Powerful: Building a Culture of Freedom and Responsibility

The foundation of a great business book is a great story and boy does Patty McCord have a great story. She joined Netflix right at the start, carpooled into work with the CEO each day and spent 14 years pioneering a radically performance focused HR approach. What makes her journey especially exciting and valuable is that her experience at Netflix isn’t just a reaction to the unique circumstances Netflix was in - pioneering a new market and a new technology- its the fact that McCord and CEO Reed Hastings set out from the start to build a company based on a different approach to people. So this isn’t the Netflix story told from a people and HR perspective, the Netflix story was always going to be told from a people and HR perspective, that’s what makes what happened at Netflix so valuable as a case study for everyone else. McCord and Hastings had worked together before and had noticed that as companies grow and startups become scale ups, something bad happens. The talent density tends to drop. The ratio of super top high performers becomes less. It’s something I’ve personally seen and heard of a hundred times. It’s what is behind the constant warnings to entrepreneurs “Watch your culture as you grow”. These warnings are made with good intention, but they are ultimately useless as they come with no guidance as to what to do, how to “watch your culture” and what practically to do to keep that fast growing, autonomous startup mindset as you grow to hundreds or thousands of employees. Powerful is that guidance, it’s the manual. With several decades of work in the Valley, Patty has developed a love for working with software engineers and that influence means she applies a product manager’s approach to HR. She has a goal of operating with minimal process and constantly tests eliminating procedures. But she does this in an agile way, like a good product manager would. She sets a low bar for people process innovation - “Is it safe to test?”, rather than “will this work”. If it is safe let’s change the process (commonly “lets remove the process) and see. If it turns out he policy was needed just re-instate it. There are some things in the book that can only work in the Valley, in that unique place where VC cash at times is plentiful and the oversupply of jobs to talent distorts things like no where else on Earth. It’s easy to focus on these things, like “constantly ask your staff to interview elsewhere and see what they are worth” and dismiss the book as not practical to your situation or industry. But that would be a tragedy because the vast majority of the learnings and advice in this book are applicable to so many businesses and organisations. The new employee college, teaching every single person how to read the P&L, tacking everyone how the company makes money, teaching everyone the key projects and key performance indicators for each department, communicating to everyone constantly what the 5 big challenges are the company is faced with, encouraging a practice of constant, respectful, radical honesty and feedback, understanding that great jobs are challenging jobs where great things get done, accepting that perks and food are at best peripheral decoration and the core thing you need at work is amazing people to work with and a great challenge to overcome - these are the central tenants of Powerful and they are applicable to any business, anywhere. Powerful is beautifully written and Patty has an engaging, irreverent style. I flipped between the Kindle version and the audio book and can heartedly recommend both, sometimes its great to hear Patty’s voice and emphasis in the material. Powerful is a fantastic read for managers, leaders, CEO’s, HR people - anyone at any level who cares about business and people and wants to help the people they work with do their best work.

I had heard of the Netflix culture deck and was inspired by it to learn more about the company. Patty McCord shares the strategy of how a startup can move at crazy fast speed through scale up to international corporation. Whilst I can see how the strategy she outlines works, I still can’t help but feel there is a lot of us vs them. She is talking from the POV of an executive (us) about employees that are pawns in a game of global domination (them). How do we find them, hire them, promote them (to us), and fire/let go of them. There is a lot of management innovation in here which I liked - and some that still smacks of strong hierarchy which I didn’t. But - there is enough in here to still make it worth a read. If I were to start a startup, I would follow a lot of the advice she has. Even the rapid staff turnover - however, I would ensure that those coming through could take the option of money and/or ownership (shares). Otherwise we are creating companies that are once again just set up for the owners and investors to take all. I think that model needs to change.

Netflix opened for business in 1998. Since then, the company has gone through ups and downs, survived changing technologies and markets, and become a moviemaker. Patty McCord was there for 14 years, starting in 1998. She was one of the people responsible for the HR policies that so many people want to hear more about. You can get some of those lessons from reading articles in the business press. Some feature specific practices, like the Netflix vacation policy. Others are about how you can be more “people-oriented.” But if you want to get an idea of why Netflix approaches HR the way it does, you need to read Powerful: Building A Culture of Freedom and Responsibility by Patty McCord. In Powerful, Patty McCord says creating a culture is an evolutionary process, and she thinks of it like an experimental journey of discovery. The book will introduce you to several of the policies that Netflix created, but it will also introduce you to that journey. Early in the book, McCord sums up the lessons shewill present. “The fundamental lesson we learned at Netflix about success in business today is this: the elaborate, cumbersome system for managing people that was developed over the course of the twentieth century is just not up to the challenges companies face in the twenty-first. Reed Hastings and I and the rest of the management team decided that, over time, we would explore a radical new way to manage people—a way that would allow them to exercise their full powers.” Read this book if you’re curious about Netflix. You’ll like it if you’re interested in new ways we can do HR. If you like thinking about how work will be different in the future, you’ll like this book, too. No matter what your other interests, you’ll get lots of ideas about things to try in your business. I’m glad that McCord waited for a few years after leaving Netflix before writing this book, Distance in time gives us perspective, and I believe the book is better for that. It’s also better because Patty McCord has worked as a consultant with other companies since leaving Netflix in 2012. We get the benefit of her experience at Netflix and her experience with other companies. I only have one tiny quibble with this book. Patty McCord writes about a high-tech, fast-growth company. If your company is like that, great, but most companies aren’t. Then what? Then you can ignore the few bits that only apply to high-tech, fast-growth companies and get all the other lessons from the book. I got many great quotes from the book. Here are a few of them. You can see more on my Goodreads page. “Yes, engaged employees probably deliver higher-quality performance, but too often engagement is treated as the endgame, rather than serving customers and getting results.” “Perhaps the worst problem with anonymous surveys, though, is that they send the message that it’s best to be most honest when people don’t know who you are.” “I love data. But the problem is that people become overly wedded to data and too often consider it much too narrowly, removed from the wider business context. They consider it the answer to rather than the basis of good questions.” “it’s absolutely great for employees to be happy, but that it’s best for both them and their companies if the reason they’re happy is that they’re doing great work with great people.” “One of the reasons that I’m no fan of the annual performance review process is that not only does it take up a lot of your HR department’s time, but it is so often removed from any true connection to business results and serving customers.” In A Nutshell Powerful: Building A Culture of Freedom and Responsibility by Patty McCord is a great business book. Read it for the story of Netflix, for a look at how cultures develop, and a whole bunch of ideas to try.

I came across Patty McCord’s name in another book about building and running great organizations (The Friction Project by Professors Sutton and Rao). I was intrigued by the story told about her honesty and her ability to challenge senior management on what was actually agreed to in meetings, and how that should be communicated to the broader group. Her book confirms these traits and teaches a lot more about how to build great teams. Quick read. Phenomenal read with great humor at times. Highly recommended!

Na minha de Organização Exponencial e Reinventando as Organizações, esse é um livro indispensável para o gestor do século XXI, independente se trabalha em uma startup ou não. O modelo Netflix de gestão de pessoas é validado e pode ser adaptado em várias esferas.

Great book. I read a lot and run my own business and people are such a problem for growth!! This book has gone a long way in understanding how you can grow without having to pander to salary demands for under performers and also having to spend a fortune on perks that no-one seems to want!! It's also an enjoyable and easy read and from the horses mouth and definitely worth the read if you're in my position or any kind of HR or business person.

La cultura corporativa de Neflix es de las más importantes de Silicon Valley y posiblemente del mundo, su "culture deck" tiene miles de descargas, con una premisa en realidad muy simple: la empresa como equipo de élite. En el Culture Deck y en diferentes artículos de google se profundiza en esto, pero aquí McCord, la autora intelectual del tema (junto a Reed Hastings) profundiza un poco más en sus métodos y visiones. Es tan simple de entender que asusta, el caso es saber llevarlo a cabo

Excellent read for people looking for new ways to work with people. Loved how stories from the author are weaves into the book.

Good book esp for a new HR perspective.