The complete and total somersault was all about the "unique and compelling strategic value," according to a company statement, that Hulu had for the networks. It's another way of saying that they suddenly realized that the site might actually be worth something -- something apparently invisible before now.
The reversal shouldn't be surprising based on what has been happening in the tech and media industries as of late. We've recently entered a new seasonal experience: the corporate strategic one-eighty. Executives set public and high profile strategic directions and then, on a dime, pivot and go exactly the opposite direction. In a generous mood, you might call this being agile, bending with the prevailing conditions. Then again, you might be more realistic and call it feckless leadership.
We went that-a-way
There's been more flip-flopping than a conversion of politicians. But as much as the Powers That Be might congratulate themselves on smart maneuvering, ping-pong lurching by such examples as HP (HPQ), Netflix (NFLX), Facebook, and Comcast (CMCSA) show nothing more than corporate confusion and poor decision making. Here's a list of just some of the whiplash-inducing changes of strategy direction we've seen of late:
- HP decided that it completely needed to change. Dump the low-margin PC business and become more like an IBM, with enterprise-level software and more emphasis on services. Except, the market didn't like the direction change, so now that the company has a new CEO in Meg Whitman, it might very well not spin off the PC division. By the way, Whitman was on the board and agreed to the necessity of the drastic change in strategy in the first place.
- What can you say about Netflix other than there's nothing management can decide to do that it can't, with equal ease, badly communicate and then abandon when criticized enough. First, it raises prices by 60 percent. Then it tells customers that it will split into two parts and that consumers will have to use different web sites for DVDs and streaming. Then it say, woops!, we changed our minds again. Management has managed to alienate customers, create distrust among investors, and look foolish, all at the same time.
- Remember when Facebook decided it would test its own daily deals? Within a month, it already was limping. A few months later, the company killed the concept.
- Comcast, it the guise of Universal, went from planning to offer a video-on-demand release of a movie while it was in theaters to calling off the whole experiment. Talk about efficient.
There's nothing inherently wrong about a company trying something and learning that it was an idea that wouldn't work. You can't be innovative or improve if you can't make a mistake. But these corporate boomerangs are different because of the speed of the retreat.
In each case, corporate management at the highest level considered a significant strategy change. But when things didn't immediately go as well as planned, top brass backed off. The problem for management is that few things are immediate hits.
Maybe the high tech and media industries have become too accustomed to "Internet time" and expect unvarnished success at the start of a venture. Or perhaps too few have learned the hard lesson that such companies as Apple (AAPL), Microsoft (MSFT), and Amazon (AMZN) have mastered of pressing on and trying to find a way to make something work when you think it's strategically sound.
Instead, they reenact a demonstration that statistical quality expert W. Edwards Demming used to give. He'd have someone stand and drop little balls on the ground. They would cluster together. Then he's have the person try to adjust after each drop and try to hit a target. Inevitably, the balls would be all over the place. When actions aren't predictable, the system producing them is unstable and you can't reliably adjust it to improve.
That's what we're seeing: a rash of unpredictable ball dropping because no one is willing to take the time and see if a choice could actually work if done correctly -- and because few are apparently spending enough time before they start some new plan to see if it actually makes sense.
- Why Meg Whitman Won't Save HP
- Meg Whitman, the HP Board's Next Blunder-in-Waiting
- Netflix: Still Clueless About Its Customers
- Netflix: Qwik, Let's Dump All the DVDs and Tick Off the Customers
- Facebook's Giant Marketing Mistake: It Works Backwards
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