Innovation Project

Presented by:

GROUP 1
Table of Contents

Introduction 01

Current innovation capability 02

Innovation process 03

Develop new products/services 04

Table of Contents

INTRODUCTION 01

Current innovation capability 02

Innovation process 03

Develop new products/services 04

Netflix is a multilingual, cross-genre streaming entertainment
service that provides a huge selection of TV series, films,
animation, documentaries, and more

In 1997, Reed Hastings and Marc Randolph launched Netflix in

Scotts Valley, California, as a mail-order DVD rental service
Key aspects of Netflix
Subcription Content Technological
model library innovation
Netflix uses a A large quantity of Netflix's Easy-to-use interface,
subscription-based original material is produced. intelligent algorithms that
business strategy with Netflix licenses a wide range enable personalized
several tiers that offer of TV series and films from suggestions, and seamless
various service levels other studios and networks streaming technology
Key aspects of Netflix
Market Business Financial
influence strategy performance
Netflix has caused a major Netflix makes use of data Netflix generates billions
upheaval in the film and analytics to better understand of dollars in revenue
television industries, viewer preferences and annually from over 230
impacting the creation and streamline the creation and million customers
consumption of content, the acquisition of content worldwide
drop in cable TV subscribers
Challenges
Fierce competition from other streaming services like Disney+,
Amazon Prime Video, HBO Max, and Apple TV+
Financial resources are being strained by the growing expenses
of creating original, high-caliber content, and studios
Various rising price policies, which poses a threat to decreasing
the number of users
Variety of regulatory regimes across the globe, which affects its
operational strategy and content availability
Market saturation in developed regions like North America and
Europe, which slows subscriber development

Netflix needs to constantly innovate and adjust.

Role of innovation
Adaptive streaming and a strong content delivery network thanks to state-of-the-art
streaming technology
Advanced algorithms increase user engagement by tailoring content recommendations
Production of highly acclaimed and globally successful original programming, which is
informed by data analytics.
Clever use of an ad-free, subscription-based business model, worldwide content
launches, and a culture that rewards innovation and takes calculated risks
Table of Contents

Introduction 01

CURRENT INNOVATION CAPABILITY 02

Innovation process 03

Develop new products/services 04

2.1 Innovation strategy analysis

SWOT analysis
Innovation Innovation
toward innovation
vision strategy
goals
Innovation vision
Goal: To become the premier entertainment destination in the world by

offering consumers an exceptional streaming experience that includes

customized, high-quality content that keeps them interested.

Core value: With these advancements, Netflix hopes to provide a high-

quality streaming service that is affordable for most users.

S W O T
ANALYSIS
 strengths weaknesses
New
Provides Geographically-
Available content is
original Easy to use based content
offline not
content varies
available

opportunities THREATS
Netflix
Regulatory
International Technological Expansion into Intense sharing
and legal
Expansion Innovations new areas competition password
challenges
crackdown
Innovation strategy
Netflix's strategic direction is accomplishing its goals by providing a high-quality

service that is widely available

Focus on user experience

Content diversification

Technological innovation

Global expansion
 2.2 Current innovation capacity assessment
No. Organizational characteristics Assessment
1 Growth orientation Strong

2 Organizational heritage and innovation experience Strong

3 Vigilance and external links Strong

4 Commitment to technology and R&D intensity Strong

5 Acceptance of risks Strong

6 Cross-functional cooperation and coordination within organizational structure Strong

7 Receptivity Neutral

8 Space for creativity Neutral

9 Strategy towards innovation Strong

10 Coordination of a diverse range of skills Strong

growth orientation
Netflix’s commitment to growth is evident in its
27 years of continuous improvements
Throughout the year 2023, the company
remained focused on reaccelerating growth by
enhancing the offering of its lower-priced ad-
supported subscription plan, increasing the
appeal of its service to both advertisers and
members, and addressing account sharing across
all jurisdictions
By the end of 2023, Netflix had over 260 million
paid memberships, $33.7 billion in annual
revenue, representing around 7% year-over-year
growth.
COMMITMENT TO technology and R&D intensity

Whole cross-functional team of researchers and a forum for discussion

Their research application spans many areas including Analytics, Computer
Vision and Graphics, Consumer Insights, Encoding & Quality, Machine Learning,...
Key features of Netflix such as the personalized recommendation system, the
original contents or its recent restrictions on password sharing are all outputs
from the company’s vigorous investment in R&D activities.
Space for creativity
Netflix empowers employees to take ownership and make autonomous decisions
The company also organizes an annual Netflix Hack Day, an event in which employees are
given the freedom and resources to work on creative projects outside of their usual
responsibilities
Netflix’s culture of seeking excellence by only keeping their highly effective people, former
employees have revealed that the company is very prone to firing someone if they make

any mistakes and have described Netflix’s culture as “culture of fear”.

Table of Contents

Introduction 01

Current innovation capability 02

INNOVATION PROCESS 03

Develop new products/services 04

3.1. Overview of innovation process
5th generation of innovation process

1. Science and Technology: Data analytics, Microservices Architecture,

AI and Machine Learning, VR and AR
2. Strategic and technological integration with stakeholders
Strategic partnership: Numerous local and regional entities to
enhance its service delivery
Open Connect: It aims to enhance streaming performance by placing
Open Connect Appliances (OCAs) within Internet Service Providers
(ISPs) and at Internet Exchange Points (IXPs) around the globe
3.1. Overview of innovation process
5th generation of innovation process

3. Market: Personalized content, Localized content, Continuous feedback

4. Process driven by
Innovation strategy
High-level organizational and technological integration: Netflix's culture of innovation provides a
real-world blueprint for fostering creativity and adaptability within organizations
 innovation process of netflix

Search Select Implement Capture

3.1. Overview OF innovation process
Current innovation process

1. Search: Customers, employees, market, R&D

2. Select:
Data analytics
Evaluates them in order to choose the most appropriate projects that are suitable with the
company’s strategy
3. Implement: Scrum, Kanban, DevOps, Agile at Scale, Design thinking
4. Capture:
Continuous Feedback
Become Leader in the Industry: stays updated on market and technology trends to stay ahead
3.2. Sources of innovation
1. Internal Sources of Opportunities
2. External Sources of Opportunities

Sources Innovation types Proportion (%)

1. The unexpected Incremental 10

2. The incongruity Incremental 10

3. Innovation based on process need Radical 10

4. Changes in industry or market structure Radical 15

5. Demographics Radical 15

6. Changes in perception, mood, and meaning Disruptive 20

7. New knowledge Disruptive 20

3.3 . Idea Management Programs
1. HR Idea Management:
Netflix fosters a culture of intrapreneurship, encouraging
employees to innovate and be creative within their roles
2. R&D Idea Management:
Netflix receives ideas for new products, such as original shows
and licensing shows
Involve developing cutting-edge streaming technologies
3. Marketing Idea Management:
Netflix's marketing department operates in a customer-centric
manner, continuously seeking feedback and insights from users
3.4. Selecting innovation
Budget for innovation
1. Industry Benchmark: The entertainment 3. Strategy of the company:

and tech industry companies in this sector Content First Strategy

often allocate around 5-10% of their Technology and Data Utilization

revenue to R&D Global Expansion

2. Opportunities for Innovation: 4. Growth target of the company:

Original Content Creation Subscriber Growth

Technology Advancements Revenue Growth

User Experience Market leadership

3.4. Selecting innovation
Buckets for alternative opportunity areas
Business Product Communication Process

Interactive and Personalized AI-driven content

Redefine Entering the
choose-your-own- marketing based production and
Category gaming industry
adventure content on AI analytics scheduling

Virtual reality (VR)

New social media Blockchain for
Expanding into live and augmented
New Offering engagement secure content
sports streaming reality (AR)
strategies distribution
experiences

Enhancing
Improved Automated quality
Incremental subscription Enhanced customer
recommendation control in
Improvement models (e.g., service chatbots
algorithms production
bundled services)
3.4. Selecting innovation
Current projects at Netflix

Dynamically Optimized Improve match Reward innovation for

(DO) encoding for High cutting with long-term member
dynamic range (HDR) Computer Vision and satisfaction about the
video Pattern Recognition show recommender
system
 3.5. INNOVATION IMPLEMENTation
NETFLIX STAGE-GATE MODEL
6-Stage Ordering Process

STAGE 3: STAGE 5:
STAGE 1: STAGE 2: STAGE 4: STAGE 6:
BUSINESS TESTING &
DISCOVERY SCOPING DEVELOPMENT LAUNCH
CASE VALIDATION

Gate 1: Idea Gate 2: Gate 3: Go to Gate 4: Gate 5: Gate 6:

Screen Second Development Go to Go to Post-
Screen Testing Launch Launch
Review
3.6. Commercialization
Netflix’s business model canvas
3.6. Commercialization
Netflix’s critical success factors

Content licensing 1

Partnership with telecom and cable providers 2

Investment in the original content 3

Culture technology innovation (A/B test results, "Informed Captain" model) 4

Keeping up with customer insight 5

Table of Contents

Introduction 01

Current innovation capability 02

Innovation process 03

DEVELOP NEW PRODUCTS/SERVICES 04

 Design thinking process
A human-centered approach to innovate through the use of the tools of
design work to integrate human needs, technological feasibility and
business requirements. It challenges businesses to let go of assumptions
and rethink their understanding of their target customer base
Design thinking process

Netflix Design Thinking prototype

1. Empathy
WHY?
1. Empathy
Netflix users enjoy watching Neftlix

WHY?
Netflix users find the platform entertaining
and accessible to a diverse content
5 Whys Questions to
WHY?
understand the users
Netflix users seek relaxation and
satisfaction

WHY?
Netflix users deal with stresses from work,
study, life...
ROOT SOLUTION

WHY?
Netflix users view challenges as a way for
them to grow and be rewarded
2. define Netflix users need a way to
feel relaxed and rewarded
because they have to deal
with stresses from their life

BUT
they find some entertainment
not diverse and enjoying
enough
 3. ideate
IDEA 1: WATCH PARTIES
Different accounts can
watch movies together,
which is similar to
video calling platforms

IDEA 2: GAMIFICATION
Achieving points by
completing missions,
then using points to
receive different benefits
4. prototype

Upgrade
4. prototype
 5. Test
Testing criteria
Effectiveness Behavioral Technical
User Engagement User Motivation User Experience
of Rewards Changes Performance

Measure frequency
and duration of user Assess the Analyze
interactions motivational whether users
Collect qualitative
impact of points exhibit desired
feedback Evaluate the Identify and fix
Track the number of and rewards behaviors
attractiveness any technical
missions completed
Identify any of the rewards issues
Observe changes Measure
usability issues
Monitor the rate of in user behavior behavioral
repeat users and and participation changes
progression
 5. Test
feedback Gamification has potential as:

Enhance user Have motivational Provide positive

engagement impact and rewards user experience
Increase users’ Encourage users to Provide enjoyable and
motivation and explore more content accessible experience
enjoyment on Netflix. through seamless
High frequency and Maintain users’ interest interactions and quick fix
duration of user and participation. minor usability issues based
interactions. Increase users’ loyalty. on user feedback.
THANKS FOR watchING

Stay hungry, stay foolish!

group 1