No Rules Rules: Netflix and the Culture of Reinvention

by Reed Hastings

The big risk is becoming irrelevant because your employees aren’t coming up with great ideas to reinvent the business.

a loosely coupled design system has few interdependencies between the component parts. They are designed so that each can be adapted without going back and changing the foundation.

If you are managing a department (or a team within a department) in a tightly coupled system and you decide you’d like to begin to lead your people with context, you may find that the tight coupling gets in your way.

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

In this case, it’s not your chef’s fault. It’s yours. You hired the right person, but you didn’t provide enough context.

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?

But at Netflix, as we’ve discussed, the informed captain is the decision maker, not the boss. The boss’s job is to set the context that leads the team to make the best decisions for the organization.

Many of these items keep the organization from changing quickly when the environment shifts. Pay-per-performance bonuses, Management by Objective, and Key Performance Indicators motivate employees to stay on a preset path, making it difficult to quickly dump one project and pick up another.

The 4As are as follows:

“Rules and process” is so familiar a paradigm for coordinating group behavior, it hardly needs any explanation at all.

In these situations, the biggest risk isn’t making a mistake or losing consistency; it’s failing to attract top talent, to invent new products, or to change direction quickly when the environment shifts.

Consistency and repeatability are more likely to squash fresh thinking than to bring your company profit. A lot of little mistakes, while sometimes painful, help the organization learn quickly and are a critical part of the innovation cycle.