The Netflix employees is required to "say exactly what they really thought, but with positive intent—not to attack or injure anyone, but to get feelings, opinions, and feedback out onto the table, where they could be dealt with." The management team observed that candor is an amplifier for performance:HIGH PERFORMANCE + SELFLESS CANDOR = EXTREMELY HIGH PERFORMANCE

Candor @ Netflix

A culture of candor does not mean that you can speak your mind without concern for how it will impact others:Giving Feedback: <ul><li>AIM TO ASSIST: Feedback must be given with positive intent. Giving feedback in order to get frustration off your chest, intentionally hurting the other person, or furthering your political agenda is not tolerated. </li><li>ACTIONABLE: Your feedback must focus on what the recipient can do differently.</li></ul> Receiving Feedback <ul><li>APPRECIATE: When you receive feedback, you need to fight going defensive and instead ask yourself, “How can I show appreciation for this feedback by listening carefully & not get angry?" </li><li>ACCEPT OR DISCARD: You are required to listen and consider all feedback provided. You are not required to follow it. Say “thank you” with sincerity. But both you and the provider must understand that the decision to react to the feedback is entirely up to the recipient.</li></ul>

4A Feedback Guide

While companies describe themselves as families. Netflix calls itself a high performance team. Families stay together regardless of "performance". A team however: <ul><li>Demands excellence, counting on the manager to make sure every position is filled by the best. </li><li>Trains to win, expecting to receive candid & continuous feedback about how to up their game from the coach and from one another. </li><li>Knows effort isn’t enough, recognizing that, if they put in a B performance despite an A for effort, they will be thanked and respectfully swapped out for another player.</li></ul>

Team not Family

If you have an idea you’re passionate about, do the following: <ol><li>“Farm for dissent,” or “socialize” the idea: create a shared memo explaining the idea & invite colleagues for input</li><li>For a big idea, test it out: Nothing workd better than a small, isolated test. </li><li>As the informed captain, make your bet: While reaching for feedback seems like consensus building, it's the opposite. It's your decision. </li><li>If it succeeds, celebrate. If it fails, sunshine it: If you make a bet and it fails, it’s important to speak openly and frequently about what happened.</li></ol>

The Netflix Innovation Cycle

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 let them go and look for a star you would fight to keep. The Keeper Test applies to everyone at Netflix: from CEO to an intern. To minimize the fear of being sacked, an employee is encouraged to ask the manager during 1-1s: “IF I WERE THINKING OF LEAVING, HOW HARD WOULD YOU WORK TO CHANGE MY MIND?” Everyone should know where they stand.

The KEEPER Test

As a company grows setting rules and policies can never work well. Real life is so much more nuanced than any policy could ever address. So Netflix focuses more on context, letting people make decisions based on the explicit context or by mimicking good behaviour: <ul><li>Act in the best interest of Netflix. You don't need approvals for spending but people should asks themselves: "Before you spend any money imagine that you will be asked to stand up in front of me and your own boss and explain why you chose to purchase that specific item".</li><li>Trust but Verify: If people choose to abuse the freedom given to them, they will be fired loudly, so others understand the ramifications.  </li><li>The Informed Captain: Your decisions are yours. Don't make decisions to please your boss, but because you have the best data.</li></ul>

No Controls @ Netflix

Netflix's Culture has 3 main components: 
<ol>
<li>Talent Density: Create a workforce of top performers that are paid top of the market.
</li>
<li>Candor: Candid feedback is encouraged even if it might feel uncomfortable. Full organisational transparency. 
</li>
<li>No Controls: No vacation, expenses policies. No decision making approvals. Focus on providing context over rules.
</li>
</ol>

The Netflix Culture Recipe

Decision making at most organizations is structured like a pyramid: Depending on the stakes a decision is being made by different people in the hierarchy. In a production company, changing the lead actor for a movie, may require the CEO sign-off, although it is the director who has most the best data to make that call. As opposed to the pyramid structure, which can lead to bottlenecks as senior leaders are inundated with diverse problems they may be ill-equipped to solve, “with a tree, with many, many branches, you can make lots of decisions all at once. And there is a much faster growth that comes with that”. At Netflix, for example, the informed captain is the decision maker, not the boss. Context setting is what feeds the tree, from the roots of all the way out to the highest branches.

Alignment is a Tree, not a Pyramid

Secrets take up a lot of space in our brains. One study showed we spend twice as much time thinking about our secrets as we do actively concealing them.According to a study by Michael Slepian, a professor of management at Columbia Business School, the average person keeps 13 secrets, 5 of which he or she has never shared with anyone else. A typical manager has even more. According to Slepian, if you are anything like an average person, there’s a:<ul><li>47% chance that one of your secrets involves a violation of trust. </li><li>60% chance that it involves a lie. </li><li>33% chance that it involves a theft, a hidden relationship, or unhappiness @ work. </li></ul>That’s a lot of confidential content to be keeping in your closet, and it takes a psychological toll: stress, anxiety, depression, loneliness, low self-esteem.

Corporate Secrets

Focus on Alignment not Control:<ol><li>Align on a north star. Every team remember should know what the the vision and the objectives.</li><li>When someone does something dumb, don't blame them but reflect what context was unclearly set.</li></ol>

HIGHLY ALIGNED, LOOSELY COUPLED

A technique of offering candid feedback to team members developed at Netflix. Team gets together over dinner and provide each-other actionable & helpful feedback. Use the following method to deliver feedback:<ul><li>Start – What's missing? Start doing it. </li><li>Stop – What’s not working? Let’s do less of that.</li><li>Continue – What’s working? Do more of that.</li></ul>

Live 360 Dinners with Start, Stop & Continue

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. <ol><li>Freedom & responsibility over control.</li><li>People over having rules.</li><li>Star players over adequate performers.</li><li>Performance over effort.</li></ol>

Freedom & responsibility

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:<ul><li>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. </li><li>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.</li></ul>

Talent Density at Netflix = Rockstar Principle

Receiving bad news about your work triggers feelings of self-doubt, frustration, and vulnerability. But studies showed that the employees are not that opposed by negative feedback: <ul><li>57% of respondents claim they would prefer to receive corrective feedback to positive feedback. </li><li>72% felt their performance would improve if they received more corrective feedback. </li><li>92% agreed with the comment, “Negative feedback, if delivered appropriately, improves performance.”</li></ul>

Negative feedback helps improve performance (study) 

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.

strategy

Strategy

movies

Movies & Shows

books

Books

leadershipandmanagement

Leadership & Management

artsandculture

Society, Arts & Culture

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.

Erin Meyer (born August 22, 1971) is an American author and professor based in Paris.[1] She is most known for writing the 2014 book, The Culture Map: Breaking Through the Invisible Boundaries of Global Business a study that analyzes how national cultural differences impact business.Meyer is a professor at INSEAD, an international business school with campuses in France, Singapore and Abu Dhabi. She regularly speaks about cross cultural management and global teamwork.

Erin Meyer

Reed Hastings is an accomplished writer whose work has resonated with readers around the world. Reed Hastings has published several books that explore a range of topics, from fiction to nonfiction, and has received critical acclaim for the ability to weave compelling narratives. Reed Hastings's writing style is known for its depth and authenticity, and has earned quite a loyal following of readers.

The KEEPER Test

Similar ideas to The KEEPER Test

Principle #12 Value knowledge and practices that have stood the test of time