Learnings from No Rules Rules — Reed Hastings and Erin Meyer

I have long admired Reed Hastings for just how well he has run NetFlix… Even through the Qwikster fiasco when I understood what he was trying to do and admired the courage and conviction it took to go forward with the future of NetFlix in mind. I had also marveled at the simplicity of the no vacation limit policy they were the first to institute

So when I found out he had written a book about the culture of NetFlix, I had to grab it. Here are my learnings from it

1. Build a team of high talent density — those that re creative and passionate
2. Once that is done, a culture of candor of feedback helps magnify the speed and effectiveness of the team. Feedback needs to incorporate the 4A framework — Giving feedback 1. Aim to assist: Feedback must be given with a positive intent 2. Actionable: It must focus on what the recipient can do differently Receiving feedback 3. Fight the reaction to be defensive and 4. Accept or Discard — Listen and consider but dont have to always follow it
3. A no vacation and no expense policy can work if 1. Bosses model good behavior 2. Finance system that audits a portion of the expenses annually and fires people abusing the system and speaking about it openly
4. Pay creative workers top of the market … One exceptional person better than 10 adequate people.. Optimize for salary vs performance bonuses
5. Open the books to your employees, including P&L and also discussing things like reorgs or layoffs ahead of time .. Talk openly about your mistakes and encourage everyone to do so ..
6. In a fast and innovative company, big ticket decision making should be dispersed across the company at all levels.. Dont just please the boss ..When new employees join the company, tell them they have a handful of chips to make bets with .. A workers performance will be evaluated on the collective of all bets and not just any one.. Encourage employees to farm for dissent, socialize the idea and test out big ideas
7. As manages, always ask the keeper test: Which of my people if they told me they were leaving for a job, would I fight to keep?”
8. A professional sports team is a better metaphor than family for a high performance culture. To manage the downside of fear, encourage employees to ask their manager the Keeper test. Talk candidly to staff about why an employee was let go to reduce fear and increase trust
9. Candor is good but not easy.. 360 evaluations are a good way do it but avoid anonymity … Live 360 is also helpful with the 4A framework.. and start, stop continue with 25% positive and 75% developmental
10. Highly creative industries need to optimize for innovation and not error prevention (vs medical or other industries where errors can lead to death)
11. Provide people max context so they can make good decisions (vs telling them what to do)
12. Going global : Map corporate culture and compare to cultures of other countries.. In less direct countries, implement formal feedback mechanisms and put feedback on the agenda more frequently… In more direct cultures, talk about cultural differences so feedback is understood as intended.. Make adaptability the fifth A in the candor model.. discuss openly what candor means in different parts of the world..

An employee is motivated when she can draw a straight line between her aspirations and contribution to the corporation

Rules and processes work for error prevention industries or functions like income reporting or new drug introduction but not for those who work in the creative economy where innovation, speed and flexibility are keys to success