Powerful: Building a Culture of Freedom and Responsibility

by Patty McCord

inculcating a core set of behaviors in people, then giving them the latitude to practice those behaviors—well, actually, demanding that they practice them—makes teams astonishingly energized and proactive. Such teams are the best drivers to get you where you need to go.

The Netflix culture wasn’t built by developing an elaborate new system for managing people; we did the opposite. We kept stripping away policies and procedures.

A company’s job isn’t to empower people; it’s to remind people that they walk in the door with power and to create the conditions for them to exercise it. Do that, and you will be astonished by the great work they will do for you.

I’m going to challenge all of the basic premises of management today: that it is about building loyalty and retention and career progression and implementing structures to ensure employee engagement and happiness. None of that is true. None of this is the job of management. Here is my radical proposition: a business leader’s job is to create great teams that do amazing work on time. That’s it. That’s the job of management.

The most important thing to understand about transforming a culture, whether that of a team or a whole company, is that it isn’t a matter of simply professing a set of values and operating principles. It’s a matter of identifying the behaviors that you would like to see become consistent practices and then instilling the discipline of actually doing them.

We wanted open, clear, and constant communication about the work to be done and the challenges being faced, not only for a manager’s own team but for the company as a whole. • We wanted people to practice radical honesty: telling one another, and us, the truth in a timely fashion and ideally face to face. • We wanted people to have strong, fact-based opinions and to debate them avidly and test them rigorously. • We wanted people to base their actions on what was best for the customer and the company, not on attempts to prove themselves right. • We wanted hiring managers to take the lead in preparing their teams for the future by making sure they had high performers with the right skills in every position.

Great teams are made when every single member knows where they’re going and will do anything to get there. Great teams are not created with incentives, procedures, and perks. They are created by hiring talented people who are adults and want nothing more than to tackle a challenge, and then communicating to them, clearly and continuously, about what the challenge is.

Excellent colleagues, a clear purpose, and well-understood deliverables: that’s the powerful combination.

They were all built upon the realization that the most important job of management is to focus really intently on the building of great teams. If you hire the talented people you need, and you provide them with the tools and information they need to get you where you need to go, they will want nothing more than to do stellar work for you and keep you limber.

IN BRIEF ▶ The greatest team achievements are driven by all team members understanding the ultimate goal and being free to creatively problem-solve in order to get there. ▶ The strongest motivator is having great team members to work with, people who trust one another to do great work and to challenge one another. ▶ The most important job of managers is to ensure that all team members are such high performers who do great work and challenge one another. ▶ You should operate with the leanest possible set of policies, procedures, rules, and approvals, because most of these top-down mandates hamper speed and agility. ▶ Discover how lean you can go by steadily experimenting. If it turns out a policy or procedure was needed, reinstate it. Constantly seek to refine your culture just as you constantly work to improve your products and services. QUESTIONS TO CONSIDER • As you survey your company-wide policies and procedures, ask: What is the purpose of this policy or procedure? Does it achieve that result? • Are there any approval mechanisms you can eliminate? • What percentage of its time does management spend on problem solving and team building? • Have you done a cost-benefit analysis of the incentives and perks you offer employees? • Could you replace approvals and permissions with analysis of spending patterns and a focus on accuracy and predictability? • Is your decision-making system clear and communicated widely?

The more time managers spend communicating and elaborating and being transparent about the job to be done, about the challenges the business is facing and the larger competitive context, the less important policies, approvals, and incentives are.

People need to see the view from the C suite in order to feel truly connected to the problem solving that must be done at all levels and on all teams, so that the company is spotting issues and opportunities in every corner of the business and effectively acting on them. The irony is that companies have invested so much in training programs of all sorts and spent so much time and effort to incentivize and measure performance, but they’ve failed to actually explain to all of their employees how their business runs.

It’s ironic how little information about strategy, operations, and results is generally shared with employees throughout companies. After all, public companies share that information with the whole world these days. Why should the investors on earnings calls know more about what’s happening in your business than most of the people working in it? I think it would be great if companies held the equivalent of an earnings call for all employees. In fact, why not have them listen to the actual earnings calls?

If your people aren’t informed by you, there’s a good chance they’ll be misinformed by others. If you don’t tell them about how the business is doing, what your strategy is, the challenges you’re facing, and what market analysts think of how you’re doing, then they will get that information elsewhere—either from colleagues, who will often be equally ill informed, or from the Web, which loves nothing so much as a rumor of doom or a juicy conspiracy theory.

But if I could pick one course to teach everybody in the company, whether they’re in management or not, it would be on the fundamentals of how the business works and serving customers.

How do you know when people are well enough informed? Here’s my measure. If you stop any employee, at any level of the company, in the break room or the elevator and ask what are the five most important things the company is working on for the next six months, that person should be able to tell you, rapid fire, one, two, three, four, five, ideally using the same words you’ve used in your communications to the staff and, if they’re really good, in the same order. If not, the heartbeat isn’t strong enough yet.

IN BRIEF ▶ Employees at all levels want and need to understand not only the particular work they are assigned and their team’s mission, but also the larger story of the way the business works, the challenges the company faces, and the competitive landscape. ▶ Truly understanding how the business works is the most valuable learning, more productive and appealing than “employee development” trainings. It’s the rocket fuel of high performance and lifelong learning. ▶ Communication between management and employees should genuinely flow both ways. The more leaders encourage questions and suggestions and make themselves accessible for give-and-take, the more employees at all levels will offer ideas and insights that will amaze you. ▶ If someone working for you seems clueless, chances are they have not been told information they need to know. Make sure you haven’t failed to give it to them. ▶ If you don’t tell your people about how the business is doing and the problems being confronted—good, bad, and ugly—then they will get that information somewhere else, and it will often be misinformation. ▶ The job of communicating is never done. It’s not an annual or quarterly or even monthly or weekly function. A steady stream of communication is the lifeblood of competitive advantage. QUESTIONS TO CONSIDER • How well do you think people throughout the company could describe its business model? Why not ask them to do so? No prompts allowed. • Do you share with employees the same informatio...