No Rules Rules, NETFLIX and the Culture of Reinvention – a book review

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How should a modern company run?  We are told that a modern company needs to be customer centric, employee empowering, deliver broad stakeholder returns and with agility to move from one opportunity to the next.  This book provides a provocative answer to these questions direct from the CEO. Reed Hastings and Erin Meyer have actually written two books in one.  One book is “NO RULES” and the other is Netflix and the culture of reinvention.  The combination is powerful as Reed shares experiences and stories and Erin puts them in a broader context.  This keeps the book from becoming preachy. This book is recommended, but not for the reasons one might think. Read this book as a leader, because it is possible to create a level of these results within the scope of your team.  This is a book for leaders who want to understand how they can attract and create high performance by adopting these ideas where possible. Reading this book from an organizational transformation point of view, frankly, is futile and hopeless for one simple reason.  Your company is not a high talent density company.  That is the essential, foundational and core reason for NETFLIX’s success – they have, hire, keep and constantly upgrade their talent. Becoming a high talent dense company requires living the following actions that are the foundation of the book: You build up talent tensity by creating a workforce of high performers You introduce candor by encouraging loads of feedback You remove controls such as vacation, travel and expense policies You strengthen talent density by paying top of the market, always You increase candor by emphasizing organizational transparency You release more controls such as decision-making approvals You max-up talent density by implementing the Keeper Test Max-up Candor by creating circles of feedback Eliminate most controls by leading with context and note control These seem like normal empowerment related topics.  Beware the book talks about how NETFIX embodies them to a degree that makes them all but impossible for the vast majority of companies – like 98%.  Many will read this book and pay lip service to these principles, some CHRO’s will stand up and say that they are a talent dense company, but these are aspirational at best and insincere at the other end of spectrum. High-density talent is the core of NETFLIX and its ability to execute these strategies effectively.  They are good, not because they have good people, they are NETFLIX because they work hard to always have the BEST PEOPLE.  There is no average at NETFLIX, all are way above average when they are there and when they fall back to average – “adequate performance gets a generous severance package.” The selected quotes from the book demonstrate the centrality of high talent density to the company and anyone seeking to adopt these ideas. “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.” Page 7. “We’d found a way to give our high performers a little more control over their lives, and that control made everybody feel a little freer: because of our high-talent density, our employees were already conscientious and responsible.” Page 54. “Once you have a workforce made up of nearly exclusively of high performers, you can count on people to behave responsibly.” Page 69. “Dispersed decision-making can only work with high talent density and unusual amounts of organizational transparency.  Without these elements, the entire premise backfires.” P. 131. “One of the reasons this (high density) is so difficult is many companies is because business leaders are continually telling their employees, ‘we are a family.’  But a high-talent-density work environment is not a family.” Page 166. “At Netflix, I want each manager to run her department like the best professional teams, working to create strong feelings of commitment, cohesion and camaraderie, while continually making tough decision to ensure the best player is manning each post.” Page 169. “Leading with context won’t work unless you have the right conditions in place.  And the first prerequisite is high talent density.” Page 201. Overall the book is well worth your time.  It is entertaining, eminently readable and enlightening.  It contains a number of ideas that will become organizational and leadership buzzwords in the future. Just read it with the caveat that very few companies have the capacity or true desire to put these ideas into practice at the organizational level.

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