An "Unbook" Review of Reed Hastings and Erin Meyer's No Rules Rules
My favorite lines from “No Rules Rules: Netflix and the Culture of Reinvention.”
Two months ago we put out our first “unbook review,” a collection of favorite quotes from a recent or popular book from the business or investing world. It was of Morgan Housel’s The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness (link here).
Feedback was great:
So we’re at it again!
This time, we’re featuring No Rules Rules: Netflix and the Culture of Reinvention, by Reed Hastings and Erin Meyer.
The format of this book is relatively unusual. Reed Hastings, Co-Founder and Co-CEO of Netflix teams up with Erin Meyer, author and academic specializing in workplace culture, to give us two distinct perspectives on Netflix. Reed walks us through what Netflix’s culture is, how it came to be, and how it works. Erin analyzes, questions and gives her perspective on the culture in real-time.
Whatever you think of corporate culture—Netflix ain’t that!
Let’s get into it.
Again, our favorite lines from each chapter of No Rules Rules: Netflix and the Culture of Reinvention, by Reed Hastings and Erin Meyer:
It was not obvious at the time, even to me, but we had one thing that Blockbuster did not: a culture that valued people over process, emphasized innovation over efficiency, and had very few controls. Our culture, which focused on achieving top performance with talent density and leading employees with context not control, has allowed us to continually grow and change as the world, and our members’ needs, have likewise morphed around us.
Chapter 1. First Build Up Talent Density...
We learned that a company with really dense talent is a company every one wants to work for. High performers especially thrive in environments where the overall talent density is high.
Chapter 2. Then Increase Candor...
The goal at Netflix is to help each other succeed, even if that means feelings occasionally get hurt. More important, we’ve found that in the right environment, with the right approach, we can give the feedback without hurting feelings.
Chapter 3. Now Begin Removing Controls...
3a: Remove Vacation Policy, Page 39
Today, in the information age, what matters is what you achieve, not how many hours you clock, especially for the employees of creative companies like Netflix. I have never paid attention to how many hours people are working. When it comes to how we judge performance at Netflix, hard work is irrelevant.
3b: Remove Travel and Expense Approvals, Page 66
Freedom isn’t the only benefit of removing your expense policy. The second benefit is that the lack of process speeds everything up.
Chapter 4. Fortify Talent Density...
In a high-performance environment, paying top of market is most cost-effective in the long run. It is best to have salaries a little higher than necessary, to give a raise before an employee asks for it, to bump up a salary before that employee starts looking for another job, in order to attract and retain the best talent on the market year after year. It costs a lot more to lose people and to recruit replacements than to overpay a little in the first place.
Chapter 5. Pump Up Candor...
For our employees, transparency has become the biggest symbol of how much we trust them to act responsibly. The trust we demonstrate in them in turn generates feelings of ownership, commitment, and responsibility.
Chapter 6. Now Release More Controls...
At most companies, the boss is there to approve or block the decisions of employees. This is a surefire way to limit innovation and slow down growth. At Netflix, we emphasize that it’s fine to disagree with your manager and to implement an idea she dislikes. We don’t want people putting aside a great idea because the manager doesn’t see how great it is. That’s why we say at Netflix: Don't seek to please your boss. Seek to do what is best for the company.
Chapter 7. Max Up Talent Density...
The Keeper Test: If a person on your team were to quit tomorrow, would you try to change their mind? Or would you accept their resignation, perhaps with a little relief? If the latter, you should give them a severance package now, and look for a star, someone you would fight to keep.
Chapter 8. Max Up Candor...
We searched for a mechanism that would encourage everyone to give feedback to any colleague they wished, that reflected the level of candor and transparency we were trying to cultivate, and that was consistent with our Freedom and Responsibility culture. After a great deal of experimenting, we now have two processes we use regularly...
Chapter 9. And Eliminate Most Controls...!
In a loosely coupled organization, where talent density is high and innovation is the primary goal, a traditional, control-oriented approach is not the most effective choice. Instead of seeking to minimize error through oversight or process, focus on setting clear context, building alignment of the North Star between boss and team, and giving the informed captain the freedom to decide.
Chapter 10. Bring It All to the World!
The overarching lesson we’ve learned is that—no matter where you come from—when it comes to working across cultural differences, talk, talk, talk. One of the best ways to get better at providing feedback to an international counterpart is to ask questions and show curiosity about the other person’s culture. If you need to give feedback to a counterpart in another country, ask another trusted colleague from that country first, “Does my message sound aggressive?” “What’s the best approach in your culture?” The more questions we ask and the more curiosity we show, the better we all become at giving and receiving feedback around the world.
I hope you enjoyed this “Unbook” Review of Review of Reed Hastings and Erin Meyer's No Rules Rules. It was an illuminating book, taking the reader behind the company and brand we all know very well.
If you had a good time, we’d love to have you subscribe to Musings by Mazwood. We aim to be respectful of your inbox and post occasional portfolio updates, market commentary, company deep dives, and experiments like this one. We hope you’ll join us!