I finished reading the book “No Rules Rules – Netflix and the Culture of Reinvention” by Reed Hastings (Netflix CEO) and Erin Meyer (author of the book “The Culture Map”) a few days ago and I must say that it gave me a lot of food for thought.
In the book, Hastings shares stories of his experiences as a founder and CEO, how the company evolved and had to pivot from DVD rentals to streaming services, and what changes they introduced to support and maintain the growth and culture.
The advice is divided into several stages, which are based on building up talent density, increasing candor, and removing controls. They iterate over these three aspects in four sections, taking them a step further with every round. Every part is supported by interviews with Netflix employees (performed by Erin Meyer) and questions on the topics she asked Reed to answer in his own words to provide additional context.
It’s a good and entertaining read. I liked and found it inspiring how the folks at Netflix have done away with many old habits and well-established assumptions about how businesses should operate.
Their recommendations are bold, but their success speaks for itself and confirms their approach. The recommendations resonated very well with me. I wished that more people in leadership roles would read it. The article 7 Leadership Lessons From Netflix CEO Reed Hastings has a good summary, in case you want to get another brief synopsis before reading the entire book.
Some things that I learned and that surprised me:
They strongly emphasize maintaining a feedback culture that practices radical candor and gives employees a high degree of freedom and responsibility. For example, they don’t have a formal vacation or expense policy and no hierarchical decision-making processes – they assume positive intent and ask their people to always act in the best interest of Netflix.
This allows them to react fast, and the responsibility and trust they put in their employees empower and motivate them. They deal with failure individually if something goes wrong instead of creating a policy that enforces certain behaviors. Mistakes are openly discussed without blaming individuals (they call it “sunshining”), but instead focusing on what could be learned and done better. In general, providing quick and direct feedback is something they strongly encourage and celebrate.
They also focus a lot on maintaining a culture of high-performing teams. They are very selective about the people they hire and keep on their teams. You may have heard of Netflix’s infamous “keeper test”, where they ask their managers to ensure that they’ve got the best person in every spot using the following question: “If a person on your team were to quit tomorrow, would you try to change their mind? Or would you accept their resignation, perhaps with a little relief? If the latter, you should give them a severance package now and look for a star, someone you would fight to keep.”.
The company applies this keeper test to everyone, encouraging employees to preemptively ask their managers the same question. They recognize that they don’t consider their company a family. It is more of an Olympic sports team, where every player needs to perform in their position, and mediocrity can not be tolerated.
They enable high performance through hiring top talent, empowerment, and a high level of openness and transparency to provide the context necessary for people to make well-informed decisions. For example, they openly share business-related information extensively internally (e.g., revenue, subscriber numbers, etc.) even before communicating these numbers to the stock market every quarter.
In summary, the book provides a concise guide and many practical tips on adopting their philosophy and culture in simple steps. But doing so requires a leadership team willing to make bold changes and challenge established corporate norms and behaviors.