No Rules Rules

In some industries, preventing errors is essential. We are in a creative market. Our big threat in the long run is not making a mistake, it’s lack of innovation.

- Reed Hastings

INTRODUCTION

To anyone who's heard pieces of the Netflix story, it seems to have it all:

  • a eureka moment for a business idea;
  • a big vision that was ahead of its time;
  • a struggling start with attempted acquistion by a giant competitor who'd ultimately go out of business (Blockbuster);
  • a shift in business models and product offering;
  • the transformation into an incredible content machine;
  • and much more!

But how did they pull it off? 

Through this book, we get a look into the views and ideas that Reed and his early collegues have used to create one of the most unique company cultures in history. 

It may not be for everyone, but it certainly is interesting.

No-rules-rules-book-cover

TAKEAWAYS

I've reordered these takeaways. For a chronological ordering - see my original Thread here.

GENERAL

The point is to encourage people to question how the dots are connected. In most organizations, people join the dots the same way that everyone else does and always has done. This preserves the status quo. But one day someone comes along and connects the dots in a different way, which leads to an entirely different understanding of the world.

The higher you get in an organization, the less feedback you receive, and the more likely you are to ‘come to work naked’ or make another error that’s obvious to everyone but you.

[...] the day you find yourself sitting on feedback because you’re worried you’ll be unpopular is the day you’ll need to leave Netflix. We hire you for your opinions. Every person in the room is responsible for telling me frankly what they think.

Real life is so much more nuanced than any policy could ever address.

“Whisper wins and shout mistakes” - Reed Hastings

The pratfall effect is the tendency for someone’s appeal to increase or decrease after making a mistake, depending on his or her perceived ability to perform well in general.

ON INNOVATION

In some industries, preventing errors is essential. We are in a creative market. Our big threat in the long run is not making a mistake, it’s lack of innovation.

In today’s Information Age, in many companies and on many teams, the objective is no longer error prevention and replicability. On the contrary, it’s creativity, speed, and agility.

A fast and innovative workplace is made up of what we call ‘stunning colleagues’ - highly talent people, of diverse backgrounds and perspectives, who are exceptionally creative, accomplish significant amounts of important work, and collaborate effectively.

Then two things occurred. The first is that we failed to innovate quickly. We had become increasingly efficient and decreasingly creative. In order to grow we had to purchase other companies that did have innovative products.

I quickly came to see the biggest advantage of sunshining a leader’s errors is to encourage everyone to think of making mistakes as normal. This in turn encourages employees to take risks when success is uncertain... which leads to greater innovation across the company.

My performance would be judged, not on whether any individual bet failed, but on my overall ability to use those chips to move the business forward. [...] you lose your job for not using your chips to make big things happen or for showing consistently poor judgment over time.

The Netflix Innovation Cycle:

  1. ‘Farm for dissent’ or ‘socialize’ the idea;
  2. For a big idea, test it out;
  3. As the informed captain, make your bet;
  4. If it succeeds, celebrate. If it fails, sunshine it.

ON CULTURE & COMPANY BUILDING

Policies and control processes became so foundational to our work that those who were great at colouring within the lines were promoted, while many creative mavericks felt stifled and went to work elsewhere.

The Netflix culture has great ideals but sometimes the gap between the ideals and practice is big, and what should bridge that gap is leadership.

If you limit their choices by making them check boxes and ask for permission, you won’t just frustrate your people, you’ll lose out on speed and flexibility that comes from a low-rule environment.

[...] the entire bonus system is based on the premise that you can reliably predict the future, and that you can set an objective at any given moment that will continue to be important down the road.

Creative work requires that your mind feel a level of freedom. If part of what you focus on is whether or not your performance will get you that big check, you are not in that open cognitive space where the best ideas and most innovative possibilities reside. You do worse.

Just about all managers like the idea of transparency. But if you’re serious about creating a high sharing environment, the first thing to do is to look at the symbols around your office that may accidentally be suggesting to everyone that secrets are being kept.

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