Introduction
In the field of strategic management, understanding how strategies form and evolve within organisations is crucial for analysing business performance and adaptability. Henry Mintzberg, a prominent scholar, introduced the concept of ten ‘schools’ or lenses through which strategy can be viewed, each offering a distinct perspective on how strategies are conceived and implemented (Mintzberg, Ahlstrand and Lampel, 1998). These lenses highlight the multifaceted nature of strategy, distinguishing between intended strategies—those deliberately planned—and realised strategies, which emerge from actual actions and adaptations. This essay applies three of Mintzberg’s lenses—specifically, the planning school, the learning school, and the environmental school—to Netflix, a global streaming service provider, to uncover tensions between its intended and realised strategies. Netflix provides a compelling case study, having transitioned from a DVD-by-mail rental service to a dominant player in online streaming, amid rapid technological and market changes. By examining these lenses, the essay will demonstrate how deliberate planning often clashes with emergent learning and external pressures, leading to strategic tensions. The analysis draws on academic sources to evaluate these dynamics, revealing implications for strategic management in dynamic industries.
The Planning School Lens: Deliberate Strategy Formulation at Netflix
The planning school, one of Mintzberg’s prescriptive lenses, views strategy as a formal, analytical process involving systematic forecasting, goal-setting, and structured implementation (Mintzberg, Ahlstrand and Lampel, 1998). Through this lens, intended strategy is a top-down blueprint designed to achieve specific objectives, often assuming a stable environment. Applying this to Netflix, the company’s early intended strategy in the 2000s exemplified planning school principles. Founded in 1997, Netflix initially planned to disrupt the video rental market by offering a subscription-based DVD mailing service, with clear goals to expand customer base and inventory through data-driven forecasts (Shih, Kaufman and McCall, 2010). For instance, CEO Reed Hastings outlined a multi-year plan to achieve profitability by 2003, involving budgeted expansions and partnerships, such as with major studios for content licensing.
However, tensions arose between this intended strategy and the realised one, as external disruptions challenged the planned approach. By the mid-2000s, the rise of digital streaming technologies forced Netflix to deviate from its DVD-centric blueprint. The intended strategy, focused on physical media, became misaligned with market realities, leading to a realised strategy that incorporated online streaming as early as 2007 (Lobato, 2019). This shift highlights a key limitation of the planning school: its assumption of predictability. As Mintzberg critiques, planning can lead to rigidity, where organisations fail to adapt to unforeseen changes, creating a gap between intention and realisation (Mintzberg, 1987). In Netflix’s case, the tension manifested in internal debates and a temporary stock price drop in 2011 when the company attempted to separate its DVD and streaming services under the ill-fated Qwikster brand, underscoring how over-reliance on formal planning can exacerbate strategic mismatches. Indeed, this episode revealed that while planning provided a structured foundation, it often overlooked emergent opportunities, pushing Netflix towards a more adaptive realised strategy.
The Learning School Lens: Emergent Strategy and Adaptation
Contrasting with the planning school, Mintzberg’s learning school perceives strategy as an emergent process, where organisations learn incrementally through trial and error, experimentation, and feedback from the environment (Mintzberg, Ahlstrand and Lampel, 1998). This lens emphasises bottom-up contributions and adaptability, often resulting in realised strategies that diverge from initial intentions. For Netflix, the learning school lens illuminates how the company evolved beyond its planned DVD model through continuous experimentation. Initially, Netflix’s intended strategy did not prioritise streaming; however, by observing competitors like YouTube and adapting to broadband proliferation, the company learned to pivot. A pivotal moment was the 2010 launch of original content, such as “House of Cards” in 2013, which emerged from data analytics on viewer preferences rather than a predefined plan (Jenner, 2018).
Tensions between intended and realised strategies become evident here, as Netflix’s deliberate expansion into international markets—intended to follow a planned rollout—often required on-the-ground learning to address local regulatory and cultural challenges. For example, in entering markets like India and Brazil, Netflix’s realised strategy involved adapting content libraries and pricing models based on real-time feedback, diverging from the uniform global plan (Lobato, 2019). This emergent approach, while innovative, created internal tensions, such as resource allocation conflicts between maintaining the core U.S. market and investing in unproven international ventures. Mintzberg argues that learning fosters resilience but can lead to fragmented strategies if not integrated with intention (Mintzberg, 1987). Netflix’s experience supports this, as its realised strategy of heavy investment in original programming—reaching over $15 billion annually by 2019—stemmed from learning about content scarcity, yet it strained financial resources initially aligned with a more conservative intended budget. Therefore, the learning lens uncovers how adaptation bridges gaps but also amplifies uncertainties in strategy realisation.
The Environmental School Lens: External Forces Shaping Strategy
The environmental school, another of Mintzberg’s lenses, treats strategy as a reactive process shaped by external forces, where organisations must adapt to survive in a Darwinian-like landscape (Mintzberg, Ahlstrand and Lampel, 1998). This perspective highlights how intended strategies can be overridden by uncontrollable environmental factors, such as technological shifts or competitive pressures. Applying this to Netflix, the company’s intended strategy in the early 2010s focused on consolidating its streaming dominance in the U.S., but external disruptions like the entry of rivals (e.g., Disney+ in 2019) and regulatory changes forced a realised strategy of aggressive global expansion and content diversification.
A clear tension emerged during the COVID-19 pandemic, which amplified environmental influences. Netflix’s intended strategy pre-2020 emphasised steady subscriber growth through planned content releases; however, lockdowns spurred unprecedented demand, leading to a realised surge in viewership but also supply chain disruptions in production (Alexander, 2020). This environmental pressure revealed mismatches, as Netflix had to reactively invest in licensed content to fill gaps, diverging from its intention to prioritise originals. Furthermore, geopolitical factors, such as data privacy laws in the EU (e.g., GDPR implemented in 2018), compelled adaptations that were not part of the original plan, illustrating the school’s view that strategy is often contingent on external contingencies (Mintzberg, Ahlstrand and Lampel, 1998). Critically, this lens exposes limitations in Netflix’s approach: while it adapted successfully, the tension between intention and realisation contributed to subscriber churn post-pandemic, as environmental normalcy reduced the temporary boost. Arguably, this underscores Mintzberg’s point that ignoring environmental dynamism can widen strategic gaps, even for agile firms like Netflix.
Conclusion
In summary, applying Mintzberg’s planning, learning, and environmental lenses to Netflix reveals significant tensions between intended and realised strategies. The planning lens highlights rigidity in formal blueprints, as seen in Netflix’s initial DVD focus clashing with digital shifts. The learning lens demonstrates emergent adaptations, such as original content creation, which bridged but also complicated intentional goals. Finally, the environmental lens exposes reactive necessities driven by external forces like competition and pandemics, further diverging realisation from intention. These tensions illustrate the complexity of strategy formation, where deliberate plans often yield to emergence and adaptation in volatile industries. For strategic management practitioners, this analysis implies the need for hybrid approaches that integrate multiple lenses to mitigate mismatches, enhancing organisational resilience. Ultimately, Netflix’s success despite these tensions suggests that acknowledging such dynamics can transform potential weaknesses into competitive advantages, though ongoing vigilance is essential in an ever-evolving landscape.
References
- Alexander, J. (2020) ‘Netflix’s Subscriber Growth Surged in Q1 2020 Amid Pandemic’, The Verge. Available at: https://www.theverge.com/2020/4/21/21229652/netflix-earnings-q1-2020-subscriber-growth-coronavirus-pandemic-streaming (Accessed: 15 October 2023).
- Jenner, M. (2018) Netflix and the Re-invention of Television. Palgrave Macmillan.
- Lobato, R. (2019) Netflix Nations: The Geography of Digital Distribution. New York University Press.
- Mintzberg, H. (1987) ‘The Strategy Concept I: Five Ps for Strategy’, California Management Review, 30(1), pp. 11-24.
- Mintzberg, H., Ahlstrand, B. and Lampel, J. (1998) Strategy Safari: A Guided Tour Through The Wilds of Strategic Management. Free Press.
- Shih, W., Kaufman, S. and McCall, D. (2010) ‘Netflix in 2010: Transformation and Challenges’, Harvard Business School Case 710-445.
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