Sunday, December 06, 2020

No Rules Rules by Reed Hastings and Erin Meyer

No Rules Rules by Reed Hastings and Erin Meyer is an interesting book co-written by the founder and CEO of Netflix along with the author of The Culture MapNo Rules Rules is about how Netflix looks to have top performance with a culture of what the authors describe as "freedom and responsibility." It's detailed in the book that this is to come from three concepts that enable and build on one another.

1. Build up talent density The idea put forth in the book is to not have adequate performers in the company, but only exceptional ones, or "stunning colleagues." Part of the principle behind this is less than stunning employees will bring down the performance and morale of the rest of the team, and result in most of the management time required. Trying to have this talent density comes from both how hiring is done and how employees are managed. If someone not performing exceptionally, they may be let go and the authors describe Netflix as like a professional sports team, always seeking to have the very best in any role. The "keeper test" is that a manager should consider if they would fight to keep an employee if that person said they got an offer to leave. If they wouldn't fight hard to keep them, that person should probably be replaced. Tying into this, it's written that employees on a regular basis should ask their managers how hard they would fight to keep them. Around compensation, it's noted that Netflix for any creative role seeks to pay top of personal market, if the market for someone increases dramatically, the objective is to increase their salary dramatically. People are encouraged to take calls from recruiters, find out what they're being offered, and report that information back to Netflix so that people don't leave because of money they're worth, but not getting at Netflix. Additionally, Netflix doesn't pay bonuses, rather pays higher salaries, in part because as the business changes, what should be the bonus criteria can change as well. 

2. Increase candor It's detailed how to help improve performance within this talent-dense workforce, there's a focus on having employees having a high level of candor with one another. The idea is for people to say what they really think (with positive intent) and give candid and actionable feedback to people, feedback that can help the recipient and help the company. This should be done not just during performance review cycles, but frequently and in-person. Also, feedback provided to someone should take into account any regional differences in how feedback best delivered. Additionally, it's covered that feedback should go upwards in the management hierarchy as well as down and laterally. People are described as hired for their opinions, and part of their job is to provide them. The concept of "open the books" is put forth, being transparent and letting people know all the details of what's going on, including potential job losses due to restructuring and profit and loss information about the company that can only be released externally at certain times. 

3. Remove controls The third large concept from the book, one that certainly requires a high level of talent density to work, is to remove controls on things including vacations, expenses, and approvals. It's covered that the goal is to instill in managers the notion of leading with context, not control. Set the context of what good behavior is and if done effectively, people will model that behavior. Around expenses, the guideline described is "act in Netflix's best interest." Make sure there's decision-making freedom, just as how people were hired for their opinions, they were hired for their decision-making ability. It's noted that Netflix runs on the "informed captain" concept, people who spend the time on something are the ones who make the decisions on it, with the company designed to be loosely rather than tightly coupled and not have everything run top-down.

These three principles of increase talent density, increase candor, and remove controls are of course easier said that done, and it's interesting reading in the book of how Netflix is said to go about the effort.