Quarterly Culture Inspiration: December 2020

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:

Quarterly Culture Inspiration: July 2020

Every quarter, I share helpful summaries and excerpts of the best books, podcasts, and articles I’ve read about organizational culture.

Book: What You do is Who You Are by Ben Horowitz

Ben Horowitz is the co-founder of Andreessen Horowitz, a VC firm. He is also an incredible writer who came out with a new book last fall, What You do is Who You Are. The book is about how to create a culture that lasts, using examples from history, including Haiti’s slave revolt, Japan’s samurais, Genghis Khan, and Shaka Senghor, who transformed prison culture. Here are some passages I found helpful.

On defining culture:

Culture is not like a mission statement; you can’t just set it up and have it last forever. There’s a saying in the military that if you see something below standard and do nothing, then you’ve set a new standard. This is also true of culture—if you see something off-culture and ignore it, you’ve created a new culture. Meanwhile, as business conditions shift and your strategy evolves, you have to keep changing your culture accordingly. The target is always moving…

Culture is not like a mission statement; you can’t just set it up and have it last forever. There’s a saying in the military that if you see something below standard and do nothing, then you’ve set a new standard. This is also true of culture—if you see something off-culture and ignore it, you’ve created a new culture. Meanwhile, as business conditions shift and your strategy evolves, you have to keep changing your culture accordingly. The target is always moving.

On writing cultural virtues/rules:

Create Shocking Rules: Here are the rules for writing a rule so powerful it sets the culture for many years: It must be memorable. If people forget the rule, they forget the culture. It must raise the question “Why?” Your rule should be so bizarre and shocking that everybody who hears it is compelled to ask, “Are you serious?” Its cultural impact must be straightforward. The answer to the “Why?” must clearly explain the cultural concept. People must encounter the rule almost daily. If your incredibly memorable rule applies only to situations people face once a year, it’s irrelevant. When Tom Coughlin coached the New York Giants, from 2004 to 2015, the media went crazy over a shocking rule he set: If you are on time, you are late. He started every meeting five minutes early and fined players one thousand dollars if they were late. I mean on time. Wait, what? At first, the “Coughlin Time” rule went over poorly. Several players filed grievances with the NFL and the New York Times wrote a scathing critique: In the player-relations department, the reign of Giants Coach Tom Coughlin started poorly and is already showing signs of unraveling one game into the season. On the heels of Sunday’s 31–17 loss to the Eagles, the N.F.L. Players Association confirmed that three Giants had filed a grievance against Coughlin for fining them for not being early enough for a meeting. A few weeks ago, linebackers Carlos Emmons and Barrett Green and cornerback Terry Cousin, all free-agent acquisitions in the off-season, were fined $1,000 each after showing up several minutes early for a meeting, only to be told they needed to arrive earlier. Coughlin’s response to the reporter didn’t make him seem more sympathetic, but it did solidify his rule: “Players ought to be there on time, period,” he said. “If they’re on time, they’re on time. Meetings start five minutes early.” Was the rule memorable? Check. Did it beg the question “Why?” He had players asking everyone from the league to the New York Times “Why?” so, check. Did they encounter it daily? Yep, they ran into it every time they had to be somewhere. But what was he trying to achieve? Eleven years and two Super Bowl wins later, backup quarterback Ryan Nassib explained the cultural intention to the Wall Street Journal: Coughlin Time is more of a mindset, kind of a way for players to discipline themselves, making sure they’re on time, making sure they’re attentive and making sure they’re ready to work when it’s time to start meetings. It’s actually kind of nice because once you get out in the real world, you’re five minutes early to everything.

On decision making:

So it’s critical to a healthy culture that whatever your decision-making process, you insist on a strict rule of disagree and commit. If you are a manager, at any level, you have a fundamental responsibility to support every decision that gets made. You can disagree in the meeting, but afterward you must not only support the final decision, you must be able to compellingly articulate the reasons the decision was made. The manager should have said, “This was a really tough decision. While we have done great work and our project shows real promise, when you consider the overall priorities of the business and where we are with cash, it just does not make sense to continue. We have to focus on our core areas. So, to make sure that everyone on this team is deployed to their highest and best use right now, we have decided to cancel the project.” After a major decision like this, it’s a good practice to ask employees what they thought of the decision—that way you can find out if the rationale behind the move cascaded down the organization with fidelity. As CEO, I wasn’t zero-tolerance about much, but I was definitely zero-tolerance on managers who undermined decisions, because that led to cultural chaos.

Article: Struggling to Thrive as a Large Team Working Remotely? This Exec Has the Field Guide You Need

Many of the articles I’ve read in the past two months have specific tips for how to run remote meetings or what to do for your virtual happy hours. However, this article from First Round Review makes the point that it’s impossible to copy and paste what works from one organization to another. Instead the article provides general guidelines and needs so you can figure out what works in your culture.

Guide: The Basecamp Guide to Internal Communication

As I mentioned above, it is not a good idea to copy and paste from another organization. However, it can be helpful to see the details of how another organization works so you can create a similar guide for your organization. Basecamp is an all-remote organization and they published a guide about how to communicate internally. For example, here is one of the bullets:

Writing solidifies, chat dissolves. Substantial decisions start and end with an exchange of complete thoughts, not one-line-at-a-time jousts. If it's important, critical, or fundamental, write it up, don't chat it down.

What I like about this guide is how specific, explicit, and detail-oriented it is. The act of writing a guide like this within your own organization can be clarifying, even if you never intend on publishing it publicly.