Should a CEO Explain Strategy Shifts?

In 1998 Reed Hastings founded Netflix, the lar...

Originally posted on financialtimes.com

THE PROBLEM

On Sunday, Netflix CEO Reed Hastings apologised for the way the company had handled a decision to raise prices and split its streaming and DVD services. He said: “I should have personally given a full justification to our members.” Is he right? Do explanations about big strategic changes need to come straight from the CEO or do they just need to be good explanations?

THE ADVICE

The academic: Paul Argenti

“I messed up. I owe everyone an explanation,” wrote Reed Hastings in a missive that appeared in my inbox at 3:13am. My first thought on reading this at 6am was that he noticed that my rented copy of Shawshank Redemption had languished in Martha’s Vineyard for too long, and he was apologising for charging me a year of fees. But no, he was apologising for weak communications! Are you kidding me?

In my view, this went too far. Yes, the CEO needs to be involved in strategy execution, but I didn’t even know this was a problem until Reed raised it to a level where everyone I know wanted to discuss his letter.

Explain the new model, charge me for whichever of the two businesses I opt for, but no mea culpa is necessary here, Reed. Next time, stay above the fray.

Read the rest of the post including advice from an executive and a PR professional in the Financial Times.

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