Introduction
Antioco listened carefully, nodded his head frequently, and then asked, “How much would Blockbuster need to pay for Netflix?” When he heard our response — $ 50 million — he flatly declined. Marc and I left, crestfallen. By 2010, Blockbuster had declared bankruptcy. By 2019, only a single Blockbuster video store remained, in Bend, Oregon.
I am often asked, “How did this happen? Why could Netflix repeatedly adapt but Blockbuster could not?” That day we went to Dallas, Blockbuster held all the aces. They had the brand, the power, the resources, and the vision.
It was not obvious at the time, even to me, but we had one thing that Blockbuster did not: a culture that valued people over process, emphasized innovation over efficiency, and had very few controls. Our culture, which focused on achieving top performance with talent density and leading employees with context not control, has allowed us to continually grow and change as the world, and our members’ needs, have likewise morphed around us.
Millions of businesspeople have studied the Netflix Culture Deck, a set of 127 slides originally intended for internal use but that Reed shared widely on the internet in 2009.
Harvard Business School professor Amy Edmondson. In her 2018 book, The Fearless Organization, she explains that if you want to encourage innovation, you should develop an environment where people feel safe to dream, speak up, and take risks. The safer the atmosphere, the more innovation you will have. Apparently, no one at Netflix read that book. Seek to hire the very best and then inject fear into your talented employees by telling them they’ll be thrown back out onto the “generous severance” scrap heap if they don’t excel?
If you’re not allotted vacation, you don’t fear losing it, and are less likely to take any at all.
The Netflix Culture Deck struck me as hypermasculine, excessively confrontational, and downright aggressive — perhaps a reflection of the kind of company you might expect to be constructed by an engineer with a somewhat mechanistic, rationalist view of human nature.
Blockbuster’s story is not an anomaly. The vast majority of firms fail when their industry shifts. Kodak failed to adapt from paper photos to digital. Nokia failed to adapt from flip phones to smartphones. AOL failed to adapt from dial-up internet to broadband.
If you give employees more freedom instead of developing processes to prevent them from exercising their own judgment, they will make better decisions and it’s easier to hold them accountable. This also makes for a happier, more motivated workforce as well as a nimbler company. But to develop a foundation that enables this level of freedom you need to first increase two other elements:
- Build up talent density. If you build an organization made up of high performers, you can eliminate most controls. The denser the talent, the greater the freedom you can offer.
- Increase candor. Talented employees have an enormous amount to learn from one another.
When talented staff members get into the feedback habit, they all get better at what they do while becoming implicitly accountable to one another, further reducing the need for traditional controls.
With these two elements in place, you can now… – Reduce controls.
Removing controls creates a culture of “Freedom and Responsibility”
Steve Jobs said: You can’t connect the dots looking forward; you can only connect them looking backwards. So, you have to trust that the dots will somehow connect in your future.
The point is to encourage people to question how the dots are connected. In most organizations, people join the dots the same way that everyone else does and always has done. This preserves the status quo. But one day someone comes along and connects the dots in a different way, which leads to an entirely different understanding of the world.
First Steps to a Culture of Freedom and Responsibility
FIRST BUILD UP TALENT DENSITY …: A Great Workplace Is Stunning Colleagues
“I believe that every individual should be able to draw a line between their contribution to the corporation and their individual aspirations. As the head of human capital management, I would work with you, the CEO, to increase the emotional intelligence quotient of our leadership and improve employee engagement.”
We learned that a company with really dense talent is a company everyone wants to work for. High performers especially thrive in environments where the overall talent density is high.
If you have a team of five stunning employees and two adequate ones, the adequate ones will sap managers’ energy, so they have less time for the top performers, reduce the quality of group discussions, lowering the team’s overall IQ, force others to develop ways to work around them, reducing efficiency, drive staff who seek excellence to quit, and show the team you accept mediocrity, thus multiplying the problem. For top performers, a great workplace isn’t about a lavish office, a beautiful gym, or a free sushi lunch. It’s about the joy of being surrounded by people who are both talented and collaborative. People who can help you be better. When every member is excellent, performance spirals upward as employees learn from and motivate one another.
Once you have high talent density in place and have eliminated less-than-great performers, you are ready to introduce a culture of candor.
THEN INCREASE CANDOR …: Say What You Really Think (with Positive Intent)
I saw that openly voicing opinions and feedback, instead of whispering behind one another’s backs, reduced the backstabbing and politics and allowed us to be faster. The more people heard what they could do better, the better everyone got at their jobs, the better we performed as a company. That’s when we coined the expression “Only say about someone what you will say to their face.” I modeled this behavior as best I could, and whenever someone came to me to complain about another employee, I would ask, “What did that person say when you spoke to him about this directly?”
When giving and receiving feedback is common, people learn faster and are more effective at work.
Few people enjoy receiving criticism. Receiving bad news about your work triggers feelings of self-doubt, frustration, and vulnerability.
If there is one thing, we hate more than receiving criticism one-on-one, it is to receive that negative feedback in front of others.
It’s stressful and unpleasant to hear what we are doing poorly, but after the initial stress, that feedback really helps.
A feedback loop is one of the most effective tools for improving performance. We learn faster and accomplish more when we make giving and receiving feedback a continuous part of how we collaborate. Feedback helps us to avoid misunderstandings, creates a climate of co-accountability, and reduces the need for hierarchy and rules.
When considering whether to give feedback, people often feel torn between two competing issues: they don’t want to hurt the recipient’s feelings, yet they want to help that person succeed.
A climate of candor doesn’t mean anything goes.
4A FEEDBACK GUIDELINES
- Giving Feedback
- AIM TO ASSIST: Feedback must be given with positive intent.
- ACTIONABLE: Your feedback must focus on what the recipient can do differently.
- Receiving Feedback
- APPRECIATE: Natural human inclination is to provide a defense or excuse when receiving criticism; we all reflexively seek to protect our egos and reputation. When you receive feedback, you need to fight this natural reaction.
- ACCEPT OR DISCARD: You will receive lots of feedback from lots of people while at Netflix. You are required to listen and consider all feedback provided. You are not required to follow it.
If you follow the 4A model, feedback can and should be given exactly when and where it will help the most.
But with a lot of brilliant people running around, you run a risk. Sometimes really talented people have heard for so long how great they are, they begin to feel they really are better than everybody else.
A culture of candor does not mean that you can speak your mind without concern for how it will impact others. On the contrary, it requires that everyone think carefully about the 4A guidelines.
“Never give criticism when you’re still angry.”
“Use a calm voice when giving corrective feedback”
First focus on developing a high-talent-density workplace. Second develop a culture of candor, assuring that everyone gives and receives a lot of feedback. With these two elements in place, you are ready to begin removing controls.
NOW BEGIN REMOVING CONTROLS …: a. Remove Vacation Policy: b. Remove Travel and Expense Approvals
Unlimited vacation helps attract and retain top talent, especially Gen Z-ers and millennials, who resist punching clocks. Removing the policy also reduces bureaucracy and the administrative costs of keeping track of who is out and when.
During the 2003 leadership meeting, where we decided to launch the no-vacation-policy experiment, Patty insisted that in order for this to work we, the executive team, would have to take big vacations and talk about them a lot.
“The Netflix culture has great ideals but sometimes the gap between the ideals and practice is big, and what should bridge that gap is leadership. When leaders don’t set a good example … I guess I’m what happens.”
If you want to remove the vacation policy in your organization, lead by example.
After Netflix removed vacation tracking, other companies began doing the same, including Glassdoor, LinkedIn, Songkick, HubSpot, and Eventbrite from the tech sector, as well as law firm Fisher Phillips, PR firm Golin, and marketing agency Visualsoft, to name just a few.
The Netflix ethos is that one superstar is better than two average people.
Unlimited holiday is easy to implement — you just have to create an environment of trust, and ours is built through three company rules: (1) always act in the best interests of the company, (2) never do anything that makes it harder for others to achieve their goals, (3) do whatever you can to achieve your own goals.
Giving employees more freedom led them to take more ownership and behave more responsibly. That’s when Patty and I coined the term “Freedom and Responsibility.”
Freedom is not the opposite of accountability, as I’d previously considered. Instead, it is a path toward it.
We saw quickly that spend company money as if it were your own was not actually how we wanted our employees to behave.
So, we changed the spending and travel guideline to something even simpler. Today the entirety of the travel and expense policy still consists of these five simple words: ACT IN NETFLIX’S BEST INTEREST That works better.
This is the nub of F&R. If your people choose to abuse the freedom you give them, you need to fire them and fire them loudly, so others understand the ramifications. Without this, freedom doesn’t work.
Even if your employees spend a little more when you give them freedom, the cost is still less than having a workplace where they can’t fly.
As companies grow from fast and flexible start-ups into mature businesses, they often create entire departments to monitor employee spending, which gives management a sense of control, but slows everything way down.
When you set them, some people will look eagerly for a way to take advantage of them. The organization with the policy is not necessarily the one saving money.
Once you have a workforce made up nearly exclusively of high performers, you can count on people to behave responsibly. Once you have developed a culture of candor, employees will watch out for one another and ensure their teammates’ actions are in line with the good of the company. Then you can begin to remove controls and give your staff more freedom.
Next Steps to a Culture of Freedom and Responsibility
FORTIFY TALENT DENSITY …: Pay Top of Personal Market
The success of Netflix is founded on these types of unlikely stories: small teams consisting exclusively of significantly above-average performers — what Reed refers to as dream teams — working on big hairy problems.
The high talent density at Netflix is the engine that drives Netflix success. Reed learned this simple but critical strategy after the layoffs in 2001. More complicated was figuring out what steps to take in order to attract and retain that top talent.
The rock-star principle is rooted in a famous study that took place in a basement in Santa Monica.
The best guy was twenty times faster at coding, twenty-five times faster at debugging, and ten times faster at program execution than the programmer with the lowest marks.
Bill Gates, whom I worked with while on the Microsoft board, purportedly went further. He is often quoted as saying: “A great lathe operator commands several times the wages of an average lathe operator, but a great writer of software code is worth ten thousand times the price of an average software writer.” In the software industry, this is a known principle (although still much debated).
The great software engineer is incredibly creative and can see conceptual patterns that others can’t.
For operational roles, you can pay an average salary and your company will do very well.
I’ve also found having a lean workforce has side advantages. Managing people well is hard and takes a lot of effort. Managing mediocre-performing employees is harder and more time consuming.
But it’s not just how much you pay people that matters. The form of payment is also important. In 2003, we learned that bonuses are bad for business at about the same time that I came across the rock-star principle.
This finding makes perfect sense. Creative work requires that your mind feel a level of freedom.
People are most creative when they have a big enough salary to remove some of the stress from home. But people are less creative when they don’t know whether or not they’ll get paid extra. Big salaries, not merit bonuses, are good for innovation.
By avoiding pay-per-performance bonuses you can offer higher base salaries and retain your highly motivated employees.
Netflix, on the other hand, wants to pay what will attract and keep talent, so their conversation with employees is focused on making it clear that (a) they estimate well what their prospective employee could make at any other company and (b) they’ll be paying just above that.
You’ll get more money if you change companies than if you stay put. In 2018, the average annual pay raise per employee in the US was about 3 percent (5 percent for top performers). For an employee quitting her job and joining a new company, the average raise was between 10 percent and 20 percent. Staying in the same job is bad for your pocketbook.
But the pay-top-of-market model at Netflix is so unusual that it is hard to understand. How is any manager supposed to know, on an ongoing basis, what top of market IS for each of her employees?
In a high-performance environment, paying top of market is most cost-effective in the long run. It is best to have salaries a little higher than necessary, to give a raise before an employee asks for it, to bump up a salary before that employee starts looking for another job, in order to attract and retain the best talent on the market year after year. It costs a lot more to lose people and to recruit replacements than to overpay a little in the first place.
When the market heats up and recruiters are calling, employees get curious. No matter what I say, some of them are going to have those talks and go to those interviews. If I don’t give them permission, they’ll sneak around and then leave without giving me a chance to retain them.
The rule at Netflix when recruiters call is: “Before you say, ‘No thanks!’ ask, ‘How much?’”
If you can’t afford to pay your best employees top of market, then let go of some of the less fabulous people in order to do so. That way, the talent will become even denser.
Once you have a company full of those rare responsible people who are self-motivated, self-aware, and self-disciplined, you can begin to share with them unprecedented amounts of company information — the type of knowledge most companies keep under lock and key.
PUMP UP CANDOR …: Open the Books
According to a study by Michael Slepian, a professor of management at Columbia Business School, the average person keeps thirteen secrets, five of which he or she has never shared with anyone else.
According to Slepian, if you are anything like an average person, there’s a 47 percent chance that one of your secrets involves a violation of trust, a 60-plus percent chance that it involves a lie or a financial impropriety, and a roughly 33 percent chance that it involves a theft, some sort of hidden relationship, or unhappiness at work.
The problem with the word secret is that once you tell someone, it’s not a secret anymore.
STUFF OF SECRETS = SOS. SOS will be our term (not a Netflix term) for information you might commonly choose to keep quiet because it would be dangerous to divulge.
Just about all managers like the idea of transparency. But if you’re serious about creating a high sharing environment, the first thing to do is to look at the symbols around your office that may accidentally be suggesting to everyone that secrets are being kept.
Although just about all companies talk about empowering staff, in the vast majority of organizations, real empowerment is a pipe dream because employees aren’t given enough information to take ownership of anything.
We are perhaps the only public company that shares financial results internally in the weeks before the quarter is closed.
But when one employee abuses your trust, deal with the individual case and double your commitment to continue transparency with the others. Do not punish the majority for the poor behavior of a few.
Spinning the truth is one of the most common ways leaders erode trust. I can’t say this clearly enough: don’t do this. Your people are not stupid.
Any leader who tries to be more transparent quickly recognizes that the good of bringing things out in the open sometimes competes with the good of respecting an individual’s right to privacy. Both are important.
When you succeed, speak about it softly or let others mention it for you. But when you make a mistake say it clearly and loudly, so that everyone can learn and profit from your errors. In other words, “Whisper wins and shout mistakes.”
The pratfall effect is the tendency for someone’s appeal to increase or decrease after making a mistake, depending on his or her perceived ability to perform well in general.
NOW RELEASE MORE CONTROLS …: No Decision-making Approvals Needed
At most companies, the boss is there to approve or block the decisions of employees. This is a surefire way to limit innovation and slow down growth.
DON’T SEEK TO PLEASE YOUR BOSS. SEEK TO DO WHAT IS BEST FOR THE COMPANY.
Dispersed decision-making can only work with high talent density and unusual amounts of organizational transparency. Without these elements, the entire premise backfires.
At Netflix, if you share all the context of your decision, you’ve done the groundwork. You don’t need approval. It’s up to you. You decide.
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).
Of course, not all decisions your people make will succeed. And when the boss moves aside from vetting judgment calls, it’s likely they’ll fail more often.
Jack made it clear that at Netflix you don’t lose your job because you make a bet that doesn’t work out.
The Netflix Innovation Cycle If you have an idea, you’re passionate about, do the following: “Farm for dissent,” or “socialize” the idea. For a big idea, test it out. As the informed captain, make your bet. If it succeeds, celebrate. If it fails, sunshine it.
We now say that it is disloyal to Netflix when you disagree with an idea and do not express that disagreement. By withholding your opinion, you are implicitly choosing to not help the company.
I can’t make the best decisions unless I have input from a lot of people. That’s why I and everyone else at Netflix now actively seek out different perspectives before making any major decision. We call it farming for dissent.
For smaller initiatives, you don’t need to farm for dissent, but you’d still be wise to let everyone know what you’re doing and to take the temperature of your initiative.
Most successful companies run all sorts of tests in order to find out how and why customers behave the way they do — and the results of those tests usually influence the corporate strategy. The big difference at Netflix is that the tests take place even when those in charge are dead set against the initiative.
At Netflix you don’t need management to sign off for anything. If you’re the informed captain, take ownership — sign the document yourself.
When you read about Freedom and Responsibility at Netflix, it’s easy to get lost in the lovely idea of Freedom without properly considering the accompanying weight of Responsibility.
Often a failed project is a critical step in getting to success. Once or twice a year, at our product meetings, I ask all of our managers to complete a simple form outlining their bets from the last few years, divided into three categories: bets that went well, bets that didn’t go well, and open bets.
They see that making bets is not a question of individuals’ successes and failures but rather a learning process that, in total, catapults the business forward.
When you sunshine your failed bets, everyone wins. You win because people learn they can trust you to tell the truth and to take responsibility for your actions. The team wins because it learns from the lessons that came out of the project. And the company wins because everyone sees clearly that failed bets are an inherent part of an innovative success wheel. We shouldn’t be afraid of our failures. We should embrace them.
In a fast and innovative company, ownership of critical, big-ticket decisions should be dispersed across the workforce at all different levels, not allocated according to hierarchical status
Techniques to Reinforce a Culture of Freedom and Responsibility
MAX UP TALENT DENSITY …: The Keeper Test
The Keeper Test, the primary device used at Netflix for encouraging managers to maintain high talent density.
Business leaders are continually telling their employees, “We are a family.” But a high-talent-density work environment is not a family.
A FAMILY IS ABOUT STAYING TOGETHER REGARDLESS OF “PERFORMANCE”
We wanted employees to feel committed, interconnected, and part of a greater whole. But we didn’t want people to see their jobs as a lifetime arrangement. A job should be something you do for that magical period of time when you are the best person for that job and that job is the best position for you. Once you stop learning or stop excelling, that’s the moment for you to pass that spot onto someone who is better fitted for it and to move on to a better role for you.
A professional sports team is a good metaphor for high talent density because athletes on professional teams:
- Demand excellence
- Train to win
- Know effort isn’t enough
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?
They shouldn’t have to wait for me to fail to replace me.
At Netflix, you might be working your hardest to do your very best, giving your all to help the company succeed, managing to deliver pretty good results, and then you walk into work one day and boom … you’re unemployed.
Is it even ethical to let go of people who are doing their best but failing to deliver amazing results?
Each time we let go of someone, we offer several months’ salary (from four months for an individual contributor to nine months for a vice president).
We encourage our managers to apply the Keeper Test regularly. But we are very careful to not have any firing quotas or ranking system. Rank-and-yank or “you must let go of X percent of your people” is just the type of rule-based process that we try to avoid.
The best response after something difficult happens is to shine a bright light on the situation so everyone can work through it in the open. When you choose to sunshine exactly what happened, your clarity and openness will wash away the fears of the group.
Most companies do what they can to minimize employee turnover.
But Reed doesn’t pay much attention to turnover rate, believing that replacement costs are not as important as ensuring the right person is in every position.
According to the Society for Human Resource Management’s “Human Capital Benchmarking Report,” the average annual turnover rate for American companies the past few years has been around 12 percent voluntary turnover (people choosing to leave the company of their own accord) and 6 percent involuntary (people who were fired), which adds up to a total average annual turnover of 18 percent. For technology companies, the total average annual turnover is more like 13 percent, and in the media/entertainment business it’s 11 percent. Over the same period, voluntary turnover at Netflix has remained steady at 3 – 4 percent (considerably below the 12 percent average — meaning not many choose to leave) and 8 percent involuntary (meaning 2 percent more people get fired at Netflix than the 6 percent average), equaling a grand total of 11 – 12 percent annual turnover … or just around the average for the sector.
MAX UP CANDOR …: A Circle of Feedback
There is one Netflix guideline that, if practiced religiously, would force everyone to be either radically candid or radically quiet: “Only say about someone what you will say to their face.”
We searched for a mechanism that would encourage everyone to give feedback to any colleague they wished, that reflected the level of candor and transparency we were trying to cultivate, and that was consistent with our Freedom and Responsibility culture. After a great deal of experimenting, we now have two processes we use regularly.
When we first tested annual written 360s, we ran them like everyone else. We used a “Start, Stop, Continue” format for the comments.
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.
By 2010, we had firmly instituted our version of the written 360 process with a lot of success. But, given the other steps we’d taken to increase transparency throughout the company, I felt that we could go further.
The exercise was a little like speed-dating except it was speed- feedback. Each pair had a few minutes to give one another feedback following the “Start, Stop, Continue” method and then we rotated, creating new pairs. Afterward, we came back into a circle as a group of eight and reported back what we’d learned. The pair exercise went fine, but the group discussion was by far the most important part of the session. The live 360s are so useful because individuals become accountable for their behavior and actions to the team. At the end of the evening each person presented a short synthesis of their main takeaways.
Live 360s work because of our high talent density and “no brilliant jerks” policy.
AND ELIMINATE MOST CONTROLS …!: Lead with Context, Not Control
“Lead with context, not control.” At just about any other company, with this much money on the table, the senior guy would get involved and control the negotiations. But that’s not what leadership looks like at Netflix.
For example, the boss might put in place a process like Management by Objectives, when she works with the employee to set Key Performance Indicators (KPIs); then she monitors the progress at regular intervals, judging the individual’s final performance based on whether he achieves the predetermined goals on time and within budget.
Leading with context, on the other hand, is more difficult, but gives considerably more freedom to employees. You provide all of the information you can so that your team members make great decisions and accomplish their work without oversight or process controlling their actions. The benefit is that the person builds the decision-making muscle to make better independent decisions in the future.
Leading with context won’t work unless you have the right conditions in place. And the first prerequisite is high talent density.
But deciding whether to lead with context or control isn’t just about talent density. You also have to consider your industry, and what you are trying to achieve.
When considering whether to lead with context or control, the second key question to ask is whether your goal is error prevention or innovation.
If your focus is on eliminating mistakes, then control is best.
If you’ve got high-performing employees, leading with context is best. To encourage original thinking, don’t tell your employees what to do and make them check boxes.
The third necessary condition you need to have in place in order for leading with context to work. In addition to high talent density (that’s the first condition) and a goal of innovation rather than error prevention (that’s the second), you also need to work (here comes the third) in a system that is “loosely coupled.”
A loosely coupled design system has few interdependencies between the component parts. They are designed so that each can be adapted without going back and changing the foundation.
It should be pretty clear by now that at Netflix, with our Informed Captain model, we have a loosely coupled system.
This brings us to the fourth and final precondition for leading with context.
Loose coupling works only if there is a clear, shared context between the boss and the team. That alignment of context drives employees to make decisions that support the mission and strategy of the overall organization. This is why the mantra at Netflix is HIGHLY ALIGNED, LOOSELY COUPLED.
Our North Star is building a company that is able to adapt quickly as unforeseen opportunities arise and business conditions change. Of course, the CEO in any organization only provides the first layer of context setting. At Netflix just about every manager, at every level, has to learn how to lead with context on entering the company.
Decision making at every organization I’d worked at before Netflix was structured like a pyramid.
But at Netflix, as we’ve discussed, the informed captain is the decision maker, not the boss. The boss’s job is to set the context that leads the team to make the best decisions for the organization. If we follow this leadership system from the CEO all the way to the informed captain, we see that it works not so much like a pyramid but more like a tree, with the CEO sitting all the way down at the roots and the informed captain up at the top branches making decisions.
In a loosely coupled organization, where talent density is high and innovation is the primary goal, a traditional, control-oriented approach is not the most effective choice.
We’ve looked at over a dozen policies and processes that most companies have but that we don’t have at Netflix. These include: Vacation Policies Decision – Making Approvals Expense Policies Performance Improvement Plans Approval Processes Raise Pools Key Performance Indicators Management by Objective Travel Policies Decision Making by Committee Contract Sign-Offs Salary Bands Pay Grades Pay-Per-Performance Bonuses.
If your goal is to build a more inventive, fast, and flexible organization, develop a culture of freedom and responsibility by establishing the necessary conditions so you can remove these rules and processes too.
Going Global
Bring It All to the World!
So, in 2010, when Netflix began expanding internationally, I thought a lot about whether the organizational culture would also need to adapt to be successful around the world.
Like Google, we would seek to hire for fit, selecting individuals in each country who were attracted to and comfortable with the corporate culture we had spent so long cultivating. And like Schlumberger, we would train our new employees in other countries to understand and work in the Netflix way.
At the same time, we would seek to be humble and flexible, tweaking our culture as we went and learning from each country we moved into.
As we grew our operations in other countries, and our employees became increasingly diverse, it didn’t take long to recognize that some parts of our corporate culture would work well around the world.
The freedom our employees thrive on in the US showed early signs that it would, without question, be successful everywhere.
Some of the other parts of our culture quickly proved less easy to export. One early example was the Keeper Test.
I understand now that to Americans, eating lunch during the work day is just a task to complete. But to a Brazilian, to be left alone eating lunch was shocking.
I guess this is what Netflix means when they say, ‘We are a team, not a family.’
When it comes to delivering criticism, the Netherlands is one of the more direct cultures in the world. Japan is highly indirect. Singapore is one of the most direct of the East Asian countries, but still to the indirect side of a world scale. The US average falls a little left of center. Brazil (with strong regional differences) is just a bit more direct than Singapore.
But learning to foster candor around the world is not a one-way street. When collaborating with less direct cultures, we’ve learned at headquarters to be more vigilant and to try to calibrate our communication so that it feels helpful to the receiver and is not rejected simply because of form.
The overarching lesson we’ve learned is that — no matter where you come from — when it comes to working across cultural differences, talk, talk, talk.
When you are leading a global team, as you Skype with your employees in different cultures, your words will be magnified or minimized based on your listener’s cultural context.
When giving feedback with those from your own culture, use the 4A approach. But when giving feedback around the world, add a 5th A: The 4As are as follows: Aim to assist, Actionable, Appreciate, Accept or decline Plus one makes 5: Adapt — your delivery and your reaction to the culture you’re working with to get the results that you need.
Conclusion
The rules-and-process approach has been the primary way of coordinating group behavior for centuries. But it isn’t the only way, and it isn’t only Netflix using a different method.
The Industrial Revolution has powered most of the world’s successful economies for the past three hundred years. So, it’s only natural that the management paradigms from high-volume, low-error manufacturing have come to dominate business organizational practices.
For those of you who are operating in the creative economy, where innovation, speed, and flexibility are the keys to success, consider throwing out the orchestra and focusing instead on making a different kind of music.
In today’s information age, in many companies and on many teams, the objective is no longer error prevention and replicability. On the contrary, it’s creativity, speed, and agility. In the industrial era, the goal was to minimize variation. But in creative companies today, maximizing variation is more essential.
