Bob's Gutsy Leadership Blog

Netflix Is Proof That Surprises Damage Reputations

Let’s face it; human beings don’t like to be surprised.   As customers, they don’t like it when one of their favorite products suddenly changes.  As individuals, they don’t like it when another person gives them news that is not consistent with what that person has said in the past.

The company Netflix provided a vivid example of this recently.  It was formed in 1997 and provided movies in DVD format by mail.  As technology evolved, Netflix offered streaming of movies over the internet.  By mid- 2011, Netflix represented an astounding 30% of all U.S. internet traffic.

The surprise occurred in August, 2011 when Netflix suddenly announced a 60% price increase.  Consumers reacted violently, and Amazon, WalMart, and HBO benefitted as their streaming offerings grew.  During the first quarter of 2012, Netflix lost $5 million versus a profit of $60 million a year earlier.  The stock price has dropped 75% in the last twelve months and is currently around $65.

When another person confronts you with information that is vastly different from what you would have assumed from previous interactions, it really causes you to begin to question the overall objectivity and forthrightness of the other person.  This is very career damaging when it happens in a work setting.  If you are sugar-coating bad news to your boss and then suddenly you realize you have to unveil the truth, I will guarantee you your stock has gone down permanently with that individual and it will hurt your reputation.

So…what’s the learning from all of this?

1.) In working with your boss, always be totally objective, laying out all of the information you know and your current interpretation of it.

2.) If you have people reporting to you, stress to them to not water-down bad news or exaggerate good news and to keep you informed every step of the way as things change.

3.) Regularly communicate during periods of change; this helps avoid surprises.

Just remember, objectivity is always your friend.

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