Erin Meyer and Reed Hastings “No Rules Rules” book cover
In 2018, Patty McCord the former Chief Talent Officer at Netflix published “Powerful: Building a Culture of Freedom & Responsibility”. As mentioned in the subtitle, this book is all about the way Netflix is articulated around a specific corporate culture. This culture has a name: Freedom & Responsibility (F&R).
Patty McCord “Powerful” book cover
As written in the upper part of the cover, Patty McCord is also a Co-Creator of Netflix famous Culture Deck. This Culture Deck, that has been published on the web, fully describes what employees should expect from Netflix and what Netflix expects from their employees. The initial version is a 127 slides presentation. You can find the latest version here on Netflix’s website.
Everything is accessible and it takes about 1 hour to read the document and catch the main ideas that define the basis of the company’s culture.
Excepted there is a chance that it will be of no help for us. Because our organization is not Netflix. And because there are prerequisites in order to be able to get the full power of F&R.
In 2020, Reed Hastings, who is the CEO of Netflix, and Erin Meyer, who previously wrote “The Culture Map”, publish “No Rules Rules: Netflix and the Culture of Reinvention”.
This book is some kind of an “How-to” book as it describes, step by step, the journey that an organization needs to take in order to build a “Freedom & Responsibility” culture.
The book mainly explores 4 thematics. The three first ones are the key levers for building an F&RÂ culture.
For all of them, the book explores three maturity levels. From the initiation to the expertise.
It is important to note that Talent Density is a prerequisite for Candor and that Candor is a prerequisite for Removing Controls.
The fourth one is a key lever when expanding the organizational culture all around the world.
In this last part of the book, the authors explain the way they compare Netflix F&R corporate culture with the local cultures in countries where Netflix are deployed (eg.USA, Netherlands, Japan, Singapore,Brazil) in order to find the best fit.
Step #1 — Talent is not enough. Talent density is the key factor for success as talented people make one another more effective. For top performers, a great workplace is about the joy of being surrounded by people who are both talented and collaborative. A great workplace is stunning colleagues.
Step#2 — 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 and pay them top of the market.
Step#3 — Consider that people in your organization belong to a team (like a sport’s team). Team members have great relationships, support each other, celebrate together and console one another. However, the coach swaps and trades players in and out in order to make sure they always have the best player in every position. The Keeper Test is a tool Netflix is using in order to assess the team members. It can be synthetized in one single question for the manager: “Which of my people, if they told me they were leaving for a similar job at another company, would I fight hard to keep ?”
Step#1 — Say what you really think (with positive intent). This means giving each other candid feedback and challenge authority. Netflix is using a tool they name “4A” (Assist, Actionable, Appreciate, Accept). Feedback should be given and sollicited in all directions (from bottom to top, from top to bottom , peer-to-peers and all other combinations).
Step#2 — Provide enough information for people to take ownership. Share everything that you would not share a priori (some financial and strategic data, your own mistakes and failures) in order to build trust.
Step#3 — Perform written non anonymous 360 and live 360s (circle of feedback based on the 4A and “Start, Stop, Continue” with a 25% positive/75% developmental rate)
Step#1 — Here Netflix proposes two things.
First, removing the vacation policy. This means everybody is free to take any amount of vacation he or she needs (freedom), as long as they do it in a defined context (responsibility). The idea behind is to build on Talent Density and Candor (as both are prerequisite for Removing Controls as mentioned earlier in this post) and give people more freedom, which leads them to take more ownership. Freedom is not the opposite of responsibility but one leads to the other. It’s interesting to notice that even with such a “no rule policy” about vacation, people usually take more or less the same amount of vacation days per year.
Secondly, removing travel and expense approvals. As a first trial, Netflix defined this one sentence policy for both topics: “ Spend company money as if it were your own”. Unfortunately, people have very different ways of managing their own money, which led to same strange decisions and behaviors. Netflix then decided to modify the policy as follows: “Act in Netflix’s best interest”. It’s a guideline that every employee can use in a context.
Step#2 — No decision-making approvals needed. Employees at Netflix can place their chips on whatever bets they believe in. Their performance will not be judged on a single bet that would fail or succeed, but on their overall ability to move the business forward. In order to define if a bet is worth being supported, Netflix created the Netflix Innovation Cycle that is made of 4 steps:
“Farm for dissent” or “socialize” the idea
For a big idea, test it out.
As the informed captain, make your bet.
If it succeeds, celebrate. If it fails, sunshine it.
Reed Hastings considers such a process to be an individual decision-making with input.
Step#3 — Lead with context, not control. In order to define if one should lead with context or control, we have to ask ourselves some questions first.
The first one is “What is the level of talent density of my staff?”
The second is to ask whether the goal is error prevention or innovation. When the goal is innovation, making a mistake is not the primary risk. The big risk is becoming irrelevant.
The third question is to define if the system we are evolving in is loosely or tightly coupled. A loosely coupled system has few interdependencies and intrinsically allows a high degree of freedom for decision-making.
The fourth and last precondition for leading with context is related to the fact that the organization is highly aligned or not. Is there a clear North Star, a vision guiding everybody from the field to the CEOÂ ?
Netflix defines itself as “Highly Aligned, Loosely Coupled”. In addition to the fact that they have a high talent density and that their mission is innovation, they fill the four condition to lead with context.
The informed captain is the decision-maker, not the boss. The boss’s job is to set the context that leads the team to make the best decisions for the organization. It works more like a tree (lead with context) than like a pyramid (lead with control).
The challenge here is to adapt the company culture (Netflix) to the local culture (eg. a specific country). As Netflix is a US company, many components of its corporate culture are inspired by the US culture. However, when expanding into other geographical areas, the corporate culture benefits to be adapted to the local culture in order to maximize the performances and well being of employees worldwide.
In order to achieve such a difficult and ambitious challenge, Reed Hasting has been inspired by Erin Meyer’s work on identifying and mapping the cultural differences between countries (you can see an example on the picture below).
from the article “Map Your Team’s Cultural Differences” by Erin Meyer, INSEAD Affiliate Professor of Organisational Behaviour
He decided to map Netflix’s coporate culture on a similar map and see where major gaps could be observed.
After having identified these gaps, the last step is to adapt the corporate culture to the local culture accordingly.
As mentioned in the part about going global, some countries have different regulations than US that obliged Netflix to adapt. They did not have to change the main roots of the “Freedom and Responsibility” culture but had to modify some practices.
When reading the book, some parts, tools and practices sounded like immediately actionable in my own and personal context (some are even already in place and need to be pushed to the next level).
Some others sounded strange and unfamiliar and I am not sure they would neither fit to my country culture, not to my organization culture. Anyway, I am pretty sure there is at least some food for thought. There is inspiration in these ones and they have the power to start a reflection or a conversation that could lead to an adaptation of the defined practice.
I did not mention it, however, throughout the book, the authors highlight the potential risk embedded by some practices when used the wrong way or with the wrong mindset.
I assume we can consider that the whole “Freedom and Responsibility” culture has to be used with the right mindset and purpose. If so then I can only encourage us to explore this model and try to catch the most promising practices and adapt them to our organizations cultures.
Because having an authentic and strong corporate culture is a major asset for an organization.
No Rules Rules was originally published in It's Your Turn on Medium, where people are continuing the conversation by highlighting and responding to this story.
by Jean-Marie Buchilly via It's Your Turn - Medium #itsyourturn #altMBA #SethGodin #quotes #inspiration #stories #change #transformation #writers #writing #self #shipping #personaldevelopment #growth #education #marketing #entrepreneurship #leadership #personaldev #wellness #medium #blogging #quoteoftheday #inspirationoftheday
