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NETFLIX Netflix CEO Reed Hastings Has Resigned. His Reason Is a Lesson in Self-AwarenessThe company is sticking with the co-CEO model. 
Reed Hastings. Getty Images Original article: Peter Burgess COMMENTARY Peter Burgess | ||
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Netflix CEO Reed Hastings Has Resigned. His Reason Is a Lesson in Self-AwarenessThe company is sticking with the co-CEO model.
BY JASON ATEN, TECH COLUMNIST @JASONATEN
Netflix is a very different company than when Reed Hastings started it 25 years ago. At the time, it was an innovative idea: instead of paying $3 or $4 every time you wanted to rent a movie, you could pay Netflix a monthly fee and the company would mail you DVDs. When you were done, you'd mail it back and Netflix would send you another. It almost seems strange to think about mailing DVDs to people's homes in a world where Netflix is now the world's largest streaming service. Things have certainly changed in the last 25 years. In fact, just last year, Netflix began selling ads after Hastings admitted in an interview that his failure to see the potential in an ad-supported tier was his biggest mistake. Now, the company's latest move into an ad-supported tier seems to be paying off. On its most recent earnings call, Netflix said it added 7.7 million subscribers, a number that beat most analysts' expectations after the company had fallen short for most of the past year. With that under the company's belt, Hastings announced an even bigger change--and this one came as a surprise. On Thursday, Hastings announced that he was resigning as CEO, effective immediately. Chief Operating Officer, Greg Peters will now serve as co-CEO alongside Ted Sarandos, who has held that role since 2020. Hastings will become Executive Chairman. To say it's a big deal is an understatement. Hastings has seen the company through three huge changes: the move from mailing DVDs to streaming video, the shift to creating its own original content, and now into ads. Of course, Hastings's reason is about as good an example as any of self-awareness. 'We start 2023 with renewed momentum as a company and a clear path to reaccelerate our growth,' Hastings wrote in a blog posted on the company's website. 'I'm thrilled about Ted and Greg's leadership, and their ability to make the next 25 years even better than the first.' What's notable about that statement is that Hastings doesn't presume that he is the best person to lead the company down that 'path to reaccelerate our growth.' He recognizes that he has two people who are better equipped to lead Netflix now and into the future. First, I think it's worth mentioning that a lot of leaders lack this level of self-awareness, instead thinking of themselves as so indispensable that they stick around for too long--to the detriment of their team and their company. 'Ted and Greg have developed great trust and respect for each other through their collective successes and failures,' Hastings wrote. 'In addition, they can always be relied upon to put Netflix's interests first. These qualities--combined with their complementary skill sets, deep knowledge of entertainment and technology, and proven track record at Netflix -- create a unique opportunity to deliver faster growth and greater success long term with them as co-CEOs.' I love that part about 'collective success and failures.' If you think about it, it's through those two experiences that relationships become solidified and strengthened. It's through shared struggles and celebrations that people learn to trust each other. Most important, however, is that Hastings explains that this transition had been in the works for years: 'Our board has been discussing succession planning for many years (even founders need to evolve!). As part of that process, we promoted Ted to co-CEO alongside me in July 2020, and Greg to Chief Operating Officer--and in the last 2½ years I've increasingly delegated the management of Netflix to them.' That last sentence is the most important. During that time, Hastings has let go of his own hold on the company, and instead gave over responsibilities to the people he trusts to lead. He's delegated his own leadership to his team, clearing the way for the people who will replace him. I do think it will be interesting to see how the arrangement works. Netflix is one of the few companies that has been able to pull off a co-CEO arrangement and it appears to be sticking with it for now. Of course, with Hastings sticking around as Chairman, the top is a little crowded. Then again, the reason it has worked is because Netflix is really two companies in one. The first is a technology product company that delivers video to your television set or iPhone. The other is a content company that makes films and television shows. There's a clear delineation of responsibility. It's precisely because of Hastings' willingness to give up the parts of the business that weren't his strength and let Sarandos be the face of the company in Hollywood that it has worked so well for so long. It takes a lot for a leader to step back and get out of the way. CEOs are notoriously bad at it. That's why it's worth pointing out when one of them demonstrates enough self-awareness to 'put Netflix's interests first.'
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