slideshow, it's one of their only policies dealing with day to day ethical decisions. Imagine if our Air Force gave officers even a fraction of that responsibility. Would we abuse it?

Ironic that you highlight Netflix as an ideal to look up to when they've recently pissed away much of their customer good will in the last few months.

I don't think it's ideal at all; in fact I think they've gone a little too far in many ways. It's definitely the opposite end of the spectrum from us and I think we could both stand to move closer toward the middle. For sure they could obviously use a little better process for ensuring that a few executives don't "crash the jet".

Processes for the critical stuff, delete the rest.

[Dupe]

I think it's desirable for Air Force officers to see what makes a company work and what doesn't. At the same time, there's a fundamental flaw here: the Air Force is not a corporation. We're a war machine. The just-in-time logistics process that Walmart uses will lead to severe capability degrades if we adopt it. As generations past learned: TQM is great for making Toyota...not as great when your product is aircraft availability or # of pounds / gallons airlifted. We're in the business of flying, fighting, and winning...that business leads to what corporate types would call "inefficiencies." Sometimes, those "inefficiencies" are actually buffers against shocks to the system (what staticians call war)...like the number of pilots we have employed, the number of GBU-38s we keep at each base, and the number of redundant systems we build into each airframe. Here's my pitch to the next generation of Air Force leaders: there's lessons to be learned from corporate success or failure. At the same time, we're not a corporation...frame those lessons appropriately.

[BFM this]

Netflix swung, and missed.

So before you cleverly type how Netflix isn't an "ideal" or that the AF isn't a business, forfuxsake, read the OP and the slides!

Netflix isn't necessarily a perfect parallel with BigBlue, but might not be too far off. From 25m subscribers, some by design (and some NOT) they're down a cool 1M from that peak. In two months. And they're surprised by this.

http://blog.netflix.com/2011/09/explanation-and-some-reflections.html

If AF leadership ever leads with "I messed up", we're already fucked.

[Mark1]

There's only one reason that this stuff can't be applied to the AF...Netflix is willing to discriminate in order to ensure their workforce is comprised of only top quality employees, and the AF is not.

10% of the people in the squadron get 90% of the work done...sound familiar? 90% of the squadron would be fired by Netflix and replaced...or better yet, never hired in the first place. Imagine the freedom you could give your people if the worst of them was an all-star.

[Learjetter]

Imagine the freedom you could give your people if the worst of them was an all-star.

There's your leadership challenge: while it's true that some of your folks (much less than 90%) ride the short bus...it's up to YOU to lead your unit/section/flight/formation to perform the mission du jour the best it can with the resources available.

[pawnman]

The lesson the Air Force can learn from Netflix, especially recently, is that making random changes that benefit no one for the sake of making changes tends to piss people off.

[Guest]

I think it's desirable for Air Force officers to see what makes a company work and what doesn't. At the same time, there's a fundamental flaw here: the Air Force is not a corporation. We're a war machine. The just-in-time logistics process that Walmart uses will lead to severe capability degrades if we adopt it. As generations past learned: TQM is great for making Toyota...not as great when your product is aircraft availability or # of pounds / gallons airlifted. We're in the business of flying, fighting, and winning...that business leads to what corporate types would call "inefficiencies." Sometimes, those "inefficiencies" are actually buffers against shocks to the system (what staticians call war)...like the number of pilots we have employed, the number of GBU-38s we keep at each base, and the number of redundant systems we build into each airframe. Here's my pitch to the next generation of Air Force leaders: there's lessons to be learned from corporate success or failure. At the same time, we're not a corporation...frame those lessons appropriately.

You would be surpised how the opposite of what you are saying here is true.

The business model comes from the military model, not the other way around.

The US military supply chain/logistics processes are actually quite efficient, especially the USAF, when compared to large global corporations. There is waste in the military system but there is also keen attention to that waste and the absence of a P&L incentive allows for what you see as inefficiencies at the tactical level.

My experience out here in the civilian world has shown me the military, USAF especially, is better at managing complex global logistics problems than most large corporations.

[BFM this]

The lesson the Air Force can learn from Netflix, especially recently, is that making random changes that benefit no one for the sake of making changes tends to piss people off.

Their price restructure wasn't random. Acquisition costs were about to skyrocket: the price model that NF was working under was based on an old "lets see where this internet streaming idea goes", and was about to increase fivefold as Hollywood now has a good handle on the profit potential.

Likewise, although the USPS woes are only now making the MSM front page, companies who's entire distribution (for the disk side) depended have had a finger on the pulse of that trainwreck for some time.

Random they weren't. Heavy handed and without regard to the consumer, yes.

Believe it or not, despite all of my bitching on this board, I still subscribe to the old-school sentiment that says the AF shouldn't give two shits about my personal desires; that, yes, Needs of the Air Force should be the trump in management and decision making.

But I also see things happening, beyond the AF and even DoD, that has the potential for long term unintended consequences. The operative question here will be how the AF navigates these unpredictable events. Bang-bang, like always? (like NF, in this case?)

And like MMoose in his original post, I think that might be worth thinking about.

Edited September 21, 2011 by BFM this

[pawnman]

Their price restructure wasn't random. Acquisition costs were about to skyrocket: the price model that NF was working under was based on an old "lets see where this internet streaming idea goes", and was about to increase fivefold as Hollywood now has a good handle on the profit potential.

Likewise, although the USPS woes are only now making the MSM front page, companies who's entire distribution (for the disk side) depended have had a finger on the pulse of that trainwreck for some time.

Random they weren't. Heavy handed and without regard to the consumer, yes.

Believe it or not, despite all of my bitching on this board, I still subscribe to the old-school sentiment that says the AF shouldn't give two shits about my personal desires; that, yes, Needs of the Air Force should be the trump in management and decision making.

But I also see things happening, beyond the AF and even DoD, that has the potential for long term unintended consequences. The operative question here will be how the AF navigates these unpredictable events. Bang-bang, like always? (like NF, in this case?)

And like MMoose in his original post, I think that might be worth thinking about.

The price hike didn't bother me. Splitting streaming from DVDs bothers me.

The list of random changes the Air Force has made is endless.

[Catbox]

The lesson the Air Force can learn from Netflix, especially recently, is that making random changes that benefit no one for the sake of making changes tends to piss people off.

just and another

[TrainerModel]

Buy netflix, now. I am

[BFM this]

Buy netflix, now. I am

They've exposed themselves to way to much competition (Hulu, Amazon, Blockbuster) with their buffonery. They had dominant market share (still do, but declining), but are going to finish on the other side of this struggling to recapture thier niche, which they'll never get back. Hollywood is happy with this just as any supplier would be; who wants to sit across the table from a distribution monopoly that constantly rakes you over the coals?

Will they still be around in 10yrs? Probably, but a decent growth stock? Nope.

[BFM this]

Just the essentials. Edited September 22, 2011 by BFM this

[Beaver]

Buy netflix, now. I am

Hope you didn't buy at the open today.

[ClearedHot]

Buy netflix, now. I am

Not on your life...

1. Netflix broke faith with the #1 thing they had going in their favor, a loyal customer base.

2. Netflx had a huge war reserve but spent it buying back stock at a premium ($220.00 a share).

3. Netflix sold bonds to finance further by backs and I believe they are technically insolvent right now, although only an accounting issue.

4. The "new deal" with Facebook excludes U.S. citizens (U.S. Law prevents some of the video sharing plans they have), so I don;t see a big impact in the short-term.

5. By splitting the business model they opened the door for someone else to steal their mojo.

6. They failed to finish Blockbuster (They should have bought them instead of letting Dishnet get them for pennies on the dollar). Now Blockbuster is resurgent with a brilliant marketing campaign aimed at disgruntled Netlfix customers. Even more important, it looks like Blockbuster will offer a Dishnet (and Starz which was the main provider of Netflix content), stream service starting sometime between Oct-Dec. They are also offering Blueray and Video Game rental within the primary price point. If the stream is realized, they could actually be cheaper than Netflix...oh karma is a bitch.

NFLX has some potential and there are those who would say it is undervalued...maybe Amazon will buy them, but the icing on the cake is the insider trading...Reed Hastings and the other seniors at NFLX have done nothing but sell for the last six months...

[sky_king]

Hope you didn't buy at the open today.

They made +0.02% today. Much better that the -4.81% I lost today on all of my other investments.