Month: February 2022

Netflix is an excellent company. The streaming giant has over 200 million subscribers and has grown so rapidly even during the pandemic. They are producing high-quality movies and TV shows and it is also a production company now. Netflix was founded in 1997 in Scotts Valley, California by Reed Hastings and Marc Randolph as a DVD rental service company.

Why is Netflix different? It is because they have No Rules Rules. I leave some notes of what I found interesting while reading this book.

1. Great Workplace is Stunning Colleagues

One of story I have learnt in this chapter is Netflix care very much about the density of talent. After the company had to lay off a third of their workforce, they found they actually did far better with 30% fewer people. The company observed top dense top talented people can do much better, however, when mediocre (jerks, slackers, sweet people with nonstellar performance, or pessimists) joins the team, they push all down to the average. Their number one goal, moving forward, would be to do everything they could to retain the talent density and all the great things that come with it.

2. Say What You Really Think (with Positive intent)

Netflix culture welcomes very much feedback from colleagues. Openly voicing opinions and feedback, instead of whispering behind one another’s back reduced the backstabbing and politics, constructive feedback allows them to be faster. The more people heard what they could do better, the better everyone got at their jobs done, the better they performed as a company.

When we consider giving feedback, people often feel torn between two competing issues, they don’t want to hurt the recipient’s feeling, yes they want to help that person succeed. The goal at Netflix is to help each other succeed, even if that means feeling occasionally get hurt. More importantly, they have found that in the right environment, with the right approach, they can give feedback without hurting feelings.

So, we have to learn how to give constructive feedback as described in the book. In principle, we need to learn to give and receive feedback well to succeed together and well. There is 4A feedback guidelines: 1. Aim to assist, 2. Actionable, 3. Appreciate, 4. Accept or Discard.

3. a. Remove Vacation Policy

Leaders must model big vacation taking. Even the company suggest the employee take vacations but their boss doesn’t take them, the employees are influenced. so leaders have to lead to take the vacations. Netflix doesn’t track vacation days, so there is no data on how much vacation employees are taking. Giving employees more freedom led them to take more ownership and behave more responsibly.

3. b Rmove travel and expense approvals

Netflix CEO, Reed Hastings says “Spend company money as if it were your own”. It is a great idea every employee could control the company money as their own however some employees are frugal but some employees like spending very much. That depends. Then, employees need to think about they are using the company money for Netflix’s best interest. Some people still cheat. So some expenses may increase with freedom, but the costs from overspending are not nearly as high as the gains that freedom provides. The responsible employees move faster with more creativity. The great gains are free, fast, and surprisingly frugal.

4. Pay top of personal market

There is a concept referred to as the “rock-star principle” which is rooted in a famous study in 1968. In the group of nine programmers who were in the experiment, the best guy was twenty times faster at coding, twenty-five times faster at debugging and ten times faster at program execution than the programmer with the lowest marks. That’s why some software giant pays so well to retain top-level programmers. Reed’s experience also says the best programmer doesn’t add ten times the value, she/he adds more like a hundred times. Since the main reason workers quit their current job is “For more money”, if you need to retain top talents, you should pay it well. And bonuses or incentives are not a good idea, just raise the basic salary. Teach employees to develop their networks and to invest time in getting to their own team. Research market value of top talent on an ongoing basis and adjust salaries accordingly. Netflix wants to pay what will attract and keep talent.

5. Open the books

Netflix has a culture of transparency. They open up the books to their employees. They teach employees how to read P&L. So they can make better decisions. If open up the books, it could some anxiety and destruction, but the trust they have built outweighed the disadvantage.

6. No decision making approval needed

Don’t seek to please your boss. Seek to do what is best for the company.

The Netflix Innovation Cycle -> If you have an idea you are passionate about, do the following: 1. Farm for dissent or socialize the idea. 2. For a big idea, test it out. 3. As the informed captain, make your bet. 4. If it succeeds, celebrate. If it fails, sunshine it.

7. The Keepers test

We are a team, not a family.

If a person on your team were to quit tomorrow, would you try to keep she/he or accept a resignation letter? If the letter, you should give a severance package now. You should look for a star, someone you would fight to keep. The Keeper test.

Avoid stack ranking system, the system can create internal competition and discourage collaboration.

8. Circle of feedback

This chapter talks about their Open 360 Feedback. Netflix embraces high talent density but they don’t accept brilliant jerks. That was an interesting point. I used to think some good scientists are brilliant jerks, but now I think they are not first-class talented people. If you have a high talent density without brilliant jerks, the circulation of feedback allows the company and employees to grow much faster.

9. Lead with context, not controll

If your focus is on eliminating mistakes, then control is best. If you are in a safety-critical market, its sites need hundreds of safety procedures to minimize the risk of people getting hurt. The control mechanisms are a necessity. However, if your goal is innovation, making mistakes is not the primary risk, if you have got high-performance employees, leading with context is best.

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 high aligned on vision and objectives?

10. Bring it all to the world

This chapter was also an interesting one. Even Netflix has expanded so rapidly and worldwide, they are still a good company as a whole. I can imagine that was not an easy job to create a great working environment around the world where they have different cultural backgrounds. This chapter shows some experiences in Netflix and the cultural map they made through that. It was great to see they could map out to analyze the culture of the countries they are working on.

In conclusion, I enjoyed reading this book, I learned a lot from this book. There are some of the ideas I can try from tomorrow. Hope I can be a good member of a team with high performance from tomorrow.