Every quarter, I share helpful summaries and excerpts of the best books, podcasts, and articles I’ve read about organizational culture.
Book: No Rules Rules: Netflix and The Culture of Reinvention by Reed Hastings and Erin Meyer
Reed Hastings is the co-founder and CEO of Netflix, and Erin Meyer is a professor at INSEAD business school, and together they have written an excellent book that functions as an anthropological study of Netflix’s culture. This is a book I recommend buying for your reference shelf as it is so full of real-life examples, rather than just theories or frameworks. The book is structured around ten key tenets that are the foundation for Netflix’s success. Hastings is honest, introspective, and vulnerable about how hard it is to run a company, and Meyer brings her great ability to synthesize patters into frameworks (her first book, The Culture Map, is also worth reading, and I wrote about it here). Here are a few excerpts I highlighted.
On how Reed Hastings models asking for feedback:
“Reed… receives more negative feedback than any other leader in the company. The proof is his 360-degree written assessment, which is open for everyone to contribute to, and where he consistently gets more feedback than any other employee does. Reed solicits feedback continually and religiously responds with belonging cues, sometimes even speaking publicly about how pleased he’s been to receive a piece of criticism. Here is a paragraph from a memo he shared with all Netflix employees in spring 2019: 360 is always a very stimulating time of year. I find the best comments for my growth are unfortunately the most painful. So, in the spirit of 360, thank you for bravely and honestly pointing out to me: “In meetings you can skip over topics or rush through them when you feel impatient or determine a particular topic on the agenda is no longer worth the time... On a similar note, watch out for letting your point-of-view overwhelm. You can short-change the debate by signaling alignment when it doesn’t exist.” So true, so sad, and so frustrating that I still do this. I will keep working on it. Hopefully, all of you got and gave very direct constructive feedback as well.”
On “The Keeper Test”:
From Reed: “Our mantra is that employees don’t need the boss’s approval to move forward (but they should let the boss know what’s going on). If Sheila comes to you with a proposal you think is going to fail, you need to remind yourself why Sheila is working for you and why you paid top of the market to get her. Ask yourself these four questions: Is Sheila a stunning employee? Do you believe she has good judgment? Do you think she has the ability to make a positive impact? Is she good enough to be on your team? If you answer NO to any of these questions, you should get rid of her (see the next chapter where we’ll learn that “adequate performance gets a generous severance”).
We also encourage all managers to consider each of their employees regularly and make sure they’ve got the best person in every spot. To help managers on the judgment calls, we talk about the Keeper Test: IF A PERSON ON YOUR TEAM WERE TO QUIT TOMORROW, WOULD YOU TRY TO CHANGE THEIR MIND? OR WOULD YOU ACCEPT THEIR RESIGNATION, PERHAPS WITH A LITTLE RELIEF? IF THE LATTER, YOU SHOULD GIVE THEM A SEVERANCE PACKAGE NOW, AND LOOK FOR A STAR, SOMEONE YOU WOULD FIGHT TO KEEP. We try to apply the Keeper Test to everyone, including ourselves. Would the company be better off with someone else in my role? The goal is to remove any shame for anyone let go from Netflix.”
On Feedback:
From Reed: “We now do the 360 written feedback every year, asking each person to sign their comments. We no longer have employees rate each other on a scale of 1 to 5, since we don’t link the process to raises, promotions, or firings. The goal is to help everyone get better, not to categorize them into boxes. The other big improvement is that each person can now give feedback to as many colleagues as they choose at any level in the organization—not just direct reports, line managers, or a few teammates who have invited input. Most people at Netflix provide feedback for at least ten colleagues, but thirty or forty is common. I received comments from seventy-one people on my 2018 report. Most important, the open 360 feedback instigates valuable discussion. I systematically share the comments I receive with my direct reports, and my reports share their feedback with their teams, all the way down the line. This not only strengthens the sense of transparency but also creates “reverse accountability” whereby the team feels encouraged to call the boss out for recurrent bad behavior. Ted Sarandos likes to tell this story about bungee jumping to demonstrate the value: Back in 1997, when I worked in Phoenix before Netflix, I went to a work event, the kind where you have some meetings but there are also activities encouraging the group to bond and have fun. Behind the restaurant in the parking lot, there was a bungee jumping station. For fifteen bucks you could jump off of a crane in full sight of everyone. No one was doing it, but I decided to try. Afterward the guy running the station said to me, “Why not go again? I’ll give you a second jump for free?” That made me curious. “Why would you do that?” I asked. He responded, “Because I want all your colleagues gawking at you from the restaurant to see that you’re happy to do it again. If they see it’s not so scary, they’ll be ready to try it also.” That’s exactly why you as the leader need to share your 360 evaluations with your teams, especially the really candid stuff about all the things you do poorly. It shows everyone that giving and receiving clear, actionable feedback isn’t so scary.”
Article: What Makes A Team Effective?
I highly recommend subscribing to Itamar Goldminz’s blog (former head of people at AltSchool and Grammerly). This post is a nice analysis of what makes a team effective. He compares several different frameworks and ultimately recommends a framework from an unknown origin. He makes a good argument that the buckets of governance, impact, and interaction cover team effectiveness well.
Guide: Informal Communication in an all-remote environment
Gitlab was already working as an all remote organization before COVID, so the company has figured out some of the tricks to making remote work work. Gitlab published a helpful guide for others to read about how they are intentional about informal communication. They recommend creating ways for people to have chance interactions, like you would in an office hallway, and designing moments for frequent feedback, such as retrospectives. Here’s an image of them having fun with hats and backgrounds:
