No Rules Rules: Netflix and the Culture of Reinvention Hardcover – September 8, 2020

How should a modern company run? We are told that a modern company needs to be customer centric, employee empowering, deliver broad stakeholder returns and with agility to move from one opportunity to the next. This book provides a provocative answer to these questions direct from the CEO.Reed Hastings and Erin Meyer have actually written two books in one. One book is “NO RULES” and the other is Netflix and the culture of reinvention. The combination is powerful as Reed shares experiences and stories and Erin puts them in a broader context. This keeps the book from becoming preachy.This book is recommended, but not for the reasons one might think.Read this book as a leader, because it is possible to create a level of these results within the scope of your team. This is a book for leaders who want to understand how they can attract and create high performance by adopting these ideas where possible.Reading this book from an organizational transformation point of view, frankly, is futile and hopeless for one simple reason. Your company is not a high talent density company. That is the essential, foundational and core reason for NETFLIX’s success – they have, hire, keep and constantly upgrade their talent. Becoming a high talent dense company requires living the following actions that are the foundation of the book:• You build up talent tensity by creating a workforce of high performers• You introduce candor by encouraging loads of feedback• You remove controls such as vacation, travel and expense policies• You strengthen talent density by paying top of the market, always• You increase candor by emphasizing organizational transparency• You release more controls such as decision-making approvals• You max-up talent density by implementing the Keeper Test• Max-up Candor by creating circles of feedback• Eliminate most controls by leading with context and note controlThese seem like normal empowerment related topics. Beware the book talks about how NETFIX embodies them to a degree that makes them all but impossible for the vast majority of companies – like 98%. Many will read this book and pay lip service to these principles, some CHRO’s will stand up and say that they are a talent dense company, but these are aspirational at best and insincere at the other end of spectrum.High-density talent is the core of NETFLIX and its ability to execute these strategies effectively. They are good, not because they have good people, they are NETFLIX because they work hard to always have the BEST PEOPLE. There is no average at NETFLIX, all are way above average when they are there and when they fall back to average – “adequate performance gets a generous severance package.”The selected quotes from the book demonstrate the centrality of high talent density to the company and anyone seeking to adopt these ideas.“We learned that a company with really dense talent is a company everyone wants to work for. High performers especially thrive in environments where the overall talent density is high.” Page 7.“We’d found a way to give our high performers a little more control over their lives, and that control made everybody feel a little freer: because of our high-talent density, our employees were already conscientious and responsible.” Page 54.“Once you have a workforce made up of nearly exclusively of high performers, you can count on people to behave responsibly.” Page 69.“Dispersed decision-making can only work with high talent density and unusual amounts of organizational transparency. Without these elements, the entire premise backfires.” P. 131.“One of the reasons this (high density) is so difficult is many companies is because business leaders are continually telling their employees, ‘we are a family.’ But a high-talent-density work environment is not a family.” Page 166.“At Netflix, I want each manager to run her department like the best professional teams, working to create strong feelings of commitment, cohesion and camaraderie, while continually making tough decision to ensure the best player is manning each post.” Page 169.“Leading with context won’t work unless you have the right conditions in place. And the first prerequisite is high talent density.” Page 201.Overall the book is well worth your time. Its entertaining, eminently readable and enlightening. It contains a number of ideas that will become organizational and leadership buzzwords in the future.Just read it with the caveat that very few companies have the capacity or true desire to put these ideas into practice at the organizational level.

We all have done it: turned on our smart televisions, laptops and game consoles and navigated to the giant red and black logo with the words “NETFLIX,” on it. Netflix, from humble beginnings in the late 1990s (see That Will Never Work by Marc Randolph) has grown into a powerhouse of cinematic viewing and streaming. While they have evolved from their inception of DVD rentals to producing massive amounts of original content, Netflix has kept one thing the same and what has worked for them: culture. In this book by Reed Hastings, CEO of Netflix and Erin Meyer, author on the topic of culture, a deep dive into the culture of Netflix and their policies acts as an immense case study for what has worked for them and continues to do so as they grow their success. Written with actual events, insights, interviews with employees and a 360 view of the internals of the company, No Rules Rules gives readers a deep dive to Netflix and how the policies they have adopted may ring true to application in your own organization. Readers of business culture and business students alike should pick this one up for the originality and draw salient points from it. It may behoove readers to read Marc Randolph’s book (see above) before reading this one as a two-part series on Netflix’s origins, rise to popularity and their continued cultural success.

The book’s format is EXACTLY the way I love to read these kinds of books. It’s not all about some smart-ass guy who was lucky and successful and won’t stop bragging how he got there. Reed was humble in his writing. He explained a theory and practise. Then it was backed up by science through his co-author using psychology and social psychology. Even with 30 years of experience, I was able to learn new things. But with 30 years of experience, I wasn’t totally convinced.One, I don’t think a lot of what is being done at Netflix is original. Talent density and individual responsibility was discussed years ago in books such as “From Good to Great” and “Reengineering the Organization”. Even the Live 360 reminded me of Synanon’s The Game sessions. But at least he is implementing these practises, and there is no doubt that it is contributing to Netflix’s success. What I really liked was that Reed did admit sometimes there were flaws in their approach, but they are minor enough not to affect the overall success.Another key flaw that the book skipped was teamwork and collaboration. The book focuses more on individuals. I am not convinced that success is based on a single employee working in a vacuum. I think Moneyball makes more sense than talent density. High talent density with the threat of high turnover can easily lead to hoarding information, chasing after glory at every moment, and basic zero-sum game theory where there is constant fighting between employees. There is always someone better out there. That is just plain statistics. Does that mean you spend endless amount of effort looking for them or upgrade the employees as the market shifts? Also, what happens if your company can’t hire the best talent as they may be a start-up or just generates less revenue than the competition. Does that mean this book is worthless?There are a lot of good lessons and takeaways when Netflix went international. They wanted to obtain their business culture but when it clashed with the local country’s culture, they were willing to bend. Last, the book does not explain why Netflix is successful. I am sure HR policies are part of it, but I am not sure that it could even be considered the main reason. Even in the book from Good to Great, many of the mentioned companies that were considered the darlings of their time, are no longer in existence. Another example is the good old Nifty Fifty of the 60s and 70s of whom many of them are now defunct. I claim that Netflix is enjoying success from what they created, and they made the right decisions during key periods (video streaming). Their ability to continue be successful will not be based on their HR practises, but rather decisions made at the top and how the market receives their offering. Yes, nurturing creativity and independence can spark a new and even brilliant idea but there is no guarantee it will be successful. In the late 90s and before the dot.com crash many so-called good ideas blossomed. Many respectable high revenue companies thought the good times would last and implemented every stupid idea in the name of creativity. This led to an overload of great ideas and creativity and ridiculous amount of money chasing them, only to come crashing down. And this is where my last criticism lies. What happens when there are bad times?The book assumes life will be great at Netflix and doesn’t mention what happens when times go bad like during the dot.com or 2008. What happens when the company hits personal hard times unique to their market like a great disruption? Can they still keep their practices? I doubt it.Don’t allow my scepticism to push you away. The book is still a good book and should be read. Enjoy!!!

Netflix build culture in a way to encourage innovation with the principle of freedom and responsibility. This book explains why and how this works