Powerful: Building a Culture of Freedom and Responsibility

by Patty McCord

Most companies are clinging to the established command-and-control system of top-down decision making but trying to jazz it up by fostering “employee engagement” and by “empowering” people. Compelling but misguided ideas about “best practices” prevail: bonuses and pay tied to annual performance reviews;

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.

Take our no-vacation-policy policy, which has received a great deal of press. We told people to take the time they thought was appropriate, just discussing what they needed with their managers. And do you know what happened? People took a week or two in the summer and time for the holidays and some days here and there to watch their kids’ ball games, just as before. Trusting people to be responsible with their time was one of the early steps in giving them back their power.

Instead of hiring people who had worked in other companies internally, I started hiring people who’d worked for headhunting firms to build that capability inside. Because we had that competency, I could tell a manager, “It’s okay if you lose a couple of people, because we can get great new people for you fast.”

Ask yourself: If you were to treat managing people the way you treat managing product, wouldn’t you also want to approach the entire system differently? If you started not with best practices but with what it takes to deliver a fabulous end product to your customers, what system would you invent?

I’m not at all saying that teams don’t need direction setting and coaching. They do. But the ways in which they’re given direction and feedback are often far from optimal.

IN BRIEF

QUESTIONS TO CONSIDER

When I was at Sun we had 370 people in HR. 370 people! And virtually all of them were divorced from the business; they couldn’t tell you what we made. We were doing initiatives and off-sites and celebrations. We were half entertainment and half happy-face HR. It was really fun but somehow empty.

My aha moment reminded me of when my son was six and playing soccer. My husband was the coach, and I’d go to lots of the practices. Watching the kids was hysterical. They’d just clump around the ball. I asked my husband in the car on the way to the team’s first game, “So what’s your strategy for the

game?” He said, “Well, I was going to really attempt to have everybody moving down the field in the same direction at the same time.” I responded, “You know, I think that’s achievable,” and he said, “Well, but in the second half, they’ve got to go the other way.” The World Cup fell later in the season, and I had the kids over to watch. When they saw the view of the game from the blimp, they realized, Oh! That’s what a pass looks like! Business is no different. People need to see the view from the C suite in order to feel truly connected to the problem solving that must be done

For a time, Reed and I would meet with every ten new hires in a room and go through a PowerPoint, which was our starting point in creating the Culture Deck. We’d say, “This is your cheat sheet. This is what you should expect from one another and absolutely expect from your management.” Over time, we developed “new employee college.” For one whole day each quarter, every head of every department would make an hourlong presentation on the important issues and developments in their part of the business. The idea for the college actually came from Cindy Holland, who is now VP of content acquisition/original series. She and I were backstage watching a set of management presentations the executive team was giving to a group of investors. She realized that she was learning a great deal, and she turned to me and asked, “Why do we do all of this hard work for a bunch of strangers but don’t do it for ourselves?” So we rolled it out for everybody. Netflixers will recall with a kind of awe that taking in all the information at new employee college was like drinking from a fire hose. They heard detailed presentations that included the metrics and the deliverables of each department. This not only gave employees a deep understanding of our business but also introduced them to the heads of the different parts of the business. Better still, they could ask those people questions.

“You will take out of this day what you put into it. If you don’t ask questions, you won’t get answers.”

I expect you’ve had the experience of talking to someone on your team about a business issue and being asked a question that makes you think, This person is clueless! Well, next time it happens, I want you to say to yourself, Wait, right, this person is clueless. He doesn’t know what I know. So I have to inform him.

Despite attempts to offer customer service through computer bots or preprogrammed FAQs or messaging systems, face-to-face or voice-to-voice service is far and away most effective.

They’re the lowest on the totem pole. Yet all business success is fundamentally driven by word-of-mouth marketing, and the people who are in direct contact with customers must understand that their every interaction with a customer leads to that person telling another person, for free, either to use the company’s product or service or not to.

It’s ironic how little information about strategy, operations, and results is generally shared with employees throughout companies.

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.

How well do you think people throughout the company could describe its business model? Why not ask them to do so? No prompts allowed.

Humans Hate Being Lied To and Being Spun | Practice Radical Honesty | One of the most important insights anyone in business can have is that it’s not cruel to tell people the truth respectfully and honestly. To the contrary, being transparent and telling people what they need to hear is the only way to ensure they both trust you and understand you.

Most of us feel that we can’t tell the people who work for us or with us the truth because (a) they’re not smart enough to understand it, (b) they’re not mature enough to understand it, or (c) it wouldn’t be nice. What’s so wrong with this? After all, humans want to be nice. We want to treat one another well, and we think that means making one another feel good. But this desire to make people feel good is often as much a desire to make ourselves feel good as to do the right thing. It often leads to people actually feeling worse, because they’re not correcting a problem in the way they’re working, and that eventually comes home to roost.

Compare to how many directors talk in front of staff and mgt in order to avoid stepping on mgts toes

Openly sharing criticism was one of the hardest parts of the Netflix culture for new employees to get used to,

One was to conduct an exercise we called “Start, Stop, Continue” in our team meetings. In this drill, each person tells a colleague one thing they should start doing, one thing they should stop doing, and one thing they’re doing really well and should keep doing.

Everyone Deserves to Know About Problems with the Business Too We practiced this same radical honesty about the challenges the business was facing. It was a very bumpy ride in the early years, and we shared with the whole company the difficulties as we encountered them, being very clear about our time frame, our metrics, and what it would take to meet goals.

People can handle being told the truth, about both the business and their performance. The truth is not only what they need but also what they intensely want.

Are people free to disagree with a point made by someone in authority during a team meeting? Have they seen it done openly, in front of the whole team?

Our Netflix executive team was fierce. We were combative in that beautiful, intellectual way where you argue to tease out someone’s viewpoint, because although you don’t agree, you think the other person is really smart so you want to understand why they think what they think. That respect for one another’s intelligence and genuine desire to discover the bases of colleagues’ views drove intense mutual questioning and kept it mostly productive and civil, if often quite colorful. The team also modeled this vigorous questioning for employees in many forums, openly debating one another.

Probably the main reason the company could continually reinvent itself and thrive, despite so many truly daunting challenges coming at us so fast and furiously, was that we taught people to ask, “How do you know that’s true?” Or my favorite variant, “Can you help me understand what leads you to believe that’s true?”

As I walked out of the meeting with the new manager, he turned to me and said, “Who does that guy think he is? How dare he talk to me that way!” I told him that the engineer was one of our best, and that we had cultivated the practice of asking people about the nature of problems they were tackling rather than assuming an understanding of them. Netflix turned out to be too much of a culture change for him, and he moved on before long.

Much more common was that people learned to appreciate the ethic of asking.

people’s opinions should always be fact based.

case. One of the great dangers in business is people who are great at winning an argument due to their powers of persuasion rather than the merits of their case.

with. This flowed naturally from the fact that most of the early employees were mathematicians and engineers. They lived and breathed the scientific method, which is all about discovering facts

But the problem is that people become overly wedded to data and too often consider it much too narrowly, removed from the wider business context. They consider it the answer to rather than the basis of good questions.

Ted also pointed out that viewership data can be limited in its ability to provide information about what people would like to watch if they could.

“There is lots of intuition that is acted on, and I look for people for the team who are smart enough to read the data and intuitive enough to know how to ignore it.”

cautions that data can be used as an accountability shield, deflecting responsibility for a judgment call. People are more comfortable making decisions based on hard data in part because they can fall back on that data if the decision turns out to be wrong.

the way to keep employees committed is to hire people who are really interested in a problem like the one you’re hiring for and who have a track record of or proclivity for working on things for a very long time. It’s

not to offer them four kinds of flavored water and sleeping pods.

he made no bones about how stressful it could be.

Executives tell me all the time about virtual wars raging between department heads. They can’t conceive of the possibility of conducting open debate about core business issues without its escalating

But if I believe that you’re fighting for the good of the company, defined as doing the right thing for the customer, then I’ll be more willing to hear you.

That story also highlights that even with avid, selfless debate, good ideas will sometimes get shot down. Which is another reason it’s so important that people recognize that even the most compelling, fact-based arguments can be wrong, and that “fact-based” does not equal “true.” It also underscores the importance of revisiting conclusions.

He arranged a debate between the two, onstage, in chairs facing each other, in front of the rest of the executive team. And the really brilliant twist was that each one argued the other’s side.

“What problem are we trying to solve here?” or “What leads you to believe that’s true?”

People are emboldened to speak up when they see that their views will be heard and they can really make a difference.

After leaving Netflix for other companies, Steve McLendon and John Ciancutti both encountered upper-management resistance to instituting the Netflix approach to questioning and open debate.

“The Netflix culture lends itself to managing younger people much more than the old top-to-bottom style.”

Are there members of your team who have become too fixed in their views about an issue and whom you could ask to take the perspective of the other side in a debate in front of your team?

Can you establish a regular forum for the presentation of arguments about key decisions and the best ways to solve problems your team is working on?