No Rules Rules: Netflix and the Culture of Reinvention

by Reed Hastings

a culture that valued people over process, emphasized innovation over efficiency, and had very few controls.

the principle that Harvard Business School professor Amy Edmondson calls “psychological safety.” In her 2018 book, The Fearless Organization, she explains that if you want to encourage innovation, you should develop an environment where people feel safe to dream, speak up, and take risks. The safer the atmosphere, the more innovation you will have.

“Lead with context, not control,”

stunning

Who decides on the definition of talent? Many believe talent is what people are either born with or not, but is there really such thing as talent?

You might think the first step for cultivating candor would be to begin with what’s easiest: having the boss give copious feedback to her staff. I recommend instead focusing first on something much more difficult: getting employees to give candid feedback to the boss. This can be accompanied by boss-to-employee feedback. But it’s when employees begin providing truthful feedback to their leaders that the big benefits of candor really take off.

A culture of candor does not mean that you can speak your mind without concern for how it will impact others.

“Never give criticism when you’re still angry”

I didn’t want our talented employees to feel that dumb rules were preventing them from using their brains to do what was best.

Creative work requires that your mind feel a level of freedom. If part of what you focus on is whether or not your performance will get you that big check, you are not in that open cognitive space where the best ideas and most innovative possibilities reside. You do worse.

I understand that it can be difficult. Any leader who tries to be more transparent quickly recognizes that the good of bringing things out in the open sometimes competes with the good of respecting an individual’s right to privacy. Both are important. But when someone is let go, everyone wants to understand why. What happened will eventually come out. But if you explain plainly and honestly why you’ve fired someone, gossip ceases and trust increases.

Generally, I believed that if the dilemma is linked to an incident at work, everyone should be informed. But if the dilemma is linked to an employee’s personal situation, it’s up to that person to share details if he chooses.

Netflix does not operate in a safety-critical market, like medicine or nuclear power. In some industries, preventing error is essential. We are in a creative market. Our big threat in the long run is not making a mistake, it’s lack of innovation. Our risk is failing to come up with creative ideas for how to entertain our customers, and therefore becoming irrelevant.

In today’s organizations, people tend to be more discreet about failure.

family is not a good metaphor for a high-talent-density workforce.

Leading with context, on the other hand, is more difficult, but gives considerably more freedom to employees. You provide all of the information you can so that your team members make great decisions and accomplish their work without oversight or process controlling their actions. The benefit is that the person builds the decision-making muscle to make better independent decisions in the future.

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?

From this early experience—and many others that followed—I learned that I couldn’t directly transfer my own way of life to the culture of another place. In order to be effective, I had to think about what adaptations I would need to make in order to get the results I was hoping for.