No Rules Rules: Netflix and the Culture of Reinvention

by Reed Hastings

When it comes to how we judge performance at Netflix, hard work is irrelevant.

Hard work is irrelevant

ACT IN NETFLIX’S BEST INTEREST

The company uses your ignorance to hire you at the lowest salary possible.

Although just about all companies talk about empowering staff, in the vast majority of organizations, real empowerment is a pipe dream because employees aren’t given enough information to take ownership of anything.

“Whisper wins and shout mistakes.”

a leader who has demonstrated competence and is liked by her team will build trust and prompt risk-taking when she widely sunshines her own mistakes. Her company benefits. The one exception is for a leader considered unproven or untrusted. In these cases you’ll want to build trust in your competency before shouting your mistakes.

In our creative business, rapid recovery is the best model.

at Netflix a person will reach out to relevant colleagues, but does not need to get anyone’s agreement before moving forward.

a high-talent-density work environment is not a family.

A job should be something you do for that magical period of time when you are the best person for that job and that job is the best position for you.

I just watched Bull Durham with my kids.

Pro baseball team example

IF A PERSON ON YOUR TEAM WERE TO QUIT TOMORROW, WOULD YOU TRY TO CHANGE THEIR MIND? OR WOULD YOU ACCEPT THEIR RESIGNATION, PERHAPS WITH A LITTLE RELIEF? IF THE LATTER, YOU SHOULD GIVE THEM A SEVERANCE PACKAGE NOW, AND LOOK FOR A STAR, SOMEONE YOU WOULD FIGHT TO KEEP.

I find it motivating that I have to play for my position every quarter, and I try to keep improving myself to stay ahead.

Microsoft that are now generally considered to have incited harmful internal competition.

stack ranking sabotages collaboration and destroys the joy of high-performing teamwork.

With rank-and-yank what you gain in talent density you lose in reduced collaboration.

“IF I WERE THINKING OF LEAVING, HOW HARD WOULD YOU WORK TO CHANGE MY MIND?”

Candor is like going to the dentist: a lot of people will avoid it if they can.

We’ve been against performance reviews from the beginning. The first problem is that the feedback goes only one way—downward. The second difficulty is that with a performance review you get feedback from only one person—your boss. This is in direct opposition to our “don’t seek to please your boss” vibe. I want people to receive feedback not just from their direct managers but from anyone who has feedback to provide. The third issue is that companies usually base performance reviews on annual goals. But employees and their managers don’t set annual goals or KPIs (Key Performance Indicators) at Netflix. Likewise, many companies use performance reviews to determine pay raises, but at Netflix we base salaries on the market, not performance.

creates “reverse accountability” whereby the team feels encouraged to call the boss out for recurrent bad behavior.

error-reduction processes, such as checking work before it goes to the client or approving purchases before orders are placed. These are all processes that allow a manager to give some freedom while still exerting a good deal of control.

If your employees are struggling, you’ll need to monitor and check their work to ensure they are making the right decisions. If you’ve got a group of high performers, they’ll most likely crave freedom and thrive if you lead with context.

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

Mighty Little Bheem

The vast majority of meetings are thirty minutes long and we generally believe that most topics, even important ones, can be settled in a half-hour time frame.

This can be adopted as a best practice

“This is just my opinion, for whatever it is worth,” and “You can take it or leave it.”

At Netflix, we are constantly debating our culture and expecting it will continually evolve. To build a team that is innovative, fast, and flexible, keep things a little bit loose. Welcome constant change. Operate a little closer toward the edge of chaos. Don’t provide a musical score and build a symphonic orchestra. Work on creating those jazz conditions and hire the type of employees who long to be part of an improvisational band. When it all comes together, the music is beautiful.

I like this: operate a little closer toward the edge of chaos. Improvisational band.