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What Netflix Can Teach Us About Culture

Yes, Netflix: The once small startup now mega corporation.

Netflix was a small company competing against the once behemoth Blockbuster for a small share of the movie rental business. The only difference between Blockbuster and Netflix is that Netflix saw themselves not as a movie rental business but an entertainment company with the long term vision of producing it’s own content similar to that of HBO. As Netflix saw success and began to grow, they recognized the importance of establishing a strong work culture that can be scaled.

Here’s the difference. Instead of getting an English major to write down things like respect, commitment, teamwork, and excellence, they decided to take a deeper dive into what innate traits were admired and what way of thinking and action lead to further growth in the company.

For instance, in the lobby of Enron were the four words displayed: Inegrity, Communication, Respect, Excellence

The truth is Enron’s true company values were success at all costs, creative thinking with those who are willing to push the boundaries. As you may know, Enron failed through manipulation and never truly owned their company values.

Netflix wanted to do better so they set out on a course to truly define what they sought in their employees. They came up with these 7 Aspects of their culture:

1. Values are what we value

Actual company values are the behaviors and skills that are valued in fellow employees. Netflix went on to define 9 particular skills and behaviors they value (who they hire and promote based on this): Judgement, Communication, Impact, Curiosity, Innovation, Courage, Passion, Honesty, Selflessness

2. High Performance

Netflix goes on to define a Great Workplace as Stunning Colleagues not free espresso, lush benefits, sushi lunches and amazing parties. They define themselves as a team not a family. Netflix leaders hire, develop and cut smartly, so they have stars in every position.

3. Freedom & Responsibility

Netflix wants to increase freedom as it goes and not limit it. This may be contrary to normal standards that will often impose processes and procedures to help with growing complexities that arise from larger organizations. The reason this method is often used is that there is a gap between talent level and the complexity of what is trying to be accomplished. Thus, rules are set in place to help avoid error and streamline the process. However, this may stifle creativity and make the company slower to adapt to changes in the market. Instead of a culture of process adherence, Netflix wants a culture of creativity and self discipline, freedom and responsibility where employees are empowered to make decisions.

4. Context, not Control

“If you want to build a ship, don’t drum up the people to gather wood, divide the work, and give orders. Instead, teach them to yearn for the vast and endless sea.” Now I know you may be thinking, at some point I need to delegate certain tasks with clear instructions and you would be right. However, if no context of why we are building the ship and what we are looking to accomplish, you will have less buy in and your employees will be working with blinders instead of identifying additional ways to help improve and accomplish the overall goal.

5. Highly Aligned, Loosely Coupled

Companies can often be grouped into 3 categories: Tightly Coupled Monolith, Independent Silos or Highly Aligned, Loosely Coupled Company. Tightly Coupled Monolith companies have clearly defined goals with multiple departments operating independent of each other but tied together through multiple buy in meetings. All groups are given equal precedence and priority in satisfying the company initiatives. Independent Silos each execute on their own objectives but with little coordination across departments. Highly aligned, loosely coupled requires management to be transparent and articulate and perceptive. Team interactions are focused on strategy and goals rather than tactics. Leaders reach our proactively for ad-hoc coordination and perspective as appropriate. There is also occasional post-mortems on tactics necessary to increase alignment.

6. Pay Top of Market

One outstanding employee gets more done and costs less than two adequate employees. Netflix takes paying top of market one step further. Instead of making comparisons of the market at time of hiring, they continue this at each evaluation making sure that the employee is fairly compensated year over year.

7. Promotions & Development

Netflix seeks to retain and grow top talent. By tying all other 6 values together, they feel they can develop and promote their employees by paying top of market, providing freedom and flexibility, giving guidance and context and surrounding them with stunning colleagues.

At the end of the day, Netflix knows they are not right for everyone. But by clearly defining what is important, they are able to bring on the right talent for their organization and grow consistently without costly turnover or change.

If you want to read more, Netflix posted their culture slidedeck on LinkedIn that has been viewed over 17 Million times!! Check it out for yourself…