Case Study

You are expected to provide informati on about the company ( background and profi le) and
to describe its organizati onal change responding to the fi ve points menti oned above.

Company Background and Profile

As a part of my research, in this section I will provide detailed information about the chosen company,
Netflix. Netflix founded on August 1997 in California, United States by Reed Hastings and Marc Randolph.
Before the company established the founders were young adults who were already realized the rise of
the internet and adoption around the world. After the year 1995, internet became considerably available
and new e-commerce startups founded. Reed Hastings and Marc Randolph, who saw that there would
be access to people over the internet, saw that DVD distribution could also be provided over the
internet. Their business strategy was actually very simple, to do what Blockbuster did not. Blockbuster
was a brick-and mortar DVD sales business which are highly expanded throughout the United States of
America. When the Netflix entered the market Blockbuster was the undisputed leader of the DVD retail
industry with seven thousand stores and they still had been growing. They cared so much about physical
merchandising and were growing so steeply that they did not open an online store until 2004, until they
realized that they would lose their dominance in the market. So, Hastings and Randolph saw great e-
commerce opportunity, they were going to use internet as a game changer such as what Jeff Bezos did
for Amazon.

In its early years, Netflix faced tough competition from established industry giants like Blockbuster.
However, the company was determined to innovate and adapt to the changing landscape. In 1999,
Netflix introduced a subscription-based model, revolutionizing the way people rented movies. Instead of
paying per rental, customers could now pay a flat monthly fee and rent an unlimited number of DVDs.
When Netflix initially launched and went live, it offered a collection of around 900 movies available for
rental, and customers had a maximum rental period of 7 days. However, by April 1999, Netflix
significantly expanded its video library, increasing the number of titles to approximately 3,100. Netflix
became so popular in the country because what they did was highly demanded by the people. Without
leaving their home their desired movie had been delivered to the doors, and people loved this idea and
showed loyalty to Netflix.

Netflix had prioritized drawing upon by data far before the competitors and other businesses. Perhaps,
they turned into a situation they had to became data driven company since they felt they should be
offering new movies to customers to sustain retention and create profitable business. By the 2000, In
order to improve user experience and assist users in finding new films that fit their preferences, Netflix
launched Cinematch, a customized movie suggestion system. The collaborative filtering algorithm that
underpinned Cinematch used member ratings to foretell how much a member would enjoy a given film.
A method called collaborative filtering generates recommendations by using the behavior and collective
expertise of a group of users. In the case of Cinematch, Netflix gathered and examined user reviews from
a sizable clientele. The programme could identify users with similar tastes and preferences by looking for
patterns and similarities in ratings across various users.

After a short time, company has been launched, Netflix reached almost 3 million subscribers by 2003.
They had been able to adapt the new trend of online selling business. However, company still declared
that they were losing money. But when the calendar shows the year of 2006 Netflix had acquired 6.3(in
text) million viewer subscribers and they had finally become profitable. Between the years 2003 to 2006
Netflix management had been organizing the firm for the moment of shifting the organization to the
future of entertainment, streaming. During this three years, Netflix continued to refine the
personalization experience of the suggestions of the DVD rentals for the customers using their own
Cinematch algorithm. They put so much emphasis on personalization that they announced that they
would give $1 million to the person or team that could improve their collaborative filtering algorithm by
10 percent in 2006. Of course, the main reason they opened it to the competition was that the necessary
software source was not in the company.

As the internet became faster and more accessible, Netflix saw the tremendous potential of streaming
technology. In 2007, they took a leap and launched their online streaming service, allowing subscribers
to instantly watch movies and TV shows on their computers. This was a game-changer for the company
as they shifted their focus from physical DVDs to delivering digital content directly to people's screens.

To compete with traditional broadcasters and make their mark in the industry, Netflix made a bold move
by venturing into original content production. It all started in 2013 with the release of their very first
original series, "House of Cards." The show received rave reviews and set a new standard for streaming
television. This move showcased Netflix's ambition to become not just a platform for distribution but
also a major player in creating captivating and high-quality shows.

Since then, Netflix has been on a roll, expanding its library of original content across a wide range of
genres. But it wasn't just about dominating the domestic market. Netflix realized the importance of
going global. In 2010, they ventured beyond U.S. borders and introduced their streaming service to
international audiences, starting with Canada. Since then, they have rapidly expanded to more than 190
countries, bringing their streaming platform to viewers worldwide. To cater to diverse audiences, Netflix
has made significant investments in producing local content tailored to specific regions. This approach
has allowed them to capture a massive global market share and establish themselves as a leading
provider of entertainment worldwide.

Netflix's success can also be attributed to their commitment to technology and user experience. Their
sophisticated algorithms and machine learning capabilities analyze user data to provide personalized
recommendations, ensuring that viewers always find something they'll love. Moreover, their streaming
platform is designed to be compatible with various devices, ranging from smartphones and tablets to
smart TVs and gaming consoles. This versatility allows subscribers to access their favorite content
wherever and whenever they want.

Despite facing increasing competition from other streaming services like Disney+, Amazon Prime Video,
and Hulu, Netflix has managed to stay ahead of the game. They continue to invest heavily in content
acquisition, production, and technology to offer an unmatched streaming experience to their
subscribers.

In the present day, Netflix has emerged as a pioneer in the entertainment industry, revolutionizing
conventional distribution models and transforming the way individuals engage with media. With an
extensive collection of content, a worldwide presence, and a devoted community of subscribers, the
company remains committed to its goal of delivering top-notch entertainment and pushing the limits of
storytelling in the modern digital era.

1. What were the reasons that led to organisational change and what was the purpose of change?

Netflix has undergone several organizational changes over its lifetime and there were many reasons why
they changed the structure or its way of selling products, they initiated the business as selling DVDs
through mail providers. Starting its journey as a disruptor to the big established players in the DVD retail
industry, Netflix continued its product innovation in the years that followed and brought a revolutionary
change to the streaming business. In the early 2000s, although technological developments had not
advanced much, Netflix launched a personalized film suggestion system named Cinematch, which
utilized member ratings to anticipate a member's potential enjoyment of a movie (Biddle, 2021). For
instance, when a person watch Godfather movie, gives five stars to that movie and watches The Heat
movie and gives five stars to that movie the Netflix recommends The Heat to a person who watched The
Godfather in the past. The success of the Cinematch algorithm has reinforced the importance of data-
driven decision making within Netflix. The company relies on data analysis and insights to make informed
choices in various aspects of its operations, including content investment, pricing strategies, user
interface design, and international expansion. This data-driven culture has been instrumental in Netflix's
ability to adapt to changing market dynamics and stay ahead of competitors. By learning to make the
best use of customer data and activity very early on, Netflix was able to take the risk of switching to
streaming. Netflix's data-driven culture is paving the way for its transition from being a retailer to
becoming a real technology company. With the accelerating usage of high speed internet, the demand
for streaming online increased. Hence, enhancements in broadband availability across the United States
have facilitated the company's expansion into the realm of online streaming (Gans, 2011). Hastings
believed internet streaming would be the future of media content consuming. Reed Hastings recognized
the potential to offer subscribers a convenient and flexible viewing experience by embracing internet
streaming. He understood that consumers desired the freedom to watch their preferred movies and TV
shows at their convenience, without being restricted by physical media such as DVDs. Netflix could have
disappeared from the industry if the management had decided to embrace and stick to the DVD mail
service. Hence, this global advancement of infrastructure of internet played significant role Netflix to
alter the organization. The primary goal of Netflix has always been to remove obstacles of people to
access the entertainment. Since the day Netflix established, they firstly removed the need for travel to
the DVD purchase from physical stores and the need for change comes from minimizing the friction for
accessing the various entertainment contents. Eventually, Netflix's introduction of its streaming service
eliminated the necessity for physical discs and waiting time for the delivery thereby significantly reducing
friction in accessing entertainment. Oster, Chen & Rosenthal support my view with their analysis
revealing on the aim of Hastings to minimize the effort for people to find contents:

Hastings saw online streaming as providing Netflix subscribers with access to content without the wait
and the expense of sending a physical object through the mail. (Oster et.al 2012, p.6)

2. Who were the involved stakeholders and what role did each of them play in the process of
change?

There are several stakeholders who made this change possible. Reed Hastings played a pivotal role as
the visionary force driving Netflix's success. He had a keen foresight into the transformative power of
the internet on media consumption, realizing its potential early on. Recognizing the emerging
streaming technology's potential, Hastings made a strategic and bold decision to pivot Netflix's core
business from DVD-by-Mail to internet streaming. His exceptional vision and transformational
leadership style were instrumental in leading the company through this transformation. Netflix said
it spent more than $40 million in 2007 to create its online service, with a major portion of the
expense going to securing rights to video content. (Oster et.al 2012, p.7) This change may have not
been possible if venture capitalist and investors had not invested in the Netflix and provide financial
support to the firm. So I could easily say venture capital organizations and investors are one of the
main stakeholders during the change. Beyond the monetary support, venture capitalists and
investors have a voice on the significant decisions that changes the fortune of companies. So
capitalists and investors made the reform possible by their monetary supply and by their votes over
the company`s destiny. The employees of the Netflix was also the main stakeholders of the
transformation. Netflix employees were critical in carrying out the streaming transition. Engineers
and developers worked extensively to construct the streaming platform's technological foundation.
They needed to overcome technical obstacles, optimize streaming quality, and ensure smooth
playback across multiple platforms. Technical team must have been worked so hard to offer the
existing customer base a smooth streaming experience. In 2008 Hastings announced a major coup as
Netflix negotiated a fixed-price partnership with Starz, which brought 25,000 movies and TV shows
to Netflix's streaming service, including Disney and Sony films. (Oster et.al 2012, p.7) Content
providers were the other player of the transformation. The creation of a wide and extensive
streaming library was critical to Netflix's success. Netflix could have offered a diverse assortment of
titles, appealing to a variety of tastes and inclinations, by establishing licencing deals with several
content sources. Content providers made it possible for Netflix to abandon DVDs and create non
physical content library. AMAZON WEB SERVICES?

3. Describe, using relevant theory and/or framework, the process of change that occurred in the
organization you’ve chosen.
Disruptive Innovation Theory??? In business theory, disruptive innovation is innovation that
creates a new market and value network or enters at the bottom of an existing market and
eventually displaces established market-leading firms, products, and alliances.
Organizations are such living organisms as human body. If the human body develops muscles and
bones as it ages, organizations evolve in the same way in time. Evolutionary theory explains the
process of change Netflix had throughout time. Netflix had to change over time to sustain in the
market and not to experience what happened to other brick and mortar shops. “Competition for
scarce environmental resources between entities [organizations] inhabiting a population generates
this evolutionary cycle” (Van de Ven & Poole, p.521, cited in Burke, 2018 p.174) So the scarce
sources here meant the market share threshold. Since there is continuous changing environment in
terms of technology after the internet became highly popular after 1999 Netflix adopted itself to
changing circumstances as human body does. Burke (2018, p.175) argued that organization change is
an ongoing, evolving process. The theory says, “It’s as if organizations have no choice but to
change.” (Burke, 2018 p. 175.) The process of change at Netflix can be explained using the
evolutionary theory, which views organizational change as a gradual and adaptive process of
continuous improvement and survival in response to external and internal factors. Netflix's
transformation from a DVD rental company to a streaming powerhouse exemplifies this evolutionary
process. The evolutionary theory emphasizes that organizational change is an ongoing and iterative
process. As the entertainment industry continues to evolve, Netflix remains adaptive, constantly
innovating, and responding to new challenges and opportunities.

4. Describe how the changing organisational context has influenced the changes that have been
undertaken.

Technological advancements brought up new channels for content distribution. The proliferation
of smart gadgets and the rise of high-speed internet cleared the door for streaming to emerge as
a handy and scalable alternative. Netflix recognised the potential of streaming to revolutionise
the way people consume entertainment as traditional DVD rental businesses grew less relevant.
Consumer behaviour also affected Netflix decision of changing the platform. People demanded
more personalised offers in terms of entertainment content. Netflix had realised that they could
not do it in feasible way just selling DVDs because it was not convenient way to reach the
customer base. By streaming service people was able to see the trailers right away when they
point the movie with the mouse, so this gave the oppurtunity to Netflix to create stronger bonds
with people.

5. How would you evaluate the outcome of change?

Netflix has proven the legitimacy of this dramatic change of

business model. Today, with around 31 billion dollars annual
revenue, 232 million paid subscribers and being the most
dominant streaming platform in the world shows the move
is needed and be appraciated. Having a streaming platform
and having loyal customers gave Netflix a position
manipulate the trends of movie industry. They created new
contents and marketing side has never been costly because
they own the biggest content platform in the world. Netflix
has changed the traditional entertaintment landscape,
before 2007 people used to watch what they have been served on the TV and DVD delivery service was
not even convenient. Transformation has not only occurred on the general consumption of
entertainment, but it has changed the social communication lingo. A new term derived as “Netflix and
chill” and people have been using the term for the social media posts to express their joy and the way
spending time. Streaming has also led Netflix to expand its operations overseas. As the streaming model
became only business model, Netflix recognized the opportunity to reach a global audience and expand
its operations beyond its home market in the United States. This change resulted an exponential revenue
gain over the years. Additionally, Netflix's streaming service disrupted the traditional TV broadcasting
and caused DVDs to be removed from the market. As a result of this change, Netflix left a revolutionary
impact on the entertainment industry. It has completely changed our consumption habits, shaped the
industry, and has become a global platform with the content it produces. Netflix could have been
forgotten like any other vanishing failing companies such as Blockbuster and Nokia if it had not decided
to pursue the changing customer need and evolving technology. But, “Netflix has sent Blockbuster to the
dustbin of history” (Sorescu,2017). The recently case study conducted by Bhattarai (2020) states “Netflix
is a rare company that could abandon its business model which has been successful and profitable in
past.” To summarize it, adaptation is challenging, but it is necessary for the companies who would like
stay alive for the future.

Discussion

Business model canvas what has changed what have stayed the same. Channel and key activity
changed.

You should discuss and analyse in depth two issues of the organisational change your selected
organisations has gone through using relevant literature. Ideally, the review of the literature
should be discussed in line with your case study.

Describe the role that Information Technology played in organisational change

(Personalization, content library, AWS

Discuss the role of innovation (in products and/or services) in the changes that have been
observed.

Netflix experienced a business model change to shift from a DVD by mail business model to a fully digital
business model. The company initially adopted a business model centered around physical distribution,
but later transitioned to a digital distribution model. (Bhattarai, 2020). To better understand the change
we should use a framework of describing how businesses apply a complete model change. In this
chapter the detailed comparison will be provided by the 9 building blocks of business model framework
of Osterwalder et al`s. (2010). “We believe a business model can best be described through nine basic
building blocks that show the logic of how a company intends to make money.” (Osterwalder et al. 2010)
Hence, the intention of gaining a profit shapes the decisions of building the constructive blocks.

Customer Segments
In its initial stages, Netflix's customer segments were concentrated on a niche audience seeking the
convenience of online DVD rentals. This comprised primarily of two primary customer categories: movie
buffs and convenience seekers. The former encompassed individuals deeply passionate about cinematic
experiences, who valued the option to access a diverse selection of movie titles without the constraints
of physical rental stores. In 1997, the journey began as a DVD-by-mail venture operating through mail-
order services, offering consumers a way to subscribe monthly and evade late fees (Venkatraman,2017).
Because the prominent DVD companies had set the profit methods on the late fees. The latter category,
convenience seekers, found value in the streamlined process of DVD delivery to their doorstep,
effectively eliminating the need for time-sensitive returns associated with traditional rental stores. This
customer segmentation reflected Netflix's initial mission to provide an alternative to the inconvenience
of brick-and-mortar rental establishments. However, the true transformation of Netflix's customer
segments began with the seismic shift from DVD rentals to streaming. This evolution expanded the
company's appeal and impact significantly. The streaming model enabled Netflix to engage a much
broader and diverse audience, reshaping its customer segments to reflect the changing landscape of
entertainment consumption.

Value Propositi ons

“Netflix innovation focused on two dimensions: logistics and analytics” (Venkatraman, 2017). In its early
days as a DVD rental service, Netflix's value proposition was rooted in convenience and efficiency. The
company recognized that customers were seeking an alternative to the inconvenience of physically
visiting video rental stores. The value proposition centered around delivering DVDs directly to customers'
doorsteps, eliminating the need for trips to a physical store and late fees associated with traditional
rentals. The new value proposition of streaming was characterized by instant access, personalization, and
variety. Subscribers were no longer constrained by the time it took to receive DVDs; instead, they could
instantly stream a vast array of movies, TV shows, documentaries, and even original content directly to
their devices. The personalized recommendation system further enhanced the value proposition by
using data-driven algorithms to suggest content tailored to individual preferences, fostering a more
immersive and engaging viewing experience. However, the personalization value proposition was already
there even before shifting to streaming but Netflix team has improved the recommendation algorithm
on the new streaming service after the change. Hence we would say that the dramatic value proposition
change has occurred on the way of people watching the contents.

Channels

The channels building block entails the methods through which a company engages with and connects to
its customer segments for the purpose of delivering a value proposition (Osterwalder et.al 2010). During
the DVD rental phase, Netflix's channels were characterized by a focus on direct mail distribution. The
company leveraged the postal system to send DVDs directly to customers' addresses. So, the company
were using both digital and physical channels to reach out the customer segment, the storage to store
the DVDs and the mail service to deliver the products were solid physical channels. DVD distribution
channel was chosen to enhance customer convenience and circumvent the need for physical visits to
rental stores. The direct mail approach eliminated the hassle of late fees and allowed customers to
manage their movie choices from the comfort of their homes. The channel aligned well with the value
proposition of convenience, as customers could select and order DVDs online, and receive them via mail
without the need for in-person interactions.

However, the advent of digital streaming brought about a radical shift in Netflix's channels. The company
transitioned from relying on physical mail to leveraging the internet as the primary distribution channel.
This transformation eliminated the need for physical distribution centers, logistics, and postage expenses
associated with mailing DVDs. Instead, Netflix utilized its streaming infrastructure to deliver content
directly to customers' devices through the internet. This marked a significant departure from the
traditional brick-and-mortar rental stores and even from physical mail, as customers could access
content instantly without any physical exchange.

Key Resources

The Key Resources Building Block describes the most important assets required to make a business
model work

In the early stages of its DVD rental model, Netflix's key resources were largely physical in nature. The
company's success hinged on the careful management of its DVD inventory and distribution centers.
Acquiring a wide range of movie titles to meet customer demands was essential, and efficient logistics
were paramount to ensure timely delivery and return of DVDs. These physical resources were tightly
intertwined with the company's value proposition of convenience – customers relied on the availability
of a diverse selection of DVDs and prompt delivery to their homes.

However, the shift to the streaming era brought about a fundamental transformation in Netflix's key
resources. The company's reliance on physical inventory and distribution centers diminished as digital
resources took center stage. The acquisition of digital content licenses emerged as a critical resource for
Netflix. Netflix entered exclusive contracts with significant content providers like Warner Bros.
Entertainment Inc. and The Walt Disney Company (Bhattarai,2020). On the purchasing content, Netflix
has product managers looking at the data and making good selections with content that which one
should be purchased (Netflix Data,2017). Unlike the limited physical shelf space for DVDs, digital content
could be acquired and stored on servers, enabling Netflix to offer an extensive and ever-expanding
library of movies, TV shows, documentaries, and original content. This shift eliminated the need for
physical stock management and the associated costs.

Another key resource that emerged in the streaming era was data analytics capabilities. The collection
and analysis of user data allowed Netflix to understand viewer preferences, viewing habits, and content
engagement patterns. This data-driven approach empowered the company to refine its content
recommendations, personalize the user experience, and make informed decisions about content
acquisition and production. Netflix reveals this approach in the official website of Netflix as:
“Recommendation algorithms are at the core of the Netflix product. They provide our members with
personalized suggestions to reduce the amount of time and frustration to find something great content
to watch” (Netflix,2022). Therefore, This analytical resource further differentiated Netflix from its
competitors and enhanced its customer relationships. The transition from offering generalized content to
embracing "personalization, individualization, and fragmentation" in video streaming has expanded its
potential customer pool and generated increased revenue of Netflix (Zhao,2022). Back then, when
Netflix embraced the DVD rental model, Cinematch recommender system had been using to suggest
consumers a new DVD content. “Historically, the Netflix recommendation problem has been thought of
as equivalent to the problem of predicting the number of stars that a person would rate a video after
watching it, on a scale from 1 to 5. We indeed relied on such an algorithm heavily when our main
business was shipping DVDs by mail” (Gomez-Uribe & Hunt,2015). However, as streaming services
embraced and the volume of available content skyrocketed, these approaches faced challenges in
handling the sheer amount of data and ensuring timely recommendations. The advent of streaming
services has led to a significant increase in data volume. As a result, there is a need to adapt the
recommender system's approach to generating suggestions and handling data ingestion. Chong (2020)
depicts this issue as, the advent of streaming services has led to a significant increase in data volume. As
a result, there is a need to adapt the recommender system's approach to generating suggestions and
handling data ingestion, to handle the vast amount of data importing through instant watching history
and provide personalized recommendations according to the viewers behaviours. One critical aspect of
this evolution is the integration of user feedback into the recommendation process. Netflix actively
encourage users to provide feedback on the recommendations they receive. This feedback loop allows
the system to learn from both positive and negative feedback, continuously refining its understanding of
user preferences. Uribe & Hunt (2015) stated that Netflix employs a potent positive feedback loop within
its system. In this arrangement, videos that garner substantial engagement from members are suggested
to a larger audience of members. More specifically, In each of particular users homepage Netflix videos
are ranked by a specific reason. Netflix employees Uribe &Hunt(2015) illustrate that Netflix use
personalized video ranking algorithm(PVR), ranks each row of the each customer in a different way to
specialize the selecting experience. Moreover, Netflix engineers use search recommendations to output
the customer the most related contents even if the content they search is not in the catalog. When the
searched content is not available the most related contents are provided with the searched content.
Search recommendations have the potential to provide substantial value beyond simply fulfilling search
objectives. This is achieved through their capacity to generate relevant responses for inquiries directed
at videos that are not readily accessible (Lamkhede & Kofler,2021). Overall, from the very beginning of
the company history, embracing IT focused approach became a company culture and has led Netflix to
overcome the challenges after shifting to streaming service. And the change would not have been
successful if Netflix had not been experienced to use data driven applications on this level. Markus
(2004) explains the challenge of IT approach to drive organizational change as; the rationale behind
managerial utilization of Information Technology (IT) for the facilitation of organizational change lies in
the recognition that initiating significant cross-functional transformations without a central emphasis on
IT proves ineffective within numerous organizational cultures. Moreover, digital technologies significantly
fasten the digital transformation. Digital technology enables the automation of routine tasks, reducing
manual interventions and expediting operational efficiency. The utilization of data analytics and artificial
intelligence enables organizations to derive actionable insights from vast datasets, leading to informed
strategic decisions. Further, the rapid evolution of technological capacities exhibited by applications such
as the Internet of Things (IoT), big data analytics, cloud computing, and mobile technologies profoundly
accelerates the overarching rate of transformation (Nadkarni&Prügl). Disruptive business model
innovation Netflix has gone through became real step by step, by adding on top of big data competence.
Streaming service would have ultimately be realized by increasing the competency of dealing with data
otherwise success would not be said inevitable. Incremental improvements starting from Cinematch to
using deep learning algorithms made the streaming possible and successful. The time frame from 1999
to 2007 witnessed these incremental improvements in terms of Netflix. Hence, gradual improvements to
prevailing business frameworks driven by heightened digital integration and extensive utilization of big
data analytics could eventually supplant less effective business models, consequently leading to the
obsolescence of associated companies over an extended period (Loebbecke&Arnold, 2015).

The implementation of product innovations at Netflix has not been confined to its external offerings;
rather, it has necessitated substantial internal restructuring to align with the evolving technological
landscape. After moving to streaming, the development and deployment of the recommendation
algorithm, for instance, required the integration of advanced machine learning and data analytics
capabilities within the company's new streaming infrastructure. This challenge fostered the whisper of a
need for systematical change within the organization. As technological infrastructure continued to
advance and DVDs began to gradually fade away, a suitable environment for a business model change
emerged, with the competencies I previously mentioned and the being able to see the future of
delivering media contents of Hastings, Netflix successfully managed the transition.

The Change Model?

The transformation that Netflix has undergone can be categorized into two distinct characteristics. In
accordance with terminologies outlined in scholarly works, Netflix has encountered both episodic
alterations—indicating abrupt shifts attributed to external influences—and continuous evolution, a trait
often associated with prosperous enterprises. So, Netflix's organizational evolution can be characterized
as a blend of both continuous change and episodic change. The company's trajectory has been marked
by a series of strategic shifts and transformative initiatives, interwoven with ongoing incremental
adjustments.

Continuous change is the concept wherein incremental and ongoing adjustments, implemented
concurrently across various entities, have the capacity to accumulate and engender significant
transformative outcomes (Weick & Quinn, 1999). Netflix has demonstrated continuous change through
its persistent efforts to optimize its streaming platform, enhance user experience, and refine content
recommendation algorithms. These iterative enhancements are driven by a commitment to staying
attuned to user preferences and technological advancements, reflecting an ongoing adaptation to
market dynamics. If one considers that organizational change primarily transpires within the framework
of an inability to adjust, then the most optimal form of an organization would be characterized by its
perpetual capacity for adaptation. (Weick & Quinn, 1999). Since making the Cinematch algorithm real in
the beginning of new millenium the departments of organization never had showed a period which
organization stay inertia. The organization kept making new product innovations or updating and
developing existing algorithms and products.

On the other hand, the term "episodic change" is employed to categorize organizational alterations that
manifest infrequently, possess a disjointed nature, and are deliberately executed. The underlying
assumption is that instances of episodic change manifest during phases of divergence, wherein
organizations deviate from their state of equilibrium. (Weick&Quinn, 1999). The equilibrium state here
can be considered as the successful business model Netflix constructed as DVD rental business and they
are diverging from this established structure. This divergence is triggered by the outer environmental
developments such as technological breakthroughs and developments and consumer needs. Netflix's
shift from a traditional DVD-by-mail business model to an online streaming service is a prime example of
episodic change. This transformation was infrequent, as it occurred over a distinct period when the
company recognized the need to pivot its core offering due to changing consumer behaviors,
advancements in technology, and evolving market dynamics. The change was intentional, as Netflix's
leadership strategically chose to move away from the equilibrium of the DVD rental model to embrace
the potential of digital streaming. Moreover, episodic transformations prove to be significantly disruptive
as they involve the complete replacement of existing structures, as opposed to mere modifications
(Mintzberg & Westley 1992). This paradigm shift was characterized by a seismic change in consumer
preferences and viewing habits. The emergence of streaming services, epitomized by Netflix's
transformation, challenged the traditional broadcast schedules and forced the television industry to
adapt to a new era of on-demand content consumption, removed the brick-and-mortar DVD sale
business models. Consumers, empowered by the flexibility and convenience offered by streaming
platforms, gradually veered away from the conventional models of content consumptions. In the face of
this disruptive change, traditional television networks were compelled to reevaluate their competitive
positioning and embrace digital adaptations. The rise of their own streaming platforms, often
accompanied by exclusive content offerings, demonstrates the necessity to remain relevant in the face of
evolving consumer preferences.