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No Rules Rules Summary

About No Rules Rules Book

The New York Times bestseller

Shortlisted for the 2020 Financial Times & McKinsey Business Book of the Year


Netflix cofounder Reed Hastings reveals for the first time the unorthodox culture behind one of the world's most innovative, imaginative, and successful companies


There has never before been a company like Netflix. It has led nothing short of a revolution in the entertainment industries, generating billions of dollars in annual revenue while capturing the imaginations of hundreds of millions of people in over 190 countries. But to reach these great heights, Netflix, which launched in 1998 as an online DVD rental service, has had to reinvent itself over and over again. This type of unprecedented flexibility would have been impossible without the counterintuitive and radical management principles that cofounder Reed Hastings established from the very beginning. Hastings rejected the conventional wisdom under which other companies operate and defied tradition to instead build a culture focused on freedom and responsibility, one that has allowed Netflix to adapt and innovate as the needs of its members and the world have simultaneously transformed.

Hastings set new standards, valuing people over process, emphasizing innovation over efficiency, and giving employees context, not controls. At Netflix, there are no vacation or expense policies. At Netflix, adequate performance gets a generous severance, and hard work is irrel­evant. At Netflix, you don’t try to please your boss, you give candid feedback instead. At Netflix, employees don’t need approval, and the company pays top of market. When Hastings and his team first devised these unorthodox principles, the implications were unknown and untested. But in just a short period, their methods led to unparalleled speed and boldness, as Netflix quickly became one of the most loved brands in the world.

Here for the first time, Hastings and Erin Meyer, bestselling author of The Culture Map and one of the world’s most influential business thinkers, dive deep into the controversial ideologies at the heart of the Netflix psyche, which have generated results that are the envy of the business world. Drawing on hundreds of interviews with current and past Netflix employees from around the globe and never-before-told stories of trial and error from Hastings’s own career, No Rules Rules is the fascinating and untold account of the philosophy behind one of the world’s most innovative, imaginative, and successful companies.

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No Rules Rules by Erin Meyer, Reed Hastings

Freedom & responsibility

Netflix is a well known for treating their employees like adults. They have a lot of autonomy (no approvals for decision making for example) but have to perform at the highest level and the organisation punishes bad behaviour. 

  1. Freedom & responsibility over control.
  2. People over having rules.
  3. Star players over adequate performers.
  4. Performance over effort.

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The Netflix Culture Recipe

Netflix's Culture has 3 main components:

  1. Talent Density: Create a workforce of top performers that are paid top of the market.

  2. Candor: Candid feedback is encouraged even if it might feel uncomfortable. Full organisational transparency.

  3. No Controls: No vacation, expenses policies. No decision making approvals. Focus on providing context over rules.

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Talent Density at Netflix = Rockstar Principle

Netflix's managers understood that merely adequate performers brings down the performance of everyone on the team. The rockstar principle guiding this says that "In all creative roles, the best is easily ten times better than average." So the goal of a Netflix leader is to create a team made up exclusively of top performers:

  • The Netflix employees are encouraged to go to interviews to competing companies to discover their true market value. Compensation is automatically increased to match a bigger offer. 
  • Each employee must pass the the Keeper Test: "IF A PERSON ON YOUR TEAM WERE TO QUIT TOMORROW, WOULD YOU TRY TO CHANGE THEIR MIND?"If a manager answer no to that question the employee is let go.

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Best book I read in 2020. If you are looking for a book to help you with setting up and managing high performing teams, this is the book for you. How Netflix manages the team, vacation policy etc. you won’t be disappointed.

Netflix In 2000

Netflix In 2000

In 2000, Netflix co-founders Reed Hastings and Marc Randolph tried to sell their company to Blockbuster for $50 million.

“Of course, [Blockbuster] wasn’t interested. What did we possibly have to offer that they couldn’t do more effectively themselves?”

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Netflix Was A Game changer

Netflix Was A Game changer

But as the world changed, it became clear that Netflix did have something different.

In 2010, Blockbuster declared bankruptcy — they’d been unable to transition from DVD rentals to streaming.

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Netflix’s Revenue Skyrocketed

By 2019, Netflix had over 167 million subscribers in 190 countries and its original film Roma won three Oscars. Why did it, and not Blockbuster, succeed?

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In a fast and innovative company, ownership of critical, big-ticket decisions should be dispersed across the workforce at all different levels, not allocated according to hierarchical status.

REED HASTINGS

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No Rules Rules Summary

No Rules Rules explains the incredibly unique and efficient company culture of Netflix, including the amazing levels of freedom and responsibility it gives employees and how this innovative way of running the business is the very reason that Netflix is so successful.

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REED HASTINGS

We learned that a company with really dense talent is a company everyone wants to work for. High performers especially thrive in environments where the overall talent density is high.

REED HASTINGS

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Great insights into the feedback loop applied at Netflix

SPUNE CE CREZI CU ADEVĂRAT (CU INTENTIE POZITIVĂ)

In primii mei ani ca CEO la Pure Software, am gestionat tehnologia în mod eficient, dar eram inca destul de stângaci în relationarea cu oamenii din conducere. Am evitat conflictele. Oamenii se supărau dacă mă adresam lor direct cu o anumită problemă, așa că încercam să rezolv problemele chiar odată cu apariția acestora.

La PureSoftware aveam un lider senior foarte atent, pe nume Aki, care, simțeam că avea nevoie de prea mult timp pentru dezvoltarea unui produs.

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Am fost frustrat și suparat, dar, în loc să vorbesc cu Aki, am cautat in afara companiei si am încheiat o înțelegere cu o altă echipă de ingineri pentru a initia proiectul. Cand Aki a aflat ce făcusem, a fost furios. El a venit si mi-a spus: „Esti supărat pe mine, dar actionezi pe la spatele meu in loc să-mi spui doar ce simti?"

Aki avea mare dreptate - modalitatea în care am abordat problema a fost îngrozitoare, dar nu stiam cum să vorbesc deschis despre temerile mele.

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Aceeași problema mi-a afectat viața personală.

Mă aflam la apogeul vieții mele profesionale, dar nu știam cum să fiu un soț bun.

Problema a luat o altă turnură când am început să mergem la un consilier marital. El ne-a determinat pe fiecare dintre noi sa vorbim despre resentimentele noastre.

Am început să vad relatia noastră prin ochii soției mele. Nu-i pasa de bani. Mă întâlnise in 1986, la o petrecere pentru voluntari Peace Corps reveniti in tară si se îndrăgostise de tipul care tocmai petrecuse doi ani predând in Swaziland. Acum se trezise legată de un tip obsedat de succesul in afaceri.

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Freedom and Responsibility

Freedom and Responsibility

If Reed Hastings is not a big fan of Lao Tzu, who advocates the idea of “governing by doing nothing (that goes against the nature)” from Tao Te Ching, then it’s either a coincidence, or, as the saying goes, “great minds think alike”.

Hastings’s idea of freedom and responsibility (F&R) is the at the very core of his management philosophy for Netflix, a company which has successfully transitioned, survived, and thrived from the DVD generation to the streaming era. The balance of F&R can easily remind us about the idea of yin and yang (Y&Y) in ancient Chinese philosophy.

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