No Rules Rules: Netflix and the Culture of Reinvention

by Reed Hastings

But we do know that good decisions require a solid grasp of the context, feedback from people with different perspectives, and awareness of all the options.” If someone uses the freedom Netflix gives them to make important decisions without soliciting others’ viewpoints, Netflix considers that a demonstration of poor judgment.

The Netflix Innovation Cycle If you have an idea you’re passionate about, do the following: “Farm for dissent,” or “socialize” the idea. For a big idea, test it out. As the informed captain, make your bet. If it succeeds, celebrate. If it fails, sunshine

Everything we’d built was crashing down because of my bad decision. It was the lowest point in my career—definitely not an experience I want to repeat. When I apologized on a YouTube video, I looked so stressed that Saturday Night Live made fun of me. But that humiliation was a valuable wake-up call, because afterward dozens of Netflix managers and VPs started coming forward to say they hadn’t believed in the idea.

now say that it is disloyal to Netflix when you disagree with an idea and do not express that disagreement. By withholding your opinion, you are implicitly choosing to

Humans are much more comfortable when going along with the herd. In many areas of life, this is not bad. But it may push us to go along with or even actively support an idea that our instinct or experience tells us is crazy.

but this specific principle is so important that we have developed multiple systems to make sure dissent gets heard.

“These are the next generation of Netflix customers,” they argued. “We want them to love Netflix as much as their parents do.” They wanted us to start producing original kids’ content as well.

that you care more about error prevention than innovation after all.

told him we’d learned that complexity kills consumer engagement.

One of the reasons this is so difficult in many companies is because business leaders are continually telling their employees, “We are a family.” But a high-talent-density work environment is not a family.

leads to employees focusing on competing with each other rather than competing with other companies.

“Only say about someone what you will say to their face.”

your employees are immature, have bad attitudes, or lack the self-confidence to show public vulnerability, you might not be ready to run these

The benefit is that the person builds the decision-making muscle to make better independent decisions in the future.

When considering whether to lead with context or control, the second key question to ask is whether your goal is error prevention or innovation.

asked incredulously.

considered another company,

selecting individuals in each

What we learned from this experience, and later found to be true not just in Japan but in most cultures where direct negative feedback is less comfortable and less common, was that asking employees to give ad hoc feedback to peers and superiors at informal moments doesn’t usually work well. But if you run more formal events, putting feedback on the agenda, providing preparation instructions, and giving a clear structure to follow, you can get all the useful feedback out there just as effectively.

Chris’s advice was simple and anyone who needs to give feedback to a colleague in a less direct culture should take heed. Be friendlier. Work harder to remove the blame. Be careful to frame the feedback as a suggestion, not an order. Add a relationship-based touch like a smiling emoji.

That’s what frustrates me about my American colleagues. As often as they give feedback and as eager as they are to hear it, if you don’t start by saying something positive they think the entire thing was a disaster.

In a manufacturing environment, you are trying to eliminate variation, and most management approaches have been designed with this in mind.

When a mistake would lead to a disaster, rules and process isn’t just nice to have, it’s a necessity.

In today’s information age, in many companies and on many teams, the objective is no longer error prevention and replicability. On the contrary, it’s creativity, speed, and agility.

A lot of little mistakes, while sometimes painful, help the organization learn quickly and are a critical part of the innovation cycle. In these situations, rules and process are no longer the best answer. A symphony isn’t what you’re going for. Leave the conductor and the sheet music behind. Build a jazz band instead. Jazz emphasizes individual spontaneity. The musicians know the overall structure of the song but have the freedom to improvise, riffing off one another other, creating incredible music.

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.