Continuous innovation, faster than anyone else, best talent…
“Our competitor is human ‘s sleep time’!”
Netflix is the company that ranked No. 1 in the “company that wants to work the most” by technical workers in 2018, No. 2 in the “happiest company for employees” and No. 1 in the U.S. in 2019. Although it is reported as a company that has benefited from the business model suitable for the untact (non-contact, non-face-to-face) society by recording the highest growth rate in the pandemic, Netflix has long been called a “representative of destructive innovation.” Netflix, which broke away from the DVD rental business and started Internet streaming services, bought copyrights for various TV programs and movies and provided them to consumers around the world, and became a large producer of high-quality video content. And in 2019, they said. “Our competitor is human ‘s sleep time’!”
What is the secret to Netflix’s ability to transform lightly and at a very fast pace whenever the market changes? Netflix co-founder and current CEO Reed Hastings puts forward their own corporate culture called Freedom and Responsibility (F&R) that does not require rules. There are literally no rules on Netflix! In other words, there are no strict procedures or regulations that reduce the drive and efficiency of work. He emphasizes that in this information age, what companies and teams need is creativity, speed of innovation, and agility, not error prevention or accurate replication. What is the greatest risk that threatens the survival of companies in this era? Reid affirms. They can’t attract the best talent, can’t come up with new products, and can’t quickly turn around when the environment changes.
Professor Erin Meyer, one of the world’s most influential business thinkers selected by Thinkers 50 in 2019, agrees that Netflix’s unusual success is due to their “slightly strange” corporate culture. After collecting the best players with the best treatment in the industry, they maintain a high ‘human resource density’ by raising salaries to match the market value. Since then, it will introduce a culture of honest feedback to remove various regulations and controls so that employees can make the best decisions without looking at anyone. This method of operation enabled faster innovation than anyone else. Professor Meyer analyzed their culture by interviewing more than 200 former and current Netflix employees over a period of two years. The reality of Netflix’s success, which has never been known by countless companies and media outlets that have studied and dug up their culture outside Netflix, will be unveiled in No Rules.
“Don’t keep an eagle in a cage!”
Netflix’s Unique Ecosystem, Incredibly Flexible
Creativity and innovation. It is a word that appears without falling into the “success factor” of not only companies but also individuals in this era. The problem is that even after forming a company with extraordinary creativity and efficient working talent, many organizations offset the strengths of employees by providing controls and regulations that would work only in the industrial era. It’s like locking an eagle in a cage trying to soar into the sky.
Reed Hastings decided to run Netflix completely differently, taking lessons from his failure in “Pure Software,” which he first founded. The government decided to eliminate bureaucratic control and procedures that had wrapped the wings of talent. There are more than 10 regulations and procedures in most companies, but not in Netflix. These are the examples.
Vacation regulations | Cost regulations | Approval procedures | Travel regulations | Contract approval | Salary rating
Decision Approval | Performance Improvement Plan | Impression Pool | Key Performance Indicators | Goal Management Act
Committee Decision Making | Salary Band | Performance Bonus
Netflix doesn’t have a fixed vacation period. There is no need to wait for the supervisor’s approval to proceed with the planned item or to sign a contract with the company. There are also no regulations on how much money can be spent on business trips and how much money can be purchased without approval when purchasing company goods. There is no salary standard based on position, but what is certain is that it is the highest level in the industry. Of course, there is no bonus based on performance. This is because they already give salaries that exceed bonuses. It is based on the judgment that the best ideas and creativity are expressed when humans are guaranteed a definite reward first.
Without regulations or procedures, it may be feared that there will be employees who operate too laxly and abuse them. Of course, the cost has increased by about 10% compared to the case of a general payment system, but in Reed Hastings’s words, this is nothing compared to the benefits of no regulation. Thanks to this, Netflix has become a company that star players want to work for, and through them, it has become a very fast and surprisingly flexible innovation company!
R&P and F&R, what’s your choice?
Fun as Netflix, their management methods
The two authors of “No Rules, Rules” exchange stories with insightful perspectives and clear strokes, and continue their arguments using the rich examples of former and current Netflix employees. Part 1 is the first step to a culture of freedom and responsibility, which guides you to get talented employees to build talent density, introduce a culture of honest feedback that can tell your thoughts as they are, and remove control by eliminating vacation rules and travel and expense approvals. Part two is the next step toward a culture of freedom and responsibility, which reinforces talent density with industry-leading rewards, encourages a culture of honesty with transparent management, and removes more control by eliminating the need for any decision to be approved. Part 3 introduces ways to strengthen the culture of freedom and responsibility, maximizing talent density through keeper tests, maximizing honesty through the use of feedback circles, and eliminating most controls by providing context rather than control. In the last part, the culture map will be introduced as a cultural recognition only when global companies that explore overseas markets on the world stage are equipped.
In the industrial era, which has created wealth for the past 300 years, the “Rules and Process (R&P)” culture that controls the movement of employees was effective. This is the way we all know it, and most companies around the world still operate like this. However, after reading this book, you will find that you can do the same with the F&R method. The choice is up to us. What is certain is that in an environment where intellectual property rights and creative services are the basis for growth, the proportion of economies that rely on cultivating creativity and innovation has become much larger, and this trend will accelerate further.
Want to create and operate an excellent organization? Looking for ways to attract top talent? Want to stand out in technology? Do you want to know what you need to innovate and take a leap forward in your company? Are you just curious about how Netflix people, who are recognized as the world’s best value companies, work and what capabilities they have to have to join global companies? Whatever you are curious about, you will find a surprising and clear answer in this book. Above all, a formidable management book is as interesting as an original Netflix movie!
Continuous innovation, faster than anyone else, best talent…