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Vision and Strategy - Epiphanies of a Netflix leader

New managers are reactive tacticians by default. Product managers drive requirements and due dates. Technical migrations, operational emergencies, and support requests form a maelstrom of distraction. It’s easy to become overwhelmed with these challenges and a common reaction is to double down on speed and efficiency. These are important tactical skills to develop but leadership (vs management) is a whole different game. Leaders are proactive, seeking out opportunities to get ahead of challenges or enable new possibilities.

Leaders think broadly and systemically - enabling them to make the right call in situations where the solution is non-obvious. Where do we apply constrained resources to maximum effect? Which infrastructure investments will yield the most benefit? How do we carve out a path that leads to transformative change?

In this session we’ll explore the concepts of vision and strategy - tools that business and technical leaders alike leverage to make tough decisions and smart bets that lead to breakout success. Using Netflix as a case study we’ll explore how these tools were used to drive bold initiatives resulting in significant business growth and competitive barriers. In addition, we’ll delve into the role of technical strategy in turning business-oriented visions into reality. Attendees will develop a deeper understanding of the formulation, implementation, and impact of vision and strategy. This is a bootstrap for those who want to make the leap from manager to leader - a journey that can last a lifetime.

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Vision and Strategy - Epiphanies of a Netflix leader

  1. 1. Josh Evans Senior Director of Platform Service Engineering @ GitHub November 13, 2017 Vision & Strategy Epiphanies of a Netflix Leader
  2. 2. 1998
  3. 3. What an incredibly stupid idea!
  4. 4. 1999 Home rental library Subscription Neil Hunt
  5. 5. 17 Years Later Netflix (1999 – 2016) • Ecommerce (DVD  Streaming) • Streaming - Playback Services • Operations Engineering
  6. 6. Netflix Graduate • Modern Architecture • Operational Excellence • Leadership • Organization • Culture • Vision & Strategy Leadership is a journey
  7. 7. Why is Netflix relevant? DVD
  8. 8. Why is Netflix relevant? DVD Streaming
  9. 9. Global leader in subscription internet TV Growing slate of global, original content 109  115 million members 190 countries, 10s of languages 1000s of device types Netflix Streaming
  10. 10. 2000% growth over 5 years!
  11. 11. This is no accident
  12. 12. Vision Strategy Netflix vs. Blockbuster Netflix Streaming GitHub Universe Today’s Journey
  13. 13. Vision Strategy Netflix vs. Blockbuster Netflix Streaming GitHub Universe Today’s Journey
  14. 14. Why does vision matter?
  15. 15. Hill Climbing Maximum Start
  16. 16. Hill Climbing find the highest adjacent node
  17. 17. Hill Climbing current = highest adjacent node
  18. 18. Hill Climbing highest node found
  19. 19. Mountain Climbing Start Local Maximum Global Maximum
  20. 20. Managers climb hills Leaders take mountains
  21. 21. Vision is the mountain
  22. 22. Vision Strategy Netflix vs. Blockbuster Netflix Streaming GitHub Universe Today’s Journey
  23. 23. What is Strategy?
  24. 24. Be Proactive
  25. 25. Reactive Influence Concern
  26. 26. Proactive Influence Concern
  27. 27. Envision what you want in the future so you can work and plan towards it. Begin with the End in Mind
  28. 28. Put First Things First 1. Urgent – Important Crises Pressing problems Deadline-driven projects Meetings, preparations 2. Not Urgent - Important Preparation, prevention Planning Innovation, creativity Values clarification Relationship building Empowerment Work-life balance 3. Urgent – Not Important Interruptions, some calls Some mail, reports, meetings Many popular activities 4. Not Urgent – Not Important Trivia, busywork Junk mail Some calls Time wasters
  29. 29. Put First Things First 1. Urgent – Important Crises Pressing problems Deadline-driven projects Meetings, preparations 2. Not Urgent - Important Preparation, prevention Planning Innovation, creativity Values clarification Relationship building Empowerment Work-life balance 3. Urgent – Not Important Interruptions, some calls Some mail, reports, meetings Many popular activities 4. Not Urgent – Not Important Trivia, busywork Junk mail Some calls Time wasters
  30. 30. Ok… but what is strategy?
  31. 31. a high level plan to achieve one or more goals under conditions of uncertainty - Wikipedia
  32. 32. Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat. - Sun Tzu, The Art of War
  33. 33. The essence of strategy is choosing what not to do. - Michael Porter, economist & business strategist
  34. 34. proactive goal oriented high level adaptive focused realized through tactics informed by vision Strategies are…
  35. 35. How is strategy formulated?
  36. 36. Strategy: a route to continuing Power in significant markets Power: the set of conditions creating the potential for persistent differential returns Business Strategy Hamilton Helmer
  37. 37. Scale economies Network economies Counter-positioning Switching costs Branding Cornered resource Process power Seven Powers
  38. 38. Some condition which yields material improvement in cash flow of the power wielder via reduced cost, enhanced pricing and/or decreased investment requirements. Benefit
  39. 39. Some obstacle which engenders in competitors an inability and/or unwillingness to engage in behaviors that might over time arbitrage out this benefit. Barrier
  40. 40. A business in which per unit cost declines as production volume increases. Benefit: lower costs Barrier: fear of retaliation 1. Scale Economies
  41. 41. The value of a product to a customer is increased by the use of the product by others 2. Network Economies
  42. 42. 3. Counter-positioning A newcomer adopts a new, superior business model which the incumbent does not mimic due to anticipated damage to their existing businesses
  43. 43. The value loss expected by a customer that would be incurred from switching to an alternate supplier for additional purchases 4. Switching Costs
  44. 44. The durable attribution of higher value to an objectively identical offering that arises from historical information about the seller. 5. Branding
  45. 45. Preferential access at attractive terms to a coveted asset that can independently enhance value. 6. Cornered Resource
  46. 46. Embedded company organization and activity sets which enable lower costs and/or superior product, and which can be matched only by an extended commitment. 7. Process Power
  47. 47. Vision Strategy Netflix vs. Blockbuster Netflix Streaming GitHub Universe Today’s Journey
  48. 48. Vision Home rental library Subscription
  49. 49. Scale economies Network economies Counter-positioning Switching costs Branding Cornered resource Process power What power did Netflix have over Blockbuster?
  50. 50. Counter Positioning
  51. 51. A newcomer adopts a new, superior business model which the incumbent does not mimic due to anticipated damage to their existing businesses Counter-positioning
  52. 52. Counter-positioning
  53. 53. Five-year head start
  54. 54. Process Power
  55. 55. Embedded company organization and activity sets which enable lower costs and/or superior product, and which can be matched only by an extended commitment. Process Power
  56. 56. DVDs opened & inspected for cracks
  57. 57. DVDs are cleaned & polished
  58. 58. NPI First Class Mail Sorter Multi-purpose • Return rental • Check for orders • Print addresses • Pre-sort 30,000 discs / hour
  59. 59. Barcode Scanner, Printer, Sorter
  60. 60. Envelop Stuffers - 4,200 Envelops / Hour
  61. 61. Conveyor - Stuff, Fold, Seal
  62. 62. Apply Sticker
  63. 63. Website – Address validation – Queue & rental history – Shipping status – Problem reporting Logistics – Rental returns – Inventory management – Shipping Deep Integration with
  64. 64. Vision Strategy Netflix vs. Blockbuster Netflix Streaming GitHub Universe Today’s Journey
  65. 65. A newcomer adopts a new, superior business model which the incumbent does not mimic due to anticipated damage to their existing businesses Netflix counter-positioned against itself Counter-positioning
  66. 66. 2007 Streaming Subscription
  67. 67. Become a much loved, global internet TV service Create a highly valuable, durable business Lead a creative revolution Netflix Streaming Visions
  68. 68. Scale economies Network economies Counter-positioning Switching costs Branding Cornered resource Process power What power does Netflix Streaming have?
  69. 69. Global leader in subscription internet TV Growing slate of global, original content 109  115 million members 190 countries, 10s of languages 1000s of device types Netflix Streaming
  70. 70. A business in which per unit cost declines as production volume increases. 1. Scale Economies
  71. 71. Competitors license the same content at the same time Inception: Non-Exclusive Studio Contracts
  72. 72. • Netflix – has 50M members who will watch one title from deal – pays $50M for a non-exclusive deal – $50M / 50M = $1 per view • Amazon – has 5M members who will watch 1 title from deal – pays $5M for a non-exclusive deal – $5M / 5M = $1 per view Exercise
  73. 73. Competitors cannot license the same content at the same time Strategy: Exclusive Studio Contracts
  74. 74. • Netflix – has 50M members who will watch one title from deal – pays 60M for an exclusive deal – 60M / 50M = $1.20 per view • Amazon – has 5M members who will watch 1 title from deal – must pay 60M for an exclusive deal – 60M / 5M = $12 per view Exercise
  75. 75. Efficient, Global Exclusives
  76. 76. How do we achieve scale?
  77. 77. 1. Ubiquity
  78. 78. 2007 • Jan – Windows 2008 • May – Roku • Oct – LG, Samsung Blu-ray • Oct – Apple Mac • Nov – XBox 360 2009 • Jun – LG DTV • Nov –Sony PS3 (disc) • Nov – Sony Bravia – DTV & Blu-ray Device Ubiquity
  79. 79. 2011 • May – Android • Nov – First e-readers – Kindle Fire, Nook Device Ubiquity 2010 • Mar – Nintendo Wii (disc) • Apr – Apple iPad • Aug – Apple iPhone • Sep – Apple TV • Oct – Sony PS3 (no disc) • Oct – Nintendo Wii (no disc) • Nov – Windows Phone 7
  80. 80. 2010 - Canada 2011 - Latin America 2012 - UK, Ireland, Nordics 2013 – Netherlands 2014 - Austria, Belgium, France, Germany, Luxembourg, Switzerland 2015 - Australia, New Zealand, Japan, Spain, Italy, Portugal Geographic Ubiquity
  81. 81. • English • Spanish (Latin American) • Portuguese (Brazilian) • Dutch • French • German • Japanese • Spanish (Castilian) • Italian • Portuguese (European) Language Ubiquity - Subs, Dubs, UI
  82. 82. January 6th, 2016
  83. 83. Geographic Ubiquity
  84. 84. Before Global • English • Spanish (Latin American) • Portuguese (Brazilian) • Dutch • French • German • Japanese • Spanish (Castilian) • Italian • Portuguese (European) Global • Chinese • Korean • Arabic Language Ubiquity – Sub, Dubs, UI
  85. 85. Ubiquitous Infrastructure
  86. 86. US-East-1US-West-2 EU-West-1 Reliably and efficiently serve any customer from any region
  87. 87. Eventually Consistent, Ubiquitous Data
  88. 88. EU-West-1US-West-2 Global Ring Global Ring US-East-1 Global Ring
  89. 89. EVCache Replication Repl Writer Kafka Application Client EVCache Replication Repl Writer 1. Set or delete 2. send metadata 3. poll msg 6. set or delete Application Client Kafka 7. read EVCache Cross-Region Replication Region BRegion A
  90. 90. Ubiquitous Traffic Management
  91. 91. US-East-1US-West-2 EU-West-1 Reliably and efficiently serve any customer from any region
  92. 92. US-East-1US-West-2 EU-West-1
  93. 93. US-East-1US-West-2 EU-West-1
  94. 94. How do we achieve scale?
  95. 95. 2. Strategic Focus
  96. 96. The essence of strategy is choosing what not to do. - Michael Porter
  97. 97. Hardware Pay per view Electronic sell-through Ad supported Sports News Netflix doesn’t do
  98. 98. 60% price hike No integration New brand Shedding Legacy
  99. 99. Was this bad strategy?
  100. 100. DVD
  101. 101. Unencumbered Expansion
  102. 102. Vision Strategy Netflix vs. Blockbuster #NetflixEverywhere GitHub Universe Today’s Journey
  103. 103. Platform-enabled development ecosystem The destination for software engineers Jason Warner
  104. 104. Network Economies? Cornered Resource?
  105. 105. From Monolith to Modern Architecture Reliable Scalable Secure Fast Layered Distributed Portable Multi-region Multi-cloud
  106. 106. Compute & Network – DC/Cloud Runtime Orchestration - Kubernetes Desktop GitHub.com Storage – file/object, MySQL, NoSQL, cache, Git, etc. BrowserGitHub Architecture 3rd Party Load Balancer/Routing Proxy Platform Services – data access, pipelines, transformation, workflow 3rd Party API Gateway – ecosystem public interface
  107. 107. Take-aways Be proactive Put first things first Be visionary Study strategy Drive alignment
  108. 108. Make an impact!
  109. 109. ? ? ? ?
  110. 110. Josh Evans Senior Director of Platform Service Engineering @ GitHub November 13, 2017 Vision & Strategy Epiphanies of a Netflix Leader

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