Disrupting companies led by powerful entrepreneurs appear on the scene as if from nowhere and are often new to the industry they intend to disrupt. Existing and entrenched companies unable or unwilling to adapt fast enough find themselves suddenly in a defensive mode and forced to change direction, cut staff, and are often either acquired by stronger companies—including the disrupting entities—or go bankrupt. When enough companies are forced to change or close, whole communities can be decimated. And as technology advances at lightning speed, all of this is happening faster and faster.
While well-executed business disruptions have proven to be the best way to transform our lives by creating immense value, almost every meaningful large-scale disruption produces winners and losers in the short run.
And yet there are a handful of highly successful disruptive leaders and their companies who are always on the offensive and resist being significantly disrupted by another entity. Bezos and Amazon, Charles Schwab and his eponymous financial services company come to mind as well as companies like Toyota and Honda that disrupted the U.S. automotive industry in the 1970’s. Despite occasional missteps, they are perennial winners of almost any battle they start or are dragged into.
And then there is Reed Hastings, the man who founded Netflix in 1997. He is one of the few great disruptive leaders who almost disrupted himself and his company out of existence.
Hasting’s first big strategic – and very wise – decision was to focus exclusively on the DVD rental-by-mail business. Within a few years, Netflix had successfully disrupted the existing bricks and mortar video rental industry by putting thousands of smaller DVD rental shops out of business, although they still had Blockbuster to contend with.
Determined to stay ahead of Blockbuster and other erstwhile competitors, they started streaming videos. While that move finally made Blockbuster a distant memory, Netflix had inadvertently disrupted its own DVD rental model and essentially put that business out of business.
By 2013 Netflix was facing potential bankruptcy. With his back against the wall, Hastings stunned the world by integrating backward into the production of movies and TV series. This move not only saved his company but caused a major disruption to the established movie and TV companies. Since 2015 the traditional TV and home video market has steadily fallen in the U.S., and it is expected to decline through at least 2022 thanks in large part to Netflix.
Reed Hastings and his company reentered the pantheon of businesses with the power and knowledge to disrupt and transform whole industries while forcing slow-moving and uncompetitive companies out of business.
The Seven Traits of Successful Disruptive Leaders #4: Hyper-Capitalists with a Mission
The Seven Traits of Successful Disruptive Leaders #3: Stretchers of Limits
The Seven Traits of Successful Disruptive Leaders #2: Ideators and Visionaries, But Not Inventors
The Seven Traits of Successful Disruptive Leaders #1: Brainiacs