Netflix’s Not-So-Secret Weapon in the Streaming Wars
By: Barry W. Enderwick
Tags: Netflix, Streaming, Disney, Apple, HBO

It seems like every other day someone is announcing a new streaming service. Soon-to-be launched HBO Max, Disney+, Apple+, and short-form contender Quibi are all due to join Netflix, Hulu, and Amazon. Making for one crowded space.

What’s most interesting is how with each new announcement there is a chorus of voices screaming about how this could be Netflix’s demise. And to be clear, added competition may eat away at the first-mover advantage that they’ve enjoyed thus far.

But what’s really interesting is that to-an-article, no one is talking about company culture.

The Netflix High-Performance Culture

When I started at Netflix in 2001, the culture wasn’t set. We were just another startup doing everything we could to grow without a real mind for what the company culture would be.

But that didn’t last long because just over a year later, CEO Reed Hastings and CPO Patty McCord introduced the “high-performance culture.” Here’s a link to the original deck. It was to be a deliberate attempt to, as Patty would say, create the company that would great to have worked for. The idea is to hire the best, pay them top-of-market, and get out their way.

It wasn’t born fully formed and definitely evolved over time but in essence, it was the “you’re an adult, act like one” approach to management. Things like the “No Vacation Policy” approach were extensions of that.

Side Note: It was not an “unlimited vacation” add-on to the culture but a natural result of it. If you wanted to take x amount of time off, and you were able to manage it, then do it. You’re an adult, act like it.

I won’t go into to much detail here, you can read “Powerful” by Patty McCord for that (and no, that is not an affiliate link). But the culture sought to eliminate bottlenecks and create as much efficiency as possible. And it worked.

We were able to not only produce a tremendous volume of high-quality work, but we were also able to turn on a dime (you can read an example about that in this article).

It allowed us to punch well above our weight for years. In fact, when I left Netflix the marketing department had about 40 people. That’s covering all aspects of marketing (customer acquisition/conversion via direct response marketing, brand marketing, pr/comms, etc.) for all of the United States, Canda, Latin America, and the UK and Ireland.

And it continues…

The Netflix high-performance culture has extended into how they approach content creators. Instead of asking for a pilot, running it, seeing how it does, and having executives give “notes” Netflix simples says something like “We’d like two seasons.” And, since they pay “top of market” they don’t nickel and dime creatives on how much they’ll earn.

Everything Netflix does when approaching talent is 180 degrees opposite of how traditional Hollywood players have done and continue to do it.

It’s why Netflix has been able to lure mega showrunners Shonda Rhimes and Ryan Murphy among others.

So…

To be sure, matching content-to-consumer will be a big key to the success of any these new streaming services.

But I think it’s worth asking, what are the cultures at the varying competitors like? Are they set up to be able to quickly take advantage of new opportunities? Do they actually spur innovation and creativity? Are they able to compete in the content cost arms race created by Netflix?

Only time will tell but for now, I’m of the opinion that the Netflix “High-Performance Culture” is a secret weapon that should not be ignored.