A great workplace is stunning colleagues
By: Hemanth Raja
Tags: Startup, Netflix

For top performers, a great workplace is not about lavish office, a beautiful gym, free lunch. It’s about the joy of being surrounded by people who are talented and collaborative. “People who can help you be better”. If you have a team with high performers, each will push each other to achieve more.

Reed Hastings’ No Rules Rules: Netflix and the Culture of Reinvention spells out how his company fosters an environment of employee “freedom and responsibility” (referred to internally as “F&R”). Hastings claims Netflix’s unique ways of doing business have formed the basis for its astronomical growth and category-dominating position today, with 193 million paying customers globally as of the end of June.

For them, to build a culture of freedom and responsibility it was important that they have high talent-density.

**Talent Density!?

Talent density works like this: for example, high-quality engineers prefer to work with other high-quality engineers. The result is these good engineers typically be found in clusters. Talented engineers do 3x the work with 10x speed with the necessary attention to detail and defensible code/design compared to the average performers. This is true for the companies for which they work and the technical communities in which they engage.

Here are the following changes he implemented internally in the company:

Build up talent density by creating a workforce of high performers

by creating a workforce of high performers Introduced candor by encouraging loads of feedback

Removed controls such as vacation, travel, and expense policies

Strengthened talent density by paying top of the market, always

by paying top of the market, always Increased candor by emphasizing organizational transparency

Released more controls such as decision-making approvals

Maxed-up talent density by implementing the Keeper Test

by implementing the Keeper Test Maxed-up Candor by creating circles of feedback

Eliminated most controls by leading with context and note control

The hypothesis behind this is to create a leaner organization with top performers who are the best at what they do.

How does an employee see it?

Since Netflix’s focus was to hire and retain top/high-performing talent. The obvious question is to ask is “Why do great colleagues leave?”.

Of course, every case is different, but if you zoom out a bit it often boils down to one or more of the following:

lacking creative freedom and/or autonomy to do the job in the desired way

the inability to improve the direct work environment

lack of improvement of the company as a whole

feeling gagged or stifled by processes or hierarchy

decisions that make no sense on an operational level

being tired of company politics and in-transparency

the inability to get a raise due to performance management and budget constraints

This is how a Netflix employee would see Netflix’s company culture:

Netflix values me as a top talent and pays me above market standard Adjusts salary based on the market demand Feedback culture on all levels is encouraged and expected High transparency in terms of business numbers Very little processes, high autonomy, and freedom of decisions on an operational level Acting in the best interest of the company The overall idea of treating employees as responsible and accountable adults Managed by context

This approach is not a one fit all model. This requires a commitment to pay top dollar and be attractive and challenging enough to get top talent. For example, old-school controls are still the best way to go for “high-volume, low-error” manufacturing businesses or for managing safety-critical environments.

Reed Hastings makes a persuasive case in the book that Netflix has successfully codified its processes and is one of the major factors that contributed to its growth.

Having said that Reed Hastings devotes the book’s final chapter to Netflix’s efforts to export its culture overseas, which haven’t always gone as he expected. “What I’ve learned is that in order to integrate your corporate culture around the world, above all, you have to be humble, you have to be curious,” he writes, “and you have to remember to listen before you speak and learn before you teach.”

If I had to answer what Netflix was about after reading this book… It’s hard to miss a self-aware founder who believes that simple is more important than sizzle, process is more important than performance and crafting is more important than creating. After twenty-three years, he understands that doing extraordinary things comes from doing ordinary things over and over and over again.