What my Netflix algorithm showed me about business

Whanganui Chronicle – By Russell Bell

I grew up with a love of statistics and mathematics. So much so that as a child I used to while many hours away creating my own sports leagues – cricket, football and rugby – and with dice I would pit each team against each other in matches and maintain leagues and player statistics.

All good statisticians know that you should avoid bias but I have to say that when Liverpool were playing or Richard Hadlee was bowling in my games they had a high rate of success. Needless to say EA Sports and Playstation have rendered these very enjoyable games redundant.

So, you can imagine that when an article appeared regarding how the Netflix algorithm shapes it’s offering to my viewing preferences – the mathematics of it boggles the mind. Not simply because algorithms are a challenge to understand but the results are quite astounding once you have established trends in your viewing.

After setting up a new user profile for my own viewing (after Mrs Bell and Miss Bell sent the algorithm into overdrive for gardening shows, La La Land – like movies and teen dramas) the titles recommended for me (including documentaries) are incredibly aligned with what I like to watch.

This is a very powerful tool and, inevitably, there will be variants on other platforms which are both designed to deliver what customers ultimately want but also drive sales for businesses. In effect, what a cold and heartless computer is doing is ‘learning’ in much the same way as a business owner learns about the habits of their customer. The good news is that it will never replace the heart and instinct of person to person relationships, but being housed on the World Wide Web it is much easier to access.

Therein lies the challenge facing today’s businesses and those of tomorrow; an inexorable march of technology from venues far and wide into your marketplace and replicating the things which you do (some things done well, others not – but rest assured refinement of these models will be ongoing and inevitable).

Which is why continuous improvement of everything we do is crucial. When in the past businesses could get by with passable service that is no longer the case because the alternatives are many and easily accessible. The great irony being that the businesses like Netflix, Spotify and Amazon are effectively platforms of continuous improvement.

For me, strategic planning engagements over the years have evolved into change management exercises. Clients are acknowledging that fundamental shifts need to occur to deal with a fluid market. One client came up with a great analogy, likening the market and their presence in it to that famous video of a polar bear on a floating sheet of ice – “the bear had better learn and brace for a swim in the cold water (where once he had solid ground to stand on)”.

The point being that the ice may never return for the bear and he had to evolve or soon face consequences which may not be palatable. The good news, as was the case with this client, we designed strategies and tactics which are both moving with the times and delivering results but “the bear had to swim and let go of the melting ice sheet”.
So tonight when you watch Netflix, stream music or buy something online think of your business and what’s next. I’d be delighted to talk with you about what you are seeing.

To discuss business strategy, process excellence and leadership mentoring – contact Russell on 021 2442421 or John Taylor on 027 4995872.

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