Netflix has consistently innovated and adapted to market changes over the last twenty years. It’s leader, Reed Hastings, credits Netflix’s unique and counterintuitive culture with its success. In “No Rules Rules” Hastings and Erin Meyer lay out the key concepts that make Netflix’s culture distinct. They include three big ideas:
Talent density
Netflix works to hire the best people and pay above-market salaries to recruit and retain them. It applies the “keeper test,” which asks if an employee resigned would you as a supervisor fight to keep them. If not, their merely “adequate” performance deserves a generous severance. Dismiss them and hire talent.
Hastings suggests that businesses that depend on innovation are not “families” – they are “teams.” “Families” should express unconditional love and are willing to endure the ups and downs of your life and performance. “Teams” are elite groups of people united for a season or for a specific project. When you are no longer the best at your position on the “team,” you will be replaced. Building a team that is densely packed with top talent is Netflix’s goal.
Candor
Netflix boasts about its emphasis on candor. It is not about annual performance reviews, it is about regular feedback all year long. Hastings tells his team that their job is not to “please your boss.” Instead, the job of every Netflix employees is to operate in the best interest of Netflix.
Sharing feedback up and down the chain of command is prized.
Remove Controls
Hastings seeks to lead with context, not controls. Netflix’s mantra is “freedom and responsibility.” Gone are rules or limits around vacation time, spending authority, per diems, and expense reports. Decision-making is decentralized but transparent.
Even if one thinks that Netflix’s culture is extreme, “No Rules Rules” is worth reading to clarify where your organization stands on each of these continuums.