Lessons Learned Part 1: CEO Case Study – Netflix’s Reed Hastings

“I messed up,” began Netflix CEO Reed Hastings in a September 18th blog post and email to customers. Such a straightforward and personal acceptance of responsibility should have set the tone for an apology that would make it easy for customers to forgive and forget, so why did it only fuel a backlash against his company?

As you likely know by now, Hastings was not apologizing for raising prices and complicating things for his customers by separating DVD rental and streaming services. No, he apologized for the way the company mishandled the way they broke the news. “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,” the post continued. “That was certainly not our intent, and I offer my sincere apology.”

Hastings went on to announce even more changes, separating the services into two companies with two pay structures, demonstrating that he clearly hadn’t heard any of the original concerns. He even seemed to poke fun at the fact that they had raised prices instead of confronting it head on, creating an even wider chasm in appearing not to take concerns seriously.

But what could he have done differently? Public apologies are never easy, but could he have done better? Here are some things we can learn from Hastings’ ordeal, should we ever find ourselves in a similar unenviable position.

• Be authentic – Hastings’ apology was hardly clear or unambiguous, making it much less effective. A direct response to customer concerns is the only way to make it clear you mean what you say, and the only way to avoid further apologies to clarify your statements.

• Respond immediately – Netflix announced their plans to increase rates on July 12th, and Hastings’ half-hearted apology came September 18th. As the immediate onslaught of 5,000+ comments in response to his blog post will attest, his mea culpa could have come earlier. The lag time made it appear his hand was finally forced.

• Be personal – Hastings could certainly have appeared more contrite if he had looked his customers in the eye in a press conference, and invited questions. Instead, he pushed out an unexpected and faceless email with carefully constructed language, and engaged in no immediate Q&A.

• Be humble – Hastings titled his post, “An Explanation and Some Reflections”, which immediately strikes a defensive tone. “An Apology and Some Reconsiderations” may have gone further to win back the hearts of those he may have alienated. He declared many new changes to be “necessary”, which implies his audience feel as if they have no voice (and has since gone back on some of the company’s major plans, now demonstrating that they were never necessitated in the first place).

As is the case with any CEO, Hastings is free to run his company as he sees fit, and his customers and stakeholders will decide how he’s doing. But we can all learn some lessons when facing up to our mistakes, no matter how public or private. It will help us personally, and help the company maintain credibility long-term.