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NO RULES RULES
Netflix and the Culture of Reinvention
Reed Hastings, Erin Meyer
The current questioning of Netflix does not stop me from recommending this great book. In less than 20 years, Netflix went from being a DVD-by-mail service, which along the way tried unsuccessfully to sell itself to Blockbuster for US$50 million, to one of the biggest names in entertainment. And what they have achieved is largely attributed to their unique way of managing people.
I liked the book because it is not focused on Netflix’s history but on its culture, and there are several concepts that, if they make sense to you, you can apply in your company from the very early stages. I recommend it to any founder or HR person.
It has a very close tone with which it tells the rules and anti-rules of Netflix governance. Ideas such as not controlling the number of vacation days or not setting spending limits are concepts that are a bit shocking but end up convincing (at least to me).
Ultimately, the book focuses on three principles: 1) Increase talent density, 2) Constant and open feedback (brutal honesty first and foremost), and 3) Eliminate rules and controls. Its thesis is that most of the controls in companies are to protect them from poor judgment or unprofessional workers. These controls generate a lot of inefficiency in companies (think of some giant company and its internal bureaucracy). If you avoid these people, the controls are unnecessary and people, besides generating a natural ownership, become more efficient.
These same talented people have a lot to learn from the rest of the workers, and the way to turbocharge them and take them to the next level is to generate the habit of open feedback without so much protocol. This way, they can iterate faster personally and professionally while ensuring that the rest of the team moves forward. Then, with talented people and constant feedback, you can eliminate most of the controls. Five signatures to initiate a purchase order? No more. With people leading with context instead of control, Netflix eliminates most internal rules.
The best thing about this philosophy is that it’s a virtuous circle. The more talent and feedback, the fewer rules are needed, making people more and more talented over time.