No Rules Rules: NETFLIX and the Culture of Reinvention – Reed Hastings & Erin Meyer

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The co-founder and CEO of NETFLIX, Reed Hastings and acclaimed business author Erin Meyer blow open the lid on an unusual and unique workplace culture that permeates the DNA of one of the world’s most successful entertainment companies. After Ricardo Semler’s groundbreaking memoir “Maverick”, that more than merely raised eyebrows with its sensational disclosure of some not so conventional workplace practices at Semco Corporation, Brazil, “No Rules Rules” is perhaps the only other book of this kind in terms of impact and introspection. A finalist for the FT & McKinsey Business Book of the Year 2020, “No Rules Rules” even though mostly an exercise in self-approbation, has candour written all over it.

Netflix houses more than 8,600 odd employees produces its own award winning original TV shows and entertains more than 150 million customers dispersed across 90 jurisdictions. In the year 2009, Patti McCord, former chief talent officer at Netflix, McCord, along with Reed Hasting, revealed the Netflix Culture Deck which at the time set the cat amongst the pigeons in Silicon valley and beyond. Controversial in its hue and colour, the Netflix Culture Deck espoused many ideas and concepts on hiring and firing, employee freedom and workplace culture that were not just revolutionary but downright peculiar. In “No Rules Rules”, both Hastings and Meyer – in alternate sections – dwell more about the practices that have made what Netflix is today.

The philosophy articulated by Hastings is fundamental in its simplicity – hire the best available talent; pay them top of the market compensation; dismantle all controls and constraints such as vacation policies and approval processes; incorporate an ecosystem of unvarnished and forthright feedback and empower the superstar employees. Hence, “The Keeper Test.” Will a manager go the whole hog to retain an employee if the latter is an indispensable resource? If yes, then the organisation gets to keep the star performer. If the manager deems otherwise, then the concerned employee would be relieved and given a generous severance package. This policy ensures that at any given point in time, the organisation is brimming with “talent density.”

Netflix also has an “uncounted” vacation policy. This policy – which since its introduction by Netflix has found many other  adherents in Virgin Atlantic, Webcredible, and Mammoth, amongst others – simply means there are no limits to how many days an employee can go on vacation. “Leading by example”, Hastings himself sets off on vacations for at least five weeks, if not more, according to Meyer.

Another singularly unique policy is the extraordinary degree of freedom accorded to employees to make their own decisions, thereby making redundant the notion of hierarchies. Managers also have unfettered authority to make financial commitments within without approvals. The credo here being, “don’t seek to please your boss”, but do what is best for the company. Hastings leaves no stone unturned to inform his readers that he does not peddle the notion of “We are family”. A family is unlikely to either disown or fire anybody because the concerned individual is not fit for executing his/her responsibilities. More likely than not, someone will step up to make up for and hide the inadequacies of the delinquent individual. This notion is injurious for corporate culture. According to Hastings, a company ought to be viewed as a team having its sights on a championship or the Olympic gold medal. “We want the best performer in every position,” the CEO writes. “Like any team competing at the highest level, we form deep relationships and care about each other.”

However, Hastings is quick to admit that even Netflix does not believe in a complete abdication of any form of oversight and rule-making endeavours. A classic case in point being the organisation’s processes for employee safety and sexual harassment, customer data privacy, and financial reporting. Those are domains, “where error prevention is clearly more important than innovation,” Hastings emphasizes.

The most striking feature of the book lies in the chronicling by employees from various part of the globe who enumerate on the Netflix culture and values. From Japan, United States of America, Brazil, and India, these employees hold forth on both the allure and intimidation of being at Netflix.

While “No rules rules” makes for some fascinatingly aspirational reading, it also brings to the fore a very important, reflective and practical question. Can the groundbreaking policies and principles that for the bedrock of Netflix be extrapolated across the world to encompass industries and conglomerates irrespective of the sector in which they operate and the domain in which they discharge their business? The answer unfortunately is a resounding “NO”. Even Hastings acknowledges this fact at the end of the book, when he candidly concedes that in an organisation such as manufacturing where noncompliance with even a seemingly inconsequential of rules may define the difference between life and death, rules, procedures and processes need to be adhered to in an uncompromising fashion. Yet, there are innumerable organisations which can take a leaf out of the Hastings handbook in so far as empowering employees go.