Check out my video overview of Reed Hastings’ “No Rules Rules” here, or read on to see some of my notes.

Introduction

Netflix Culture is Weird

Unlike many companies, we practice: adequate performance gets a generous severance package

The Keeper Test Mangers Use: Which of my people, if they told me they were leaving, for a similar job at a peer company, would I fight hard to keep at Netflix?

In her 2018 book, “The Fearless Organization”, she (Amy Edmondson) explains that if you want to encourage innovation, you should develop an environment where people feel safe to dream, speak up, and take risks. The safer the atmosphere, the more innovation you will have.

Netflix Vacation Policy and Tracking: There is no policy or tracking. There is also no clothing policy at Netflix, but no one comes to work naked. Lesson: You don’t need policies for everything.

Honesty Always: As a leader, no one in your group should be materially surprised of your views.

A DIFFERENT TYPE OF WORKPLACE

Policies and control processes became so foundational to our work that those who were great at coloring within the lines were promoted, while many creative mavericks felt stifled and went to work elsewhere.

Build up talent density

If you build an organization made up of high performers, you can eliminate most controls. The denser the talent, the greater the freedom you can offer.

Increase candor

Talented employees have an enormous amount to learn from one another. But the normal polite human protocols often prevent employees from providing the feedback necessary to take performance to another level. When talented staff members get into the feedback habit, they all get better at what they do while becoming implicitly accountable to one another, further reducing the need for traditional controls.

Reduce controls

“Lead with context, not control,” and coaching your employees using such guidelines as, “Don’t seek to please your boss.”

Section One: First Steps to a Culture of Freedom and Responsibility

1. First Build up Talent Density

A Great Workplace Is Stunning Colleagues

TALENT DENSITY: TALENTED PEOPLE MAKE ONE ANOTHER MORE EFFECTIVE

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.

If you have a team of five stunning employees and two adequate ones, the adequate ones will

• sap managers’ energy, so they have less time for the top performers,
• reduce the quality of group discussions, lowering the team’s overall IQ,
• force others to develop ways to work around them, reducing efficiency,
• drive staff who seek excellence to quit, and
• show the team you accept mediocrity, thus multiplying the problem.

PERFORMANCE IS CONTAGIOUS

Will Felps first found that, even when other team members were exceptionally talented and intelligent, one individual’s bad behavior brought down the effectiveness of the entire team. In dozens of trials, conducted over month-long periods, groups with one underperformer did worse than other teams by a whopping 30 to 40 percent.

2. Then Increase Candor

Say What You Really Think (with Positive Intent)

This chapter reminds me of Gary Vaynerchuk’s idea of Kind Candor

HIGH PERFORMANCE + SELFLESS CANDOR = EXTREMELY HIGH PERFORMANCE

At Netflix, it is tantamount to being disloyal to the company if you fail to speak up when you disagree with a colleague or have feedback that could be helpful. After all, you could help the business—but you are choosing not to.

WE HATE CANDOR (BUT STILL WANT IT)

4A FEEDBACK GUIDELINES

Giving Feedback

1. Aim to Assist
2. Actionable

Receiving Feedback

3. Appreciate
4. Accept or Discard

CLARIFY AND REINFORCE THE DIFFERENCE BETWEEN BEING SELFLESSLY CANDID AND A BRILLIANT JERK

3. Now Begin Removing Controls

3a – REMOVE VACATION POLICY

Then a suggestion from an employee led us to make a change. He pointed out the following:

• “We are all working online some weekends, responding to emails at odd hours, taking off an afternoon for personal time. We don’t track hours worked per day or week. Why are we tracking days of vacation per year?”

This reminds me of “Back to Human”, as well as Ali’s “scheduled variety”:

• “The line is blurry between work and life. So we have to make sure that our people can do personal stuff while on the job, because I know they’re doing work things when they’re off the job.”

LEADERS MUST MODEL BIG VACATION-TAKING

FREEDOM FROM VACATION POLICY ADDS VALUE—EVEN IF NO ONE USES IT

Unlimited holiday is easy to implement—you just have to create an environment of trust, and ours is built through three company rules: (1) always act in the best interests of the company, (2) never do anything that makes it harder for others to achieve their goals, (3) do whatever you can to achieve your own goals.

3b – REMOVE TRAVEL AND EXPENSE APPROVALS

SPEND COMANY MONEY AS IF IT WERE YOUR OWN

ACT IN NETFLIX’S BEST INTEREST

SOME PEOPLE WILL CHEAT, BUT THE GAINS OUTWEIGH THE LOSSES

Section Two: Next Steps to a Culture of Freedom and Responsibility

4. Fortify Talent Density

Pay Top of Personal Market

OFFER ROCK-STAR PAY

Give generous (and appropriate) raises so that other firms can’t touch them.

5. Pump Up Candor

Open the Books

Lots of lessons from “The Great Game of Business”

However, opening company secrets to employees had another outcome: it made our workforce smarter. When you give low-level employees access to information that is generally reserved for high-level executives, they get more done on their own. They work faster without stopping to ask for information and approval. They make better decisions without needing input from the top.

6. Now Release More Controls

No Decision-making Approvals Needed

DON’T SEEK TO PLEASE YOUR BOSS. SEEK TO DO WHAT IS BEST FOR THE COMPANY.

Afterward, when Sheryl Sandberg and I debriefed, she said, “The amazing thing was to sit with you all day long and see that you didn’t make one decision!”

At Netflix, if you share all the context of your decision, you’ve done the groundwork. You don’t need approval. It’s up to you. You decide.

Takeaways from Chapter 6

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.

Section Three: Techniques to Reinforce a Culture of Freedom and Responsibility

7. Max Up Talent Density

The Keeper Test

A FAMILY IS ABOUT STAYING TOGETHER REGARDLESS OF “PERFORMANCE”

FROM FAMILY TO TEAM

At Netflix, I want each manager to run her department like the best professional teams, working to create strong feelings of commitment, cohesion, and camaraderie, while continually making tough decisions to ensure the best player is manning each post.

THE KEEPER TEST

To help managers on the judgment calls, we talk about the Keeper Test:

• 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.

During your next one-to-one with your boss ask the following question:

• “IF I WERE THINKING OF LEAVING, HOW HARD WOULD YOU WORK TO CHANGE MY MIND?”

8. Max Up Candor

A Circle of Feedback

There is one Netflix guideline that, if practiced religiously, would force everyone to be either radically candid or radically quiet: “Only say about someone what you will say to their face.”

It reminds me of “The Office” when Michael says:

• “I would never say this to her face, but she’s a wonderful person and a gifted artist.”
• Oscar replies with “Why wouldn’t you say that to her face?”

9. And Eliminate Most Controls

Lead with Context, Not Control

• “If you want to build a ship, don’t drum up the people to gather wood, divide the work, and give orders. Instead, teach them to yearn for the vast and endless sea.” – Antoine de Saint-Exupery

IS YOUR ORGANIZATION HIGHLY ALIGNED?

ALIGNING ON A NORTH STAR

Instead I reminded myself of what I often tell leaders throughout Netflix:

• WHEN ONE OF YOUR PEOPLE DOES SOMETHING DUMB DON’T BLAME THEM. INSTEAD ASK YOURSELF WHAT CONTEXT YOU FAILED TO SET. ARE YOU ARTICULATE AND INSPIRING ENOUGH IN EXPRESSING YOUR GOALS AND STRATEGY? HAVE YOU CLEARLY EXPLAINED ALL THE ASSUMPTIONS AND RISKS THAT WILL HELP YOUR TEAM TO MAKE GOOD DECISIONS? ARE YOU AND YOUR EMPLOYEES HIGHLY ALIGNED ON VISION AND OBJECTIVES?

Section Four: Going Global

10. Bring It All to the World!

IDEAS ABOUT CANDOR DIFFER GREATLY AROUND THE WORLD

WITH LESS DIRECT CULTURES, INCREASE FORMAL FEEDBACK MOMENTS

EVERYTHING IS RELATIVE

When you are leading a global team, as you Skype with your employees in different cultures, your words will be magnified or minimized based on your listener’s cultural context. So you have to be aware. You have to be strategic. You have to be flexible. With a little information and a little finesse, you can modify the feedback to the person your speaking with in order to get the results that you need.

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.

Conclusion

IT’S JAZZ, NOT A SYMPHONY

At Netflix, we are constantly debating our culture and expecting it will continually evolve. To build a team that is innovative, fast, and flexible, keep things a little bit loose. Welcome constant change. Operate a little closer toward the edge of chaos. Don’t provide a musical score and build a symphonic orchestra. Work on creating those jazz conditions and hire the type of employees who long to be part of an improvisational band. When it all comes together, the music is beautiful.