---
layout: post
title: No Rules.. Rules
categories: ["books"]
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About the Netflix culture and what they’ve gotten right to be a successful company

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## The Culture

This book by Reed Hastings (CEO of Netflix as of writing this article), co-written by Erin Meyer is best summarized by - leadership at Netflix inculcating the following three practices to form a successful culture.

1. The first operation the company undertakes is to attract and **build up talent**. Underperforming employees (dubbed ‘adequate’ employees by the CEO) are terminated with a hefty severance package. He feels adequate employees take up more resources to run and could shoo away stunning talent.

2. The next step is to **drive frequent feedback** among colleagues and also make it informal. A continuous feedback cycle ensures employees regularly improve themselves.

3. Once the company has the brightest talent, comfortable among themselves, and always improving themselves, **remove controls** over the employees under the trust that the employees act responsibly.

Some such **controls** are

- Remove vacation policy. Employees can take a vacation whenever they feel like it.
- Remove travel expense approvals trusting the employees to act in the best interests of the company.

Strict rules exist though, to audit and occasionally catch cheaters who are promptly fired with a huge severance package.

### Rinse and Repeat

..but something more

- Attract more talent and make sure they stay in the company by compensating them with top-of-the-market prices for that role. They even go to the extent of asking their employees to attend calls from recruiters from other companies and understand how much they are ready to pay so that the employees can immediately talk to their managers and express their intent to be compensated more. Managers are provided a framework in the form of “Keeper’s test” to decide if they think an employee should be fired or compensated more.


- Increase feedback cycles. There is tooling present that formalizes providing and acting on feedback. Employees are encouraged to provide actionable feedback (another guideline called the 4A system). And teams are also encouraged to informally meet outside the office for lunch and give each other informal feedback.

- Remove more controls and make sure employees have as much freedom as they can to make decisions for the company - such as signing multi-million dollar deals with creators around the world. Just make sure everyone is aligned correctly with the company’s core principles and they will make the right decisions in such deals.

Netflix also understands that this mode of operation is specific to American culture and has made a lot of efforts to globalize this after trying to understand different cultures. For example, employees in Singapore would be easily offended by negative feedback, which would be completely normal talk in America. Likewise, Europeans could be extremely straightforward with their feedback that often they might come out as rude. China has a model of authoritative decision-making that granting more freedom doesn’t help much and causes confusion.


## My Take

Netflix does provide a lot of freedom and comfort for its employees, allowing them to perform at their best. They also seem to have solved most of the problems that plague both the employees and employers.

Their culture is based on the premise of having the best employees performing at their best all the time. This makes it difficult for other companies in similar fields to emulate their game-plan. The number of such motivated, intelligent, focused employees would probably only be representative of a smaller population - who may also not motivated be motivated enough in all stages of their lives.

This means that there can only be a few companies like Netflix in this world.
