No Rules Rules: Netflix and the Culture of Reinvention
Rate it:
Open Preview
Read between September 07 - September 08, 2020
2%
Flag icon
In 2002, two years after that meeting, we took Netflix public. Despite our growth, Blockbuster was still a hundred times larger than we were ($5 billion versus $50 million). Moreover, Blockbuster was owned by Viacom, which at that time was the most valuable media company in the world. Yet, by 2010, Blockbuster had declared bankruptcy. By 2019, only a single Blockbuster video store remained, in Bend, Oregon. Blockbuster had been unable to adapt from DVD rental to streaming.
2%
Flag icon
It was not obvious at the time, even to me, but we had one thing that Blockbuster did not: a culture that valued people over process, emphasized innovation over efficiency, and had very few controls.
Paulo Cunha liked this
2%
Flag icon
We have a culture where No Rules Rules.
2%
Flag icon
For many years, one of America’s biggest corporations proudly exhibited the following list of values in the lobby of its headquarters: “Integrity. Communication. Respect. Excellence.” The company? Enron.
2%
Flag icon
They violate the principle that Harvard Business School professor Amy Edmondson calls “psychological safety.”
3%
Flag icon
Overall, the Netflix Culture Deck struck me as hypermasculine, excessively confrontational, and downright aggressive—perhaps
Santhosh Guru liked this
3%
Flag icon
Each time this happened, I put a process in place to prevent that mistake from occurring again.
3%
Flag icon
The first is that we failed to innovate quickly. We had become increasingly efficient and decreasingly creative.
4%
Flag icon
With my next company, Netflix, I hoped to promote flexibility, employee freedom, and innovation, instead of error prevention and rule adherence.
Santhosh Guru liked this
4%
Flag icon
If you give employees more freedom instead of developing processes to prevent them from exercising their own judgment, they will make better decisions and it’s easier to hold them accountable.
4%
Flag icon
If you build an organization made up of high performers, you can eliminate most controls. The denser the talent, the greater the freedom you can offer.
4%
Flag icon
Start by ripping pages from the employee handbook. Travel policies, expense policies, vacation policies—these can all go. Later, as talent becomes increasingly denser and feedback more frequent and candid, you can remove approval processes throughout the organization, teaching your managers principles like, “Lead with context, not control,” and coaching your employees using such guidelines as, “Don’t seek to please your boss.”
4%
Flag icon
Netflix generally doesn’t believe in anonymity,
5%
Flag icon
he didn’t exactly set out to build a company with a unique ecosystem. Instead, he sought organizational flexibility.
5%
Flag icon
First build up talent density . . . 1 ▶ A Great Workplace Is Stunning Colleagues Then increase candor . . . 2 ▶ Say What You Really Think (with Positive Intent) Now begin removing controls . . . 3a ▶ Remove Vacation Policy 3b ▶ Remove Travel and Expense Approvals
Santhosh Guru liked this
6%
Flag icon
We were in cost-cutting mode, and we’d just let go of a third of the workforce, yet the office was suddenly buzzing with passion, energy, and ideas.
6%
Flag icon
Suddenly, we were doing far more work—with 30 percent fewer employees.
6%
Flag icon
a team with one or two merely adequate performers brings down the performance of everyone on the team.
7%
Flag icon
Felps first found that, even when other team members were exceptionally talented and intelligent, one individual’s bad behavior brought down the effectiveness of the entire team. In dozens of trials, conducted over month-long periods, groups with one underperformer did worse than other teams by a whopping 30 to 40 percent.
7%
Flag icon
If you have a group with a few merely adequate performers, that performance is likely to spread, bringing down the performance of the entire organization.
7%
Flag icon
Our number one goal, moving forward, would be to do everything we could to retain the post-layoff talent density and all the great things that came with it.
7%
Flag icon
I became laser-focused on making sure Netflix was staffed, from the receptionist to the top executive team, with the highest-performing, most collaborative employees on the market.
8%
Flag icon
I saw that getting feedback had an added benefit. It pushed the performance in the office to new levels.
8%
Flag icon
“Only say about someone what you will say to their face.”
9%
Flag icon
When giving and receiving feedback is common, people learn faster and are more effective at work.
9%
Flag icon
HIGH PERFORMANCE + SELFLESS CANDOR = EXTREMELY HIGH PERFORMANCE
9%
Flag icon
At Netflix, it is tantamount to being disloyal to the company if you fail to speak up when you disagree with a colleague or have feedback that could be helpful.
9%
Flag icon
“I was just saying to my colleagues,” she explained, “that the way you are facilitating the discussion from the stage is undermining your message about cultural diversity. When you ask for comments and call on the first person who raises a hand, you’re setting just the type of trap your book tells us to avoid—because only Americans raise their hands, so only Americans get the chance to speak.”
10%
Flag icon
“I’d love to give you some feedback.” We’d
10%
Flag icon
A feedback loop is one of the most effective tools for improving performance. We learn faster and accomplish more when we make giving and receiving feedback a continuous part of how we collaborate.
11%
Flag icon
The goal at Netflix is to help each other succeed, even if that means feelings occasionally get hurt.
11%
Flag icon
I recommend instead focusing first on something much more difficult: getting employees to give candid feedback to the boss.
11%
Flag icon
The first technique our managers use to get their employees to give them honest feedback is regularly putting feedback on the agenda of their one-on-one meetings with their staff.
11%
Flag icon
When the moment arrives, solicit and encourage the employee to give feedback to you (the boss) and then—if you like—you can reciprocate by giving feedback to them.
12%
Flag icon
“Brian, the day you find yourself sitting on your feedback because you’re worried you’ll be unpopular is the day you’ll need to leave Netflix. We
13%
Flag icon
AIM TO ASSIST: Feedback must be given with positive intent. Giving feedback in order to get frustration off your chest, intentionally hurting the other person, or furthering your political agenda is not tolerated. Clearly explain how a specific behavior change will help the individual or the company, not how it will help you. “The way you pick your teeth in meetings with external partners is irritating” is wrong feedback. Right feedback would be, “If you stop picking your teeth in external partner meetings, the partners are more likely to see you as professional, and we’re more likely to build ...more
This highlight has been truncated due to consecutive passage length restrictions.
13%
Flag icon
The only remaining question is when and where to give feedback—and the answer is anywhere and anytime.
13%
Flag icon
“Rose! This isn’t working! You are losing the room! You sound defensive! You’re talking too fast.
15%
Flag icon
What if Sherry’s accomplishing amazing things working a twenty-five-hour week from a hammock in Hawaii? Well, let’s give her a big raise! She’s extremely valuable.
17%
Flag icon
“Not that you can take more or less days off, but that you can organize your life in any crazy way you like—and as long as you do great work nobody bats an eyelid.”
17%
Flag icon
“Lead with context, not control”
18%
Flag icon
In the absence of written policy, every manager must spend time speaking to the team about what behaviors fall within the realm of the acceptable and appropriate.
18%
Flag icon
The Netflix ethos is that one superstar is better than two average people.
19%
Flag icon
Patty and I both noticed people seemed to be taking more ownership around the office. Just little things, like someone started throwing out the milk in the refrigerator when it got sour.
19%
Flag icon
That’s when Patty and I coined the term “Freedom and Responsibility.”
19%
Flag icon
SPEND COMPANY MONEY AS IF IT WERE YOUR OWN
20%
Flag icon
ACT IN NETFLIX’S BEST INTEREST
20%
Flag icon
At Netflix you don’t have to complete a purchase order and wait for approval to buy something. You just buy it, take a photo of the receipt, and submit it directly for reimbursement. But that doesn’t mean no one pays attention to what you spend.
21%
Flag icon
This is the nub of F&R. If your people choose to abuse the freedom you give them, you need to fire them and fire them loudly, so others understand the ramifications. Without this, freedom doesn’t work.
Paulo Cunha liked this
21%
Flag icon
The freedom we offer wasn’t a good match for her.
« Prev 1