Leadership and Governance in Strategic Management - Case Study Example

Leadership and Governance Name Professor Institution Course Date Leadership and Governance Executive summary Strategic marketing has become a very important tool in gaining competitive advantage in world markets. As business environment becomes competitive, modern managers must seek to get the best strategies in when expanding to new markets. This report therefore looks at the strategies used by Reed Hastings to transform Netflix from a poor performing to a giant provider of internet TV. Some of the issues to analyze include how Hastings changed his communication usage in receiving and sending messages from the Pure Software to Netflix. It will also discuss conflict management style used by Hastings at Netflix and Pure, the leadership paradigm presented in Netflix and how Big Five Model of Personality traits of Hastings transform from Pure to Netflix. The discussion will be finalized by describing the leadership style used by Hastings at both Netflix and Pure Software and also how organizational politics, power and negotiations were or were not presented in these organizations. Introduction In the period from early to mid 2000, Netflix was not doing well and even its collapse had been predicted by Wedbush Securities analyst Michael Pachter. Such skeptics considered that Amazon, Blockbuster and Wal-Mart which had large customer base and economies of scale and could have simply wipe out Netflix out of the market (Lussier & Achua 2007, p.222). The changing business environment characterized by communication failure, interpersonal failure and poor leadership was blamed for the company’s poor performance. Even though, leadership and management style has been questioned, competition and globalization has happened rapidly prompting the CEO to change his strategies to sustain competition. The rapid change has overturned good times when Reed Hastings led to company to positive results. Five years later, Netflix gained the top position in the market, the CEO Reed Hastings became business person of the year according Fortune magazine, and the stock rose to 200%, S&P 500 increased to 7% (Lussier & Achua 2007, p.22). The performance improved over the years and in 2011 Netflix stock was being sold between $280 and $290. In 2013, the stock tripled, the customer base increased to almost 29 million and the company won 3 Emmy awards. Based on the information, this report will analyze strategies used by Hastings to transform this company. Some of the strategies that will be discussed include communication, leadership style and conflict management style. How Hastings changed his communication usage in receiving and sending messages from the Pure Software to Netflix Reed Hastings possessed a bad repute of hard headed leader who did not take criticism (Lussier & Achua 2007). At Pure Software Hastings employed autocratic style of leadership to push his agenda. Jing & Avery (2008, p.68) contend that authoritarian leader is a poor communicator and listener because they have a predetermined decision. In a nutshell, they are considered one-way communicator where no one questions his decision. Reed sometimes could embarrass employees by rolling his eyes at these staffs back at Pure Software. He had the norm of calling employees’ ideas as “dumb ideas”. Such behavior earned him a nickname from employee “Animal”. Reed Hastings realizes he did not like the kind of a person he had developed to and wanted to change when he observed the company was not performing well. He first sold Pure Software at $750 million and transformed his communication style at Netflix (Lussier& Achua 2007, p.22). At this new company he became new person and changed his application of communications, particularly sending and receiving messages. Reed Hastings became open to new ideas, more kind and a better listener. He stopped being the autocratic leader to one who looks for new ideas. In fact, he listened to all ideas, whether good or silly and stopped rolling his eyes and humiliation of employees. The changing of his communication skills has brought a massive change and could be witnessed in increase in stock and him being awarded in 2010 for being Businessperson of the year (Lussier & Achua 2007, p.222). How Hastings changed his use of feedback from Pure Software to Netflix He transformed his usage of feedback through listening to his staff’s ideas, and even he seeks for clarification. He would requests help him understand his or her idea, and whether it would be effective. He developed rapport through open communication with employees and paid attention to such communication. He used feedback to create a learning organization. An organization where open ideas are allowed, employees learn from each other to improve their areas of weaknesses (Johansson, Miller & Hamrin 2014, p.165). When good feedback is received from both managers and employees, trust is fostered into the organization. Also, it makes organizational goals clear to everyone, thus reducing conflicts of roles. Hastings has realized that emotional disconnects take place when a sender and a receiver is distressed due to form of leadership one uses. For instance, autocratic leadership which Hastings used before expects to make a final decision which should not be questioned. Rao & Rao (2005) argue that Prejudgment and forming opinions about others also distorts feedback. This was witnessed at Pure Software where the CEO could not accept other ideas terming them “dumb”. This changed when he deserted the prejudgment behavior to allow discussion and effective listening. Effective communication needs the receiver and sender who allow openness in their communication, have effective listening skills and tolerate the difference in personality and opinions (Barrett 2006, p.386). How Hastings changed his use of coaching guidelines from Pure Software to Netflix Hastings style of coaching Pure was very poor because he was bossy, perfectionist and unwelcome to new ideas (Lussier & Achua 2007, p. 222). He offered no positive support, advice and feedback. Such character traits demoralized employees and felt less valued at the organization. Organization behavior theories argue that in an organization where there is less motivation, employees do not work hard to realize organization but rather work to earn salary for survival. Reed should be grateful that he never experienced employees’ turnover due to his relationship with them. Autocratic style of leadership is often a recipe for high employees’ turnover. The moment he realized performance might not go his way if he continued with the attitude, he decides to change at Netflix. He boldly enhanced his coaching principles in numerous ways. He began by praising and recognizing staff, not condemning while giving descriptive and specific feedback. He was not just changing his coaching style because it is a fad, but because it is fundamental in employee management and business performance. Judge et al (2006, p.207) posits that the transformation of employees coaching is a proof that organizations and leaders have understood how important has become, hence are adding “their capability to coach and grow others” to a continuously increasing list of competence and skills they needs in every manager. In organizational behavior theory, this implies more workforce development, effective relationship between employees and management and operational efficiency (Howarth & Rafferty 2009, p.3). What Reed Hastings did support and encourage his followers to gather more ideas and feel free to communicate them so that the management can review them as see which makes a better concept. Unlike before when he was dismissing, he encouraged learning from each other by listening carefully, being open to other perspectives and permitting staff to vent their emotions and “silly ideas” without being judgmental. They support staff to make improvement towards their objectives and recognize their accomplishments. At Netflix Hastings, they understood that coaching is a dissimilar strategy to growing the potential of employees. Through consistent feedback and mentoring the CEO ensured that he presented his workforce with an opportunity to attain best performance. Which conflict management style did Hastings tend to use at Pure and Netflix? Conflict normally takes place when organizational members have different goals and personalities. Sometimes it is caused when unsuitable leadership and even when different opinions are not allowed as seen at Pure Software Company and early when Reed Hasting arrived at Netflix. At Pure Software Hastings was ruthless and no opinion or idea was allowed. Employees were dismissed even before explaining his concept to the fullest. Management experts believe that Hastings was using a competing style of management conflicting. This style is considered as a “win-lose” strategy (Kadir 2011). In this approach, the leader perform in a very forceful manner to attain his goals without cooperating with other members of the organization. Reading at the case study, an impression that comes out is that Reed Hastings did not care what his employees at Pure Software think concerning him. In brief, he created an attitude that I win while Lose attitude which competing conflict management is often all about. On the other hand, at Netflix he used a collaborative style of conflict management. With this approach, he involved all the parties, comprising of other member of the management and employees so as to achieve organizational objectives (Kadir 2011). Even though he remained assertive and perfectionist than employee, he acknowledged that they were important too. This style of conflict management is viable when in need of bringing many ideas on board to get a better solution to improving performance. In making a deal with Epix, which conflict management style was most likely used by Netflix? Joint venture has become an important in expanding capacity and targeting customers in other regions. Also, the company benefits from each other in terms of skills and technology. After just five years of doubt on the capacity of Netflix, Hastings led it to a considerable growth; this was depicted in improvement in stock prices. According to Lussier & Achua (2007), the improvement of stock prices is attributed to the joint venture deal between Netflix and Epix. The contract worth $1 for more than five years was to allow Netflix stream movies from Lions Gate, MGM and Paramount. The deal has enabled Newtflix to attract customers from competitors including HBO, Starz and Showtime (Lussier & Achua 2007, p.223). When negotiating for this deal this Netflix could have used comprising style of conflict management. In such deals, stand-offs are likely to arise, especially when one party realizes that the other is likely to benefit more. With comprising, the parties normally attempts to reach a solution which will partially suit everyone. In this approach, the two companies gave up something to make the deal get through. How to improve Netflix’s product offerings The best way to improve product provision is through innovation. Netflix will need to enhance its provision by making a high quality but low capacity movies to make people not only to stream but be able to download their content quicker. Today, the industry is focused on animations and games. Moving towards this direction with unique products is the best way Netflix can improve its provision but also increase its profits. Sound cloud is yet to be exploited in term of visual, images and video. Currently, it’s the audit which has dominated this platform, hence delivering movies on this platform is an effective way the company can increase its competitive advantages. Which level or levels of analysis and leadership paradigm are presented in this case, and did Hastings use the management or leadership paradigm? According to Lussier and Achua (2007), leadership has four main paradigms including trait, behavioral, integrative and contingency. However, in this case study there are level one and two paradigms that have been discussed which are behavioral and trait. Behavioral and trait paradigm defined personal characteristic of Reed Hasting such as agreeable, extrovert and open to new experiences. While the trait encompasses interpersonal relationship, demographic and task competence behavioral are related to style of leadership such as from autocratic to participative (Lussier & Achua 2007). Hastings used the leadership paradigm to improve performance at Netflix. Even thoug, Reed Hastings is a manager by definition, transformation of Netflix needed more of leadership skills which he was prompted to exhibit. Leadership paradigm influences the relationship between a leader and the employees while management requires planning, organization, directing and monitoring (Pless 2007, p.441). How did Hastings Big Five model of personality leadership traits change from Pure Software to Netflix? Various traits are also beneficial to a leader in dealing with new surprises brought by globalization. In applying the “Big Five Model of personality traits”, it is arguable that Hastings encompassed fairly higher forms of these five traits consisting of extraversion, openness to experience, agreeableness, conscientiousness and adjustment, especially when he came to Netflix (Zhan & Bartol 2010). However, at Pure Software, Hastings exemplified “bad” traits which could not make him perform better in any organization. He was stronger in extroversion hence had a high need for authority; he wanted to control all situations including ideas, decision and communication (Judge, Piccolo & Kosalka 2009). However, he changed and was able to use this trait positively while at Netflix. As an agreeable leader, Hastings became cooperative and understanding and trusting to his employees. Those traits are of great advantage to a leader to coexist and create a good rapport with employees from a different culture. Additionally, his openness to experience can be portrayed by his adoption of innovation to improve its product provision. In 2000, he led Netflix in the development of brand boxes incorporated with hard drive which connected the customer to movie queue for download. He also created a partnership with Epix (Lussier & Achua 2007, p.223). As a conscientious leader, Hastings strived to provide concrete feedback at Netflix. The need was also depicted is high need to achieve when he transformed the company to a positive growth. It is such passion that makes them succeed in a and become top spot ahead of Comcast and Warner Bros University of Iowa leadership styles that Hastings use at Pure Software and Netflix At Pure Software, Hastings used autocratic style of leadership. According to University of Iowa, studies on leadership styles autocratic leaders are usually give orders and directives (Schaubroeck, Lam & Cha 2007, p.1026). At Pure Software, Reed hasting dominated every decision and never allowed other perspectives from staffs. The study also concluded that it depends strongly on staff receiving orders from manager as opposed to a leader providing more clarification or seeking dialogue. It also works through warnings and threat. Back at Pure, Reed judged employees on the basis on mistakes and often rebuked through non-verbal harassment like eye-rolling or in floggings (Lussier & Achua 2007, p.223). He however emulated change at Netflix and adopted a participative style. University of Iowa studies on leadership styles held that participative leaders frequently empower and encourage their staff during to come up with a new concept. At Netflix, he stopped rolling his eyes and encouraged more ideas through team work. This shows that the leader appreciates the potential talents, and contribution to organizational goals (Piccolo & Colquitt 2006). On the other hand, employees feel a sense of ownership of the company. How power, organizational politics, networking, and negotiation are, or are not, discussed in the case. McCuddy (2005) defines organizational politics as the application social networking and power in the organization to attain changes which benefit individuals inside or outside it. Power by people could serve individual interests with no regard to their impact on the firm itself. From this perspective, it is obvious that organization politics was at power play and using autocratic leadership was a way Reed Hastings wanted to remain powerful and over other members of the organization. Organizational politics is not is good for the health of the business because it makes people involve pulling to their direction as shown by Hastings. Also, it will leave the organization disgruntled as people pursue personal goals than organizational goals (Pless 2007). Conclusion In conclusion, the essay has established the in the globalized business world, change is inevitable and modern managers must have strategies of managing to be able to survive. Creating a learning organization is important to employees and organization in general in keeping with changes which taking place within the industry. Change is not easy people always state and people undertaking are likely to be overwhelmed with challenges such as resources, poor planning and employees’ resistance. However, managers must aim to succeed through best practices such as communication, employees’ involvement, resources mobilization and proper planning. References Barrett, D.J 2006, Strong communication skills a must for today’s leaders, Handbook of Business Strategy, vol.7, no.1, pp.385–390. Howarth, M. D & Rafferty, A. 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