In 2021, for my 4th year consulting class, I was tasked with researching a company with a business problem, analyzing the findings and suggesting recommendations for how it can solve its problem. Culminating in a final deliverable of a research brief.
<aside> 💼 Company: Netflix
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<aside> ⚠️ Problem: Ballooning debt and lack of profitability
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To break down the problem, I used the (1) TOSCA framework to formulate my underlying (2) core question to be answered and create a (3) MECE compliant Hypothesis Pyramid to guide my research and analysis.
| Information | |
|---|---|
| Trouble | Netflix’s ballooning debt, negative cash flow and slowed subscriber growth are unsustainable and threaten the long-term future of the company. |
| Owners | Reed Hastings (co-CEO), Ted Sarandos (co-CEO, chief content officer), Greg Peters (COO, CPO) |
| Success Criteria | In two years, Netflix will increase profits (revenue less content cost per subscriber) by 20%, decrease its negative cash flow to less than 500 million USD and maintain its current market share (27.6% total video streamers subscribed) |
| Constraints | Netflix has a negative cash flow because it invests heavily in licensed and original content. Decreasing the negative cash flow could decrease subscriber growth and lead to loss of market share. Therefore, solutions must decrease costs without alienating current and prospective subscribers. |
Additionally, Netflix may already have licensing and production commitments that will mature in the time this problem is solved. Thus, costs cannot be cut from everywhere – there will be some existing heavy content costs. | | Actors | The subscribers, major stakeholders, studios and content providers, employees that have production roles |
<aside> ❓ How can Netflix increase profits without incurring more debt?
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I started with one hypothesis as an answer to the core question and expanded out sub-hypotheses that were MECE (mutually exclusive and collectively exhaustive) in the below Hypothesis Pyramid.
After framing the problem, core question, and hypotheses to investigate, I created a research brief with my conclusions and recommendations. You can find it by clicking the link below: