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Netflix made headlines recently for their unexpected decline in new subscription growth and drop in subscriptions in the US, which pushed their stock price down. Critics are asking if Netflix’s business model is relevant in the changing competitive environment, when Disney and other content owners have started pulling back their content from streaming services like Netflix in order to build their own.

But that is the wrong question.

Tactical vs. adaptive performance

Neel Doshi and Lindsay McGregor, authors of the book Primed to Perform, describe in their excellent piece of research that there are two distinct types of performance: tactical and adaptive.

Having great tactical performance means being able to execute a plan effectively. Adaptive performance means being able to adjust your plan when circumstances change. Tactical performance means executing a business model relevant to the market. Adaptive means being able to adjust your model when the market changes.

Netflix’s ability to adapt

Most critical analysis of Netflix right now is focused on their tactical performance. It’s unfair to expect critics to do otherwise as much of the strategic theory in which they were steeped in business school was based on a stable world in which companies won by executing the right strategy (tactical performance). The fundamental question from the traditional mindset is: are we executing a strategy that will enable us to reach our strategic goals?

I made this mistake myself five years ago when in my last book, Outthink the Competition, I suggested that Netflix would soon go away because their business model was becoming irrelevant. I was right that their business model at the time would be undermined.

But what I grossly underestimated was Netflix’s ability to adapt. In other words, I was predicting their future based on tactical performance, not adaptive.

3 levers to pull for adaptive performance

The kinds of levers that work for tactical performances are different than ones that work for adaptive. In slow-moving industries and eras, when tactical performance was enough, organizations could manage their people and operations using levers like social pressure, financial pressure, and asking people to just keep doing what they are doing.

But, drawing again from the work of Doshi and McGregor, such levers enable tactical performance at the cost of adaptive. Organizations led by these levers may execute their plan well but are too slow to change the plan when needed.

Instead, in fast-moving environments like the one that many of us are competing in today, to succeed, to build adaptive performance, you need to pull three different performance levers:

  • Play (do your people enjoy the work?)
  • Purpose (do your people feel uniquely capable of achieving the outcomes?)
  • Potential (are we collectively driving toward something that is meaningful?)

Asking the right questions

Now, I have my learned my lesson, and will not attempt here to predict Netflix’s future. But I can tell you, if you were asking the typical strategic questions about whether they have the right business model or the right strategy today, then you are asking the wrong questions.

The success of any company, Netflix’s or yours, depends on the ability to adapt. A good place to look if you want to predict future viability or secure it for yourself, is to assess whether you are pulling the three levers that increase adaptive performance: play, purpose, and potential.

“8Ps” of StrategyOpportunity
for Disruption
Recommended Leverage Points
Position- The farmers, individual and corporate, that you are targeting.

- The need of the agricultural industry that you seek to fill.
3- What technologies do you control that can help you tap into market
segments that you previously thought unreachable?

- What are the potential business alliances you could think about with key players in the segment to serve your customers with integrated solutions? (Serving customers with more integrated solutions example: serving farmers with fertilizers, crop protection and other).
Product- The products you offer, and the characteristics that affect their value to customers.

- The technology you develop for producing those products.
8- What moves are your organization taking to implement Big Data and analytics to your operations? What IoT and blockchain applications can you use?

- What tools and technology could you utilize or develop to improve food quality, traceability, and

- How can you develop a more sustainable production model to accommodate constraints on arable

- What is the future business model needed to serve new differentiated products to your customers?
Promotion- How you connect with farmers and consumers across a variety of locations and industries.
- How to make consumers, producers, and other stakeholders aware of your products and services.
8- How are you connecting your product with individual and corporate farms who could utilize it?
- How could you anticipate market and customer needs to make customers interested in accessing your differentiated products?
PriceHow consumers and other members of the agricultural supply chain pay for access to agricultural products.7- What elements of value comprise your pricing? How do each of those elements satisfy the varying needs of your customers?
Placement- How food products reach consumers. How the technologies, data, and services reach stakeholders in the supply chain.9- What new paths might exist for helping consumers access the food they desire?
- How are you adapting your operations and supply chain to accommodate consumers’ desire for proximity to the food they eat?
- How could you anticipate customer expectation to make products more
accessible to customers/agile supply chain?
- Have you considered urbanization as a part of your growth strategy?
- How your food satisfies the needs and desires of your customer.
- How the services you provide to agribusiness fulfill their needs.
9- Where does your food rate on a taste, appearance, and freshness
- Could the services you provide to companies and farms in the agriculture industry be expanded to meet more needs?
- What senses does your food affect besides hunger? How does your
customer extract value from your food in addition to consumption?
Processes- Guiding your food production operations in a manner cognizant of social pressure.8- How can you manage the supply chain differently to improve traceability and reduce waste?
- How can you innovate systems in production, processing, storing, shipping, retailing, etc.?
- What are new capabilities to increase sustainability (impact on the environment, or ESG) components?
People- The choices you make regarding hiring, organizing, and incentivizing your people and your culture.- How are you leveraging the agricultural experience of your staff bottom-up to achieve your vision?
- How do you anticipate new organizational capabilities needed to perform your future strategy (innovation, exponential technologies needed, agile customer relationship, innovative supply chain)?
- How do you manage your talents to assure suitable development with exposure in the agrifood main challenges/allowing a more sustainable view of the opportunities/cross-sectors?