No Rules Rules: Netflix and the Culture of Reinvention

by Reed Hastings

If your focus is on eliminating mistakes, then control is best.

Leading with control is great for error prevention.

If you’ve got high-performing employees, leading with context is best.

In addition to high talent density (that’s the first condition) and a goal of innovation rather than error prevention (that’s the second), you also need to work (here comes the third) in a system that is “loosely coupled.”

In a tightly coupled system, strategic change is easily aligned throughout the organization.

With loose coupling, on the other hand, the risk of misalignment is high.

Loose coupling works only if there is a clear, shared context between the boss and the team.

HIGHLY ALIGNED, LOOSELY COUPLED

make sure that all leaders across the company are highly aligned on what I call our North Star: the general direction we are running in. We don’t need to be aligned on how each department is going to get where they are going—that we leave to the individual areas—but we do need to make sure we are all moving in the same direction.

WHEN ONE OF YOUR PEOPLE DOES SOMETHING DUMB DON’T BLAME THEM. INSTEAD ASK YOURSELF WHAT CONTEXT YOU FAILED TO SET. ARE YOU ARTICULATE AND INSPIRING ENOUGH IN EXPRESSING YOUR GOALS AND STRATEGY? HAVE YOU CLEARLY EXPLAINED ALL THE ASSUMPTIONS AND RISKS THAT WILL HELP YOUR TEAM TO MAKE GOOD DECISIONS? ARE YOU AND YOUR EMPLOYEES HIGHLY ALIGNED ON VISION AND OBJECTIVES?

When one of your people does something dumb, don’t blame that person. Instead, ask yourself what context you failed to set.

The first lesson was to increase formal feedback moments when dealing with less direct cultures.

In less direct countries, implement more formal feedback mechanisms and put feedback on the agenda more frequently, because informal exchanges will happen less often.

Are you working in an industry where your employees’ or customers’ health or safety depends on everything going just right? If so, choose rules and process. If you make a mistake, will it end in disaster? Choose rules and process.

Are you running a manufacturing environment where you need to produce a consistently identical product? Choose rules and process.