Unlocking the Customer Value Chain: How Decoupling Drives Consumer Disruption

by Thales S. Teixeira

Netflix’s decision reflects a deep and abiding customer-centricity on the part of Hastings and other company executives. A traditional incumbent would have focused on its most valuable resources, an inventory of millions of DVDs and multiple shipping and handling facilities around the country. But for a company streaming content online, those assets didn’t matter. In fact, they were worthless. The new resource would have to include powerful servers, broadband bandwidth, and licensing agreements with Hollywood studios. The almost total divergence in strategic resources required for the two business models would have impeded the transition, if not for Hastings’s prescience and deep customer focus. To execute this courageous business model transformation, he began to use internet service providers’ most valuable strategic resources: broadband bandwidth.