Option 1: Analyzing Leadership Decisions. Research A Leader ✓ Solved

Option #1: Analyzing Leadership Decisions. Research a leader

Option #1: Analyzing Leadership Decisions. Research a leadership decision that was ineffective or did not have the desired results.

Describe the problem that may have precipitated the decision, as well as the apparent processes used by the leaders involved in the decision-making effort.

Use terms from this course.

Critique the processes they implemented, applying what you learned from this course.

Recommend a different approach that could have been taken, using theories and methodologies from this course.

Present a strong case for how your recommendations could have altered the decision made, leading to more effective results for the organization.

Use theory from this course to support your evaluation, critique, and recommendations.

This assignment may be delivered in the form most suitable to your response.

Paper For Above Instructions

Title: Analysis of the 2011 Netflix "Qwikster" Decision — Causes, Critique, and Alternative Approaches

This paper analyzes Netflix’s 2011 leadership decision to separate its DVD-by-mail and streaming services (the proposed “Qwikster” spin-off), a strategic choice that provoked subscriber backlash, damaged brand trust, and required rapid reversal. The analysis describes the precipitating problem, reconstructs the decision processes used by leaders, critiques those processes with course concepts, and recommends alternative approaches grounded in decision-making and leadership theory. The argument demonstrates how alternative methods could have produced more effective organizational outcomes.

Problem that precipitated the decision

By mid-2011 Netflix faced two interrelated problems: rising content licensing costs for streaming and a perceived complexity in managing two different revenue streams (DVD rentals and streaming subscriptions) under a single brand. To address margin pressure and simplify pricing, Netflix’s leadership announced a price increase and proposed splitting services into separate brands (Hastings, 2011; New York Times, 2011). The move intended to clarify value propositions and allow different business models to scale independently, but it underestimated customer perception and market reaction (Kahneman, 2011).

Apparent decision-making process used by leaders

Evidence suggests the Netflix leadership process emphasized executive-driven strategy, rapid implementation, and financial logic over extensive stakeholder testing. The decision followed an internally focused diagnosis of cost structure and product portfolio rather than broad customer-centered inquiry (Bazerman & Moore, 2012). Public communication was framed as a fait accompli rather than co-created with customers, indicating limited iterative testing, lack of sufficient scenario planning, and insufficient contingency communication planning (Eisenhardt, 1989; Simon, 1947).

Critique using course terms and theory

Several decision-making failures are identifiable. First, bounded rationality constrained leader search and evaluation processes: leaders relied on satisficing solutions rather than exhaustive alternatives (Simon, 1947). Second, groupthink dynamics likely suppressed dissenting views, producing overconfidence in the split strategy and underestimation of emotional customer reactions (Janis, 1972). Third, cognitive biases—particularly availability bias and loss aversion—affected leader perception of streaming’s risks and the DVD business’s diminishing value, skewing decisions toward an abrupt structural split (Tversky & Kahneman, 1974).

Additionally, inadequate stakeholder analysis and poor change management violated principles in Kotter’s change model: there was insufficient creation of urgency with stakeholders, no broad coalition-building, and poor communication planning, which led to customer outrage rather than adoption (Kotter, 1996). The leadership also displayed escalation of commitment to a chosen solution, delaying reversal until public backlash forced retreat (Bazerman & Moore, 2012).

Recommended alternative approach

A more effective approach would have combined rigorous customer-centered research, iterative experimentation, and adaptive leadership. Specific steps:

• Conduct rapid, small-scale experiments and A/B tests: pilot separate billing or branding alternatives with subsets of customers to gather quantitative and qualitative data before full implementation (Eisenhardt, 1989; Kahneman, 2011).
• Use scenario planning and red-teaming: apply structured pre-mortem methods to surface potential failure modes, emotional responses, and market reactions (Bazerman & Moore, 2012; Tetlock & Gardner, 2015).
• Engage stakeholder-centered communication: use transparent, phased messaging with subscribers and partners, and solicit feedback channels to co-create the transition (Kotter, 1996; Heifetz & Linsky, 2002).
• Apply adaptive leadership: treat the situation as an adaptive problem requiring experimentation and mobilization of diverse perspectives, rather than a purely technical fix (Heifetz, 1994).
• Institute decision governance safeguards: embed devil’s advocacy, independent review, and explicit bias checks (e.g., checklists for common cognitive biases) prior to public announcements (Bazerman & Moore, 2012; Janis, 1972).

How these recommendations would likely have altered the outcome

If Netflix had piloted changes with representative customer segments, the company would have observed subscriber sensitivity to price increases and brand fragmentation early, allowing adjustments such as clearer bundled pricing or segmented offerings without a full brand split. Scenario planning and red-teaming could have revealed reputational risks, prompting more cautious phased releases and stronger messaging about customer benefits (Eisenhardt, 1989). Stakeholder co-creation and adaptive leadership would have built internal and external coalitions to ease transition, reducing the likelihood of intense backlash and subscriber churn (Kotter, 1996; Heifetz, 1994).

Decision governance measures (devil’s advocacy, bias checklists) would have reduced overconfidence and groupthink, increasing the probability that alternatives (e.g., voluntary opt-in experiments, temporary pilot pricing) would be selected over an abrupt full-service split (Janis, 1972; Bazerman & Moore, 2012). Overall, these methods emphasize evidence, iteration, and stakeholder alignment, improving both decision quality and implementation success.

Conclusion

The Netflix Qwikster episode illustrates how well-intentioned strategic responses can fail due to cognitive biases, poor stakeholder engagement, and inadequate change processes. Applying course theories—bounded rationality, groupthink, bias mitigation, adaptive leadership, and structured experimentation—provides a robust alternative path. Leaders who integrate iterative testing, scenario planning, participatory communication, and governance safeguards can reduce risk, preserve brand trust, and achieve more effective organizational outcomes.

References

• Bazerman, M. H., & Moore, D. A. (2012). Judgment in Managerial Decision Making. Wiley.
• Janis, I. L. (1972). Victims of Groupthink. Houghton Mifflin.
• Kahneman, D. (2011). Thinking, Fast and Slow. Farrar, Straus and Giroux.
• Kotter, J. P. (1996). Leading Change. Harvard Business Review Press.
• Heifetz, R. A. (1994). Leadership Without Easy Answers. Belknap Press.
• Eisenhardt, K. M. (1989). Making fast strategic decisions in high-velocity environments. Academy of Management Journal, 32(3), 543–576.
• Simon, H. A. (1947). Administrative Behavior: A Study of Decision-Making Processes in Administrative Organizations. Free Press.
• Tversky, A., & Kahneman, D. (1974). Judgment under Uncertainty: Heuristics and Biases. Science, 185(4157), 1124–1131.
• Tetlock, P., & Gardner, D. (2015). Superforecasting: The Art and Science of Prediction. Crown.
• New York Times. (2011). “Netflix Retreats After Qwikster Backlash” (coverage of Netflix’s announcement and reversal).