If you've been on this planet for any length of time, you’ve had ample opportunity I'm sure to say the words, I’m sorry.  In the business world, when is the last time you heard a CEO use those very same words? It can be difficult for executive to let down the curtain and show vulnerability but it’s often even hard to admit their decision or product missed the mark or that it just wasn’t the right time.  Listed below is an apology letter crafted by the Co-Founder and CEO of Netflix regarding their recent announcement to raise their subscription rates.  Now many cynical people will smirk and say the timing of this is just to protect their shareholder value or try to win back the customers they lost.  Regardless of the motivation, I don’t believe you can ever go wrong admitting your mistakes, especially to your customer base. In business, it’s not always about which company never makes mistakes but rather how the company responds to the mistakes that truly counts. 

Dear Dennis,

I messed up. I owe you an explanation.

It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming and the price changes. That was certainly not our intent, and I offer my sincere apology. Let me explain what we are doing.

For the past five years, my greatest fear at Netflix has been that we wouldn't make the leap from success in DVDs to success in streaming. Most companies that are great at something – like AOL dialup or Borders bookstores – do not become great at new things people want (streaming for us). So we moved quickly into streaming, but I should have personally given you a full explanation of why we are splitting the services and thereby increasing prices. It wouldn’t have changed the price increase, but it would have been the right thing to do.

So here is what we are doing and why.

Many members love our DVD service, as I do, because nearly every movie ever made is published on DVD. DVD is a great option for those who want the huge and comprehensive selection of movies.

I also love our streaming service because it is integrated into my TV, and I can watch anytime I want. The benefits of our streaming service are really quite different from the benefits of DVD by mail. We need to focus on rapid improvement as streaming technology and the market evolves, without maintaining compatibility with our DVD by mail service.

So we realized that streaming and DVD by mail are really becoming two different businesses, with very different cost structures, that need to be marketed differently, and we need to let each grow and operate independently.

It’s hard to write this after over 10 years of mailing DVDs with pride, but we think it is necessary: In a few weeks, we will rename our DVD by mail service to “Qwikster”. We chose the name Qwikster because it refers to quick delivery. We will keep the name “Netflix” for streaming.

Qwikster will be the same website and DVD service that everyone is used to. It is just a new name, and DVD members will go to qwikster.com to access their DVD queues and choose movies. One improvement we will make at launch is to add a video games upgrade option, similar to our upgrade option for Blu-ray, for those who want to rent Wii, PS3 and Xbox 360 games. Members have been asking for video games for many years, but now that DVD by mail has its own team, we are finally getting it done. Other improvements will follow. A negative of the renaming and separation is that the Qwikster.com and Netflix.com websites will not be integrated.

There are no pricing changes (we’re done with that!). If you subscribe to both services you will have two entries on your credit card statement, one for Qwikster and one for Netflix. The total will be the same as your current charges. We will let you know in a few weeks when the Qwikster.com website is up and ready.

For me the Netflix red envelope has always been a source of joy. The new envelope is still that lovely red, but now it will have a Qwikster logo. I know that logo will grow on me over time, but still, it is hard. I imagine it will be similar for many of you.

I want to acknowledge and thank you for sticking with us, and to apologize again to those members, both current and former, who felt we treated them thoughtlessly.

Both the Qwikster and Netflix teams will work hard to regain your trust. We know it will not be overnight. Actions speak louder than words. But words help people to understand actions.

Respectfully yours,

-Reed Hastings, Co-Founder and CEO, Netflix

p.s. I have a slightly longer explanation along with a video posted on our blog, where you can also post comments.

I received this little bag of goodness from one of my customers who knows what I am passionate about. Do you know what YOUR customers are passionate about? When is the last time you surpised THEM with a token of appreciation?

People don’t buy what you do; they buy why you do it.  The goal is not to do business with everybody who needs what you have; the goal is to do business with people who believe what you believe. A company like Apple and even people like the Wright Brothers and Martin Luther King are great examples of this. Check out this great video that challenges you to ask yourself “What’s your why?”

I have a confession to make. I have watched every season of the Reality TV show Survivor.  Not only do I enjoy watching it every week with my teenage daughter but surprisingly there are some good business lessons to be gleaned from this show as well. Survivor is a microcosm of today’s business environment.  There are many aspects to the game of Survivor but at its core, it really is a social game. People are thrown together from all walks of life and are part of a team (at least at the beginning) with the ultimate goal of being the one to outlast, outwit and outplay everyone.  They have to learn to live and work together in less than perfect conditions. The contestants face many hurdles in the forms of challenges and puzzles that have to be figured out, not to mention the severe competitive nature of everyone knowing that only one person will come out on top.  What is quite fascinating to watch is that each season there are a few contestants who underestimate the importance of the social aspect and they inevitably don’t do very well. When you stop and think about it, business really works in the same fashion.  So much of a business environment can be broken down to learning to get along with co-workers, superiors and being part of a team, to achieve a common goal (business plan).  The consequences in business however are far more damaging than just getting kicked off a TV show.  Here are some other common aspects that both Survivor and business share:

Survivor                                               Business

Tribe mates                                       Co-workers

Competitions                                    Deadlines, projects, unplanned events

Tribe leader                                       Boss, immediate supervisor

Lack of food and resources           Budget constraints, cost reductions, staff reductions

Tribal Council                                   Employee reviews, promotions, demotions

Success is business often comes down to the business relationships you have. How is your social game at work?  Are you playing to win or merely survive?