Impact SUSE Hub (2024)

Netflix is a prime example of an organization that has thrived after fully embracing open-source technology. According to a recent survey conducted by Economist Impact and sponsored by SUSE, open-source technology is the most prevalent channel of open innovation.

Netflix both leverages and contributes to open source technology. Deconstructing Netflix's system shows that it adopts this approach for agility, reliability, scalability, security and reducing costs while maintaining its competitive advantage by creating exclusive content.

Netflix's technology deployment allows for continuous build and integration of its services, which are found in more than 50 countries. Much of the company's success can be attributed to the open-source environment that it has created for its products and services.

Netflix created the conducive context and ecosystem for open innovation through its robust organizational culture of "freedom and responsibility". Evolved over ten years, freedom and responsibility are seen as a gateway to creativity.

In 2006 Netflix launched an open innovation challenge to the public called Netflix Prize. This aimed to find a filtering algorithm that improved user movie and series suggestions by 10% compared with its platform at the time. Although faced with some legal issues surrounding user privacy, the challenge successfully met its original objective. A total of 40,000 teams from 186 countries entered the competition and, in less than three years, two solutions were proposed.

Netflix dove head-first into what may seem to the outsider like a pool of chaos—a culture where “no rules rule”. From early on, the leadership at Netflix realized that the short-term optimization of efficiency is the death of long-term success and innovation. As companies grow, so does complexity. To deliver the best results most efficiently, Reed Hastings, the co-founder and chairman of Netflix, notes that it is crucial to minimize rules and inhibit chaos with best-performing people.

Encouraging original thinking and not telling employees what to do in the innovation process requires that the team members are highly talented, self-disciplined, and aligned on the vision and objectives of the tasks at hand. A leader should provide all the information so the team members can make great decisions and accomplish their work without oversight and process controlling their actions.

Co-creation brings about co-accountability and makes hierarchy irrelevant. It is, therefore, most important that an efficient system of two-way feedback is in place. Netflix invests significant time teaching their employees the right and wrong way to give feedback and establish a candor communication platform while considering the cultural nuances in different regions where it operates. A feedback loop is seen as the most effective tool to improve performance.