The No Rules Rules: Netflix and the culture of Reinvention by Erin Meyer and Reed Hastings

Ever wondered what life would have been had there been no internet and no Netflix during a pandemic situation? All locked up at home and nothing else to do. Well, I must even thank the internet for keeping the jobs of millions of people who could work from home. As for the Netflix part, it has become an integral part of the way we consume entertainment. 



Author : Erin Meyer and Reed Hastings
Originally Published : 2020
Publication :Penguin Press
Pages :320
Genre(s) :-
Non-Fiction, Business, Entertainment, Technology

I was pleasantly surprised when the name has even become part of a cliché !

Wilmot Reed Hastings, known only as Reed Hastings founded Netflix when he was fined for delay for the VHS of Apollo 13 from Blockbuster that rented VHS cassettes.

In 1997, Reed Hastings and  his colleague from Pure Software which he had founded earlier started Netflix as a better version of Blockbuster which worked on paper catalogues rented through over 9000 stores across the US. Netflix on the other hand, mailed DVDs which were lighter and which could be chosen over their website instead of a catalogue.

This book chronicles the journey of Netflix, from being a newbie vying with Blockbuster, to going public in 2002 and becoming the behemoth that it is within just two decades. As you start reading the book, you realize that though Netflix has fundamentally been a company that doesn’t believe in rules and policies, it is still rated one of the best companies to work for. Having no rules actually worked because the employees knew they needed to work this freedom correctly. In 2009 hastings famously put out the no rules policy document in public domain.

But soon they needed the rules to keep their sanity! Hastings lists out three key points. He says that to develop a foundation that enables this level of freedom, you need three things-

Build up talent density- that has no place for sloppy and unprofessional people.  Fill your organization with high performers and they know how best to use this freedom of having no rules

Increase candor –a healthy culture of continuous learning and seeking and giving feedback allows for less time in training and motivating people.

Then, says he, you can use the third tenet-

Having less controls and more freedom – doing away with employee policies like vacation policy, travel and expense policy and later as talent becomes denser; you can do away with approval policy too.

Doing this creates a virtuous cycle when your people use the freedom with responsibility and flourish with innovation, in turn. Erin Meyer who has co-written this book with Reed, has taught at INSEAD. An article in Huff Post wrote that a reason for Netflix’s success is that they treat employees like grown-ups. You did smile, now, didn’t you? Probably you reminisced how your own company tells you everything- what to do, how and how much.

Hastings begins by telling how the company had to lay off a third of its workforce during the dotcom bust. After the initial tears and anger by those laid off, the remaining staff surprisingly became more and more efficient as the days went by. He says talented people make one another more efficient. Performance- both good and bad is infectious. So you decide whom to keep and whom to let go so your team always stays ahead.

I doubt anyone else promotes, appreciates and productively uses candid feedback the way they do at Netflix. People generally detest feedback because they fear being rejected. On the other hand, people appreciate constructive feedback than just positive feedback. The fear of being rejected comes from our basic instinct of the desire to be liked by all.
The second key part is the way we give and receive feedback- while giving, firstly ensure it aims towards helping the other person and secondly, it’s actionable. While receiving, appreciate first and then decide for yourself whether to accept or discard. How cool is that!

Only after putting these two things in place can you remove the controls. Doing away with vacation policy, for example, implied that responsible employees knew how much time they can take off, without comparing with the boss or others on their team. There’s no competition to staying off work when there’s so much more to achieve together.

Key takeaways

  1. Fill your organization with the best talent
  2. Treat your employees like grown-ups
  3. Encourage candid feedback that helps correct things in time
  4. Give freedom to your employees who then value it
  5. Removing controls on vacation time and travel and expense approvals. The best employees use company money as if it were their own- spending it wisely where it is justified, acting in the best interests of the company
  6. Fortify talent so they stay motivated and perform best because they’re also paid the best in industry
  7. Get rid of closed offices, employees who act as guards and locked spaces to encourage more transparency

Why I recommend this book

Because it is a great lesson in how a company like Netflix climbed up to become a giant riding largely on its innovative HR policies. Read this book if you own a business or plan to start one so you know how best to form a high performing A-Team. It also sets an example of what happens when owners think from the employees’ perspective, putting all the ‘employees must be governed’ rule on its head.

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