Use A Drone Lens To Build A Better Business
Use A Drone Lens To Build A Better Business
The smart thing Netflix is doing to stay on top of its industry.
Yong Chuan Tan
I read somewhere that Netflix’s biggest competitive threat isn’t other streaming platforms— it’s actually the video gaming industry and heavy hitters such as Fortnite.
The logic behind this insight is that Netflix’s most important success metric is “consumer screen time”. Under this metric, Netflix’s competitive analysis expands beyond streaming and includes appropriate competitors like Fortnite, Animal Crossing, and more.
I love this insight because it’s forward-thinking. It’s an approach that pulls Netflix out of the bias of its own industry and helps the company think through plausible time cannibalizers for its consumers.
It helps Netflix from falling into the demise that the music industry didn’t properly prepare themselves for — a shift away from CD sales to streaming.
How different would the music industry look today if it embraced its core success metric as “entertainment consumption time” and embraced Napster in its heyday and the ultimate arrival of Spotify? It probably would have controlled the narrative of the shift and made some money off of it, rather than scrambling for a new profit model like it is today.
Use A Drone Lens
You can and you should apply this same logic to your business in order to create a competitive analysis for the 21st century.
When I went to business school, most SWOT exercises and competitive analyses conversations were focused on threats within the industry or a parallel one.
In today’s competitive landscape, you need to envision your playground through the lens of a drone zooming out on your location. You need to look at all the different roads through which your customers can exit your business to a competitor that isn’t even in your industry.
The best way to predict this and to keep the appropriate tabs is by determining your core success metric and then following the consumption habits of your customers closely.
Apply It To Your Business
Similar to how Netflix broke down their core success metric to a specific behavior rather than an industry-specific metric, you should break down the single-driving behavior that pushes customers to your product.
This will allow you to think beyond the confines of your industry and stay ahead of the possible industry disruptions that can capitalize on your territory.
Once you’ve figured out your core success metric, you now have an agenda on what to watch and follow. Align this core success metric with other industries that also rely on the same success metric. Make a list of these industries and keep tabs on their growth, what they’re doing well, and how quickly they’re capturing their market.
Checking in and making these assessments will help you sniff out a potential takeover a la Spotify’s takeover of CD sales, and also keep you on top of the larger consumer behaviors that are tapping into your sales.
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