Authors : Reed Hastings and Erin Meyer. Buy Now
With its 183 million subscribers worldwide, #Netflix has become a touchstone of modern culture. Having started off 20 years ago as a DVD-by-mail service, it streams Oscar-winning movies.
But Netflix isn’t successful because of streaming. It’s successful because the company was founded on a unique Culture. The Netflix culture values people, prioritizes innovation, and has few control mechanisms.
True freedom comes from careful planning.
Four things are necessary to unlock the potential of radical employee freedom and the responsibility that comes with it:
1) High Talent Density
In 2001, the first internet bubble burst. Hundreds of Silicon Valley start-ups failed and had to liquidate.
Netflix was impacted too : the company’s venture capital funding was cut off.
As a result, Hastings had to lay off a third of the workforce.
Weirdly, Netflix’s performance improved a lot after the layoffs. People had new bursts of creativity and zeal for their work.
It holds people to a higher standard, and it’s more fun. When everyone is excellent, performance spirals upward. It makes more financial sense to hire one amazing person and pay them a huge amount rather than a couple of decent people and pay them a normal salary.
Bill Gates : The best software engineers add 100 times the value of a normal one
2) High Levels of Candor between Employees and Managers
At Netflix, radical candor is a vital part of the company’s culture.
For example, it’s perfectly common for people to directly contradict their bosses in meetings if they disagree. Casually dropping by someone’s desk to say you thought they came off as defensive in an email is not only normalized – it’s expected.
If you don’t speak up when you disagree, it’s as if you are purposely being disloyal to the company.
You could help the business be better, but you’re choosing not to.
Many organizations have annual performance reviews, where managers give feedback individually to their direct reports.
But, At #Netflix, employees are encouraged to give feedback at all times, not just once a year. But more than that, Employees are encouraged to give feedback to their bosses, even more than the other way around.
Rules to Candor:
- Give Feedback with the aim of Helping
- Your Feedback should be Actionable
- When receiving feedback, you should appreciate the effort and bravery of your colleague speaking up
- You should think carefully about whether or not to accept it
3) Maintaining a talent dense
A lot of companies talk about how their employees are a family.
Netflix’s talent-dense team isn’t a family. Job is something you do for a magical period of time when you’re the best person for a job & it is the best position for U.
Instead of a family, Netflix employees think of themselves as a professional sports team aiming for the championship.
Every player is the best performer possible in that position.
But doesn’t the internal competitiveness become impossible to bear? Is it like The Hunger Games in the office? Well, no. With the continuous feedback system, employees always know where there’s room for improvement.
If employees take feedback on board and can action their colleagues’ suggestions, they improve constantly and perform at the cutting edge of their abilities.
4) Dispersed Decision-Making is most Efficient
At most companies, the boss is there to either approve or shut down employees’ ideas. That’s leadership with control. This is a great way to limit innovation and slow down growth.
At Netflix, managers lead with context, letting employees use their own judgment to make the choice they feel is best for the company.
With employees making their own decisions, senior leadership is freed up for other things. This type of leadership can be counterintuitive.
If your employee does something you think is stupid, it can be hard not to jump in and offer a correction.
But if you focus instead on understanding why the employee thought this decision was best for the company, you can improve your communication and alignment, making for a more efficient company – no micromanagement necessary.
This only works, of course, if you’ve already built a talent-dense team which you trust to make creative, smart decisions.
Netflix has become one of the best start-up stories of the 21st Century. which creates the environment of freedom and responsibility among employees, that empowers them to make the most creative decisions and perform at the very peak of their capabilities.
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