OK, that headline is a bit satirical—but it is to the point.

By now, due to wide media coverage, many if not all readers of this newsletter will have heard of Netflix's recent self-inflicted trauma.

First, Netflix implemented large rate hikes for its steaming service and announced that the DVD and streaming service payments would be split. Second, it revealed that Netflix would split the DVD delivery and streaming services into two websites. Finally, the company is now rapidly backing off the split, announcing that the services will remain together.

Virtually the only thing Netflix did right was the last thing: promote increased selection for streaming content. Pretty much everything else was a disaster.

Gartner's Allen Weiner (Research VP for Media Service) commented, "But you have to admire the transparency that [CEO] Reed Hastings and Netflix has had. This isn't something they've done in secret and then sprung on customers. They've been really open and honest about it..."

Weiner was only halfway paying attention. Yes, there's a value to transparency and honesty with customers: admitting when you’ve made a mistake is important.

However, let's rewind a bit and take a look at what really happened. Hastings, via blog posts and a video message to customers (Netflix content on YouTube), admitted that the company communicated poorly regarding the reasons for the business split and price increases. Compounding this, Hastings simultaneously proposed the further step of spinning off the DVD service as a separate website—an announcement that caused many customers to immediately lose patience with Netflix, and caused the company to do a rapid about-face.

So unless Weiner's point is that it IS better to "open your mouth and remove all doubt", or unless Hastings is some sort of genius directing machinations far beyond our understanding, I fail to see how Hastings is to be admired. I prefer the reflections and advice offered by Fordham University Professor Paul Levinson as published in the Christian Science Monitor.

Disclosure: I’m a Netlfix customer. Though I am amazed at Netflix’s apparently clumsy efforts to steer its ship on a new course, I still think I’m paying a decent price for the service that I receive. My general feeling is that I was getting a pretty good deal before, and I’m still getting a decent deal. Alternatives to Netflix don’t appeal to my tastes as a consumer. I think streaming video is already great and will get much better. So I’m not full of vitriol over this—just shaking my head and laughing. Even after all this, I want Netflix to thrive and get better, not worse.

And ironically, Netflix could have avoided all of these problems by asking me—or any business-minded person familiar with Netflix’s services (perhaps you). Who among us would Netflix have found to say, “Well, I think you should charge a lot more, then tell people you’re going to make enjoying the service more difficult, then admit to twice making a huge mistake. Finish it up by telling people that the price hikes will remain in force. That’ll be peachy!”

At the end of the day, this is a question about leadership. The question must be asked: have the leaders at Netflix become so divorced from reality that they didn’t see this train wreck coming? And if so, should they be leading the company into the future?

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