In this solo commentary, Tom Guarriello, Ph.D. reflects on a New York Times article about Netflix abandoning its email‑only support in favor of a live call‑center in Portland. He uses the move as a concrete illustration of his broader thesis that the future of business lies in delivering one‑of‑a‑kind products, services, and experiences. Guarriello argues that while personalized, telephone‑based support may initially be more costly, disruptive innovation— as described by Clayton Christensen’s The Innovator’s Dilemma— will drive down the cost of such customization over time. He cites mass‑customization examples like Lands’ End’s made‑to‑measure clothing to show how technology can enable individualized offerings at near‑mass‑market prices. The video invites viewers to consider whether personal phone support truly enhances the Netflix experience and to think about the strategic opportunities (market share, price differentiation) that one‑of‑a‑kind approaches can create.
Chapters
Hey guys, it's Tom Guarriello. You know, you watch my videos, you know that there's several things that I really enjoy talking about, and one of them is the New York Times. And today's New York Times has an article, not the one about the pigs, the one, the one down here called Victory for Voices Over Keystrokes. And That article made me think about the one-of-a-kind video that I made the other day and a couple of the responses that I got to that video. So I thought I'd take that Times article and weave it into these ideas. In the article in the Times, the point that they're making there is that Netflix, our friends at Netflix, the folks with the red envelope, Um, have abandoned their email-only customer service model, which they had used since they started, and have now adopted, um, an actual call center approach to customer service. They have real people, and in fact, they did a lot of research and decided Portland, Oregon was where they wanted to locate their call center. Doc? Momo, how are you? And because the people were so nice out there. So here's a company that decided that in order to continue to be distinctive, and if you look at Netflix, you will see that Netflix is an end-to-end, one-of-a-kind, aspiring kind of company. What do I mean? Well, Morphine went through an interesting a, let's call it a case method of going through the argument in my One of a Kind video and got to a point of saying, you know, I might be on to something. That in fact, maybe despite what today is a higher cost for some of the items that make for one of a kind experiences and one of a kind products, which, you know, my argument is that's where we're heading. We're heading towards this world world where everything needs to be one of a kind, that while today there are some extra costs involved in that, that there are, um, uh, both market share opportunities— in other words, you get more people who really want to come and get this unique kind of experience— um, and perhaps even some kind of price differential opportunities. You might be able to charge more for things that are one of a kind. Let's leave the price differential off because I think price differentials end up going away anyhow because people always look for price. Now, not that people don't buy on other things than price, but eventually price will catch up with you when the market starts to get close. Um, uh, so what happens now in this world of Netflix is that not only do you select your own videos, and not only do you put them in the order that you want them to, and, you know, the DVDs you want to watch, and now you can actually call up your customer rep, you can talk to somebody there, and that can make a difference. To some of us, that can make a difference in the kind of experience that we have of dealing with Netflix. So here's again a company that's trying to go end-to-end from the very first contact with them through their customer service experience, going end-to-end, trying to tailor every single aspect of that experience to each of us as individuals. I think that's a big deal. Now, there's one other thing about this that I wanted to mention in response to to Morpheen's video, and that is that we think that it's going to be more expensive to deliver one-of-a-kind, um, elements or one-of-a-kind items in products, services, and experiences, that it'll be more expensive than doing a mass-produced, uh, version. And, you know, initially that's true. Because we don't have systems that enable us to deliver one-of-a-kind product services and experiences, uh, to a wide audience initially in a market. But what happens is that over time, technology systems enable, uh, the provision of this kind of one-of-a-kind service at a more reasonable price because the technology itself gets better and better and better. This is part of what Clay Christensen talked about in his really landmark book, The Innovator's Dilemma, in which he describes— that book's got to be, what, is it 10 years old now? Maybe more— in which he describes that markets get attacked from the bottom all the time, but then as the attackers from the bottom, from the bottom of the price range, as the attackers kind of attack from that range change, they start to figure out ways to do things that the upper market kind of people have been doing, but at a lower price. So suddenly the things that looked like they were signals of a higher price end up being able to be delivered down here, lower in the price continuum of that market. So the idea that today we assume that it's always going to be more expensive to deliver this one-of-a-kind experience to a customer is— might be true now, but it's on way to not being true because we'll have the same kind of disruptive innovation. That's what Christensen calls it. The same kind of disruptive innovation taking place to enable this one-of-a-kind connectivity with customers, this one-of-a-kind delivery of tailored material to customers. Look, I can go on Lands' End right now and get made-to-measure, made-to-order shirts and pants that cost not much more than the mass market version. I can get— I can tailor the buttons, the collars, the cuffs, the various stripes. I can get everything done exactly the way I want them to get done. And the reason they can do that is because the systems that they can now use to manufacture enable that kind of individual, one-of-a-kind product making at a much lower price than you would expect to find, you know, at a handmade tailor shop doing that. So Netflix making a statement about the desire to be a one-of-a-kind, all the way through sort of company. I'm interested in your thoughts about— particularly, I'm interested in your thoughts about this idea that personal, on-the-telephone customer service is going to make a difference rather than email customer service. So, uh, love to hear what you think. And as always, thanks a lot and see you again soon. Bye.
