Book Review & Summary: No Rules Rules

19.03.2021

No Rules Rules - Reed Hastings, Erin Meyer

Rating

5/5 🌟

I've found this book enjoyable to listen to and at the same time interesting. Especially the part about candor and honest feedback got me thinking and even motivated some change in my own working life. If you are interested in the topics, which I will talk about below, then I can wholeheartedly recommend this book!

Who is this book for?

• Anyone interested in
  • leadership
  • organizational culture
  • innovation
  • the tech industry/silicon valley
  • how Netflix changed from a DVD shipping company in the US to producing world-renowned shows for its streamings service that is popular all over the globe

Summary

• There are 3 main steps in creating Netfllix' culture
  • High talent density
  • Candor
  • Freedom and Responsibility (F&R)

High talent density

• After Netflix was forced to let go of people because of financial troubles, they found they were more productive and creative than before letting those people go. They attributed that increase in productivity to the increased talent density which has a symbiotic effect, lifting up the whole company. They state studies that showed that one unproductive/unmotivated employee can pull down a whole team.
• To attract top talent, Netflix pays top of the market. To do so, they encourage employees to talk to recruiters and even go to interview with competitors. If they would be paid more there, and they would pass the Keeper Test (see below), Netflix will pay the higher salary. Netflix managers are even encouraged to give top of the market increases regularly without the employees asking for it.
• The reason they pay so much is the so-called "rockstar principle", arguing that one "rockstar" employee is worth many average employees.
• Netflix Managers exercise the Keeper Test. They regularly ask themselves whether they would fight for an employee if the employee decided to leave. If not, they let them go. The employees can ask their manager where they stand right now and how they can improve to pass that test. If they do not pass the test, they will be let go. The motto of Netflix here is: "Adequate performance will give you a generous severance package", indicating that adequate is not enough to work at Netflix, you have to be outstanding.

Candor

• Candor and feedback are critical for Netflix's culture. If you work there, it's part of your job description to give honest feedback when it is most useful for the other person. More often than not, this means critical feedback right on the spot. Not giving feedback because you feel uncomfortable doing so, even though your feedback could help the company, is seen as disloyal to the company, its culture, and your coworkers.
• Hierarchical feedback etiquettes don't exist at Netflix. Not giving critical feedback to your boss won't help your career, it will hurt it, since Netflix managers are trained to see employees criticizing them as a valuable asset for growth, not a personal attack.
• Especially in countries with a lower tolerance for direct feedback, establishing institutional feedback measures is important, like yearly feedback reviews as a group (not individual performance reviews, but feedback for and by everyone, even the leaders).

Freedom and Responsibility

• If the other two steps have been completed, it's time to release controls. You have top employees who keep each other in check, through honest feedback, now it's time to let them shine.
• No vacation policies. Employees can decide for themselves how much they want/need to vacation and when. Just make sure they don't burn out and it doesn't turn into a no-vacation policy. One way to do so is to instruct managers to take regular vacations and talk about them a lot, showing employees having downtime is accepted and even desired.
• No expenditure policies. They make employees feel bad/restricted and make the organization stiff and less innovative. Plus, they are expensive.
• Playing your cards: New Netflix employees are told they have a set of coins when they start, and their job is, to make big bets. If some of those bets fail, it's not a big deal, as long as they learn from it and document their learning for the rest of the company too. Also, some of those bets should, of course, pay off.
• "Designated captain": Employees at Netflix are paid for doing a certain job and being responsible for it. This means they can make decisions in that field without the approval of their boss. They know best, so they should decide and innovate in their field of expertise.