No Rules Rules

No Rules Rules explains the unique and efficient company culture of Netflix, from high levels of freedom and responsibility to low levels of bureaucracy, illustrating what has made the company so successful over the years.

Remember going to Blockbuster to rent movies? In 2000, Reed Hastings met with the CEO of Blockbuster to make him an offer. At the time, Netflix was a small start-up, and Blockbuster was a huge company worth $6 billion and 9,000 stores worldwide.

The pitch he and his partner made was for Blockbuster to buy Netflix for $50 million and allow Hastings and his partner to run an online video rental service for Blockbuster. The CEO quickly declined the offer. This turned out to be a huge mistake, because as we know, Blockbuster filed for bankruptcy just ten years later. After all, Netflix dominated the market.

How did the small company adapt so much better than the rental giant Blockbuster? It all came down to the culture of Netflix. It is a company that emphasises people and innovation and isn’t overly controlling. This has allowed it to grow at unprecedented rates, and a 2018 survey rated it as the best place in Silicon Valley to work.

In just 20 years,  the company has maneuvered through four huge industry shifts impressively well. It was first a DVD-by-mail service, then a streaming service, then it moved on to license content from other studios, and finally, it started producing movies and TV shows of its own.

Hastings says this is because, at Netflix, his employees are allowed much more freedom than other companies. When they are given this freedom, they are inspired to work harder, be more innovative, and make better decisions.

Before you set your employees loose, however, you need to ensure 3 things, Hastings says: Have high talent density Offer lots of candor Throw out pointless policies A company with a smaller group of great talent will always outperform a large one with so-so employees. That’s because high performance is contagious. When you have multiple high performers together, they hold themselves to a higher standard and have more fun. When everyone is good at their job, performance spirals upward. So how do you attract and keep employees that have this kind of zeal? Pay a great salary. It even makes financial sense because hiring one amazing person and paying them a lot will be more worth it than paying many decent workers a normal salary. Netflix also prioritizes what the authors call radical candor. It is perfectly normal for employees to contradict their supervisor in a meeting if they disagree directly. Telling people when you disagree with them isn’t just normal; it is expected. They see…