Netflix CEO Explains Why A “Gut” Feeling Is Still Better Than Big Data

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The CEO of one of the fastest-growing tech companies has some advice on how to make decisions with big data: Trust your gut.

Speaking at DLD’s flagship European conference in Munich earlier this week, Netflix’s Reed Hastings says that even though the company famously invests heavily in data analytics, the ultimate decisions come down to smart intuition

“We start with the data,” said Hastings. “But the final call is always gut. It’s informed intuition.”

Specifically, he gave credit to the man in charge of the company’s wildly successful original programming, Ted Sarandos, who, Hastings says, has the “golden gut.”

How To Find Your Gut

One question readers may be asking themselves is how Hastings’s strategy applies to their business. Gut instincts may work for picking shows—but what about other categories of products?

In a follow-up to that conversation, he gives a key insight: Intuition works for him when he’s deciding between a ton of products and can treat them like an investment portfolio. Under this scenario, he only needs a smaller percentage of those risks to pay off big to make up for failures.

“The advantage of Netflix at this stage is that we get to make a number of bets in parallel and manage it like a portfolio,” explains Hastings.

It’s a simple fact that data science simply isn’t sophisticated enough to predict whether a product will be a hit. Ultimately that rests on a bit of faith that we can predict the future of how consumers will react to a new idea.

In other words, it’s difficult to know which idea will be an outlier: something surprising that doesn’t fit the trend. At Netflix, with lots of bets, come lots of opportunity for hits. 

Can you manage your product decisions like a portfolio? Maybe you’re not making video entertainment, but you can still derisk your intuition by making lots of bets—and being analytical with data after you place them.

Here’s the entire interview:

Screenshot via DLD Conference

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