Netflix and the Culture of Candor

If you work at Netflix, you have unlimited vacation, no expense policies, freedom to decide when show up at work and when to take time off. Behind those benefits there are several years spent through innovation to stay aligned with the ongoing World transformation.

I have just finished reading “No Rules Rules — Netflix and the Culture of Reinvention” written by Reed Hastings and Erin Meyer and this book has just reinforced the quote “Change is a process not an event”.

Since Blockbuster rejection Netflix has always reinveted itself and now become part of daily of millions of people around the world.

Success in this case is a mere consequence of many remarkable decisions which allowed to reach the top of the market in the entertainment industries: part of the growth is due to Netflix’s People Management Strategy, a concept of working which is unfolded in this book.

“No Rules Rules” explains this process and below are listed ten dots around which Netflix built a Culture where People come before Process.

The first dot

This is the most critical dot for the foundation of the whole Netflix Story. A fast and innovative workplace is made up of what we call “stunning colleagues” — highly talented people, of diverse backgrounds and perspectives, who are exceptionally creative, accomplish significant amounts of important work, and collaborate effectively. What’s more, none of the other principles can work unless you have ensured this first dot is in place.

The second dot

If you have a group of people who are highly talented, thoughtful, and well meaning, you can ask them to do something that is not at all natural but nonetheless incredibly helpful to a company’s speed and effectiveness. You can ask them to give each other loads of candid feedback and challenge authority.

The third dot

Once you have a workforce made up nearly exclusively of high performers, you can count on people to behave responsibly. Once you have developed a culture of candor, employees will watch out for another and ensure their teammates’ actions are in line with the good of the company. Then you can begin to remove controls and give your staff more freedom. Great places to start are the lifting of your vacation, travel, and expensive policies. These elements give people more control over their own lives and convey a loud message that you trust your employees to do what’s right. The trust you offer will in turn instill feelings of responsibility in your workforce, leading everyone in the company to have greater sense of ownership.

The fourth dot

In order to fortify the talent density in your workforce, for all creative roles hire one exceptional employee instead of ten or more average ones. Hire this amazing person at the top of whatever range they are worth on the market. Adjust their salary at least annually in order to continue to offer them more than competitors would. If you can’t afford to pay your best employees top of market, then let go of some of the less fabulous people in order to do so. That way, the talent will become even denser.

The fifth dot

If you have the best employees on the market and you’ve instituted a culture of open feedback, opening up company secrets increases feelings of ownership and commitment among staff. If you trust your people to handle appropriately sensitive information, the trust you demonstrate will instigate feelings of responsibility and your employees will show you just how trustworthy they are.

The sixth dot

If you have high talent density and organizational transparency firmly in place, a faster, more innovative decision-making process is possibile. Your employees can dream big, test their ideas, and implement bets they believe in, even when in opposition to those hierarchically above them.

The seventh dot

The Keeper Test has helped to elevate the talent density at Netflix to a level rarely seen in other organizations. If each manager considers carefully, on a regular basis, whether every employee on the team is indeed the best choice for that position and replaces anyone who isn’t, performance across the organization soars to new heights.

The eighth dot

If you’re serious about candor at some point, you do need to implement mechanisms to assure candor happens. With just two institutional processes you can ensure that everyone gets candid developmental feedback at regular intervals.

The ninth dot

In a loosely coupled organization, where talent density is high and innovation is the primary goal, a traditional, control-oriented approach is not the most effective choice. Instead of seeking to minimize error through oversight or process, focus on setting clear context, building alignment of the North Star between boss and team, and giving the informed captain the freedom to decide.

The last dot… for now

When giving feedback with those from your own culture, use the 4A approach outlined in chapter 2. But when giving feedback around the world, add a 5th A:

The 4As are as follows:

- Aim to assist

- Actionable

- Appreciate

- Accept or decline

Plus one makes 5:

- Adapt — your delivery and your reaction to the culture you’re working with to get the results that you need.