This is my review of No Rules Rules. This is a book about Netflix and the culture they’ve built over there. The main idea is that their unique culture has allowed them to achieve their extraordinary results. And that this could work for your company too. Indeed, among the FAANGM companies, Netflix the most focused, most customer driven, and arguably the one impacting the cultural zeitgeist the most these days. It’s also the smallest of the bunch, which means it punches way above it’s weight class.
If it seems like the first paragraph comes off as gushing, it’s because it is. I really liked this book. It’s like a blueprint on how to build high-performance organisations. But I actually arrived at it via a “reading workshop” at work. My initial view was that this was gonna be a feel-good-y book full of truisms or impossible to replicate outside of Netflix advice. Far from the truth. The book is very grounded and rather incremental. While some of the proposals are hard to apply, they’re by no means impossible. And a little goes a long way here.
The book has ten chapters, organised into three sections. They track the historical development of this “culture” at Netflix and the authors offer it as a blueprint for others to follow. I liked how across the chapters there were references to Reed Hasting’s previous company and the mistakes they did there. As well as the highlights of how even at Netflix things didn’t start out the way they are right now.
The first chapter is the bedrock of the whole book. The core idea is that in order to have a great company, you have to have a group of great people working there. Companies with higher talent density will do better than those with lower talent density. So it’s important to be very proactive in building this kind of workspace. The other chapters are really either ways of increasing the talent density, or consequences of having such a great talent density.
The second chapter is all about creating a culture with loads of continuous feedback. Especially loads of constructive feedback. Performance is part individual, part context, and part luck. Luck is what it is, and the individuals you’re working with would be great according to the previous chapter. But you also need them in the right context. Via continuous feedback you’re moulding their innate abilities to the context of the company.
The third chapter is about the ability to remove simple rules - vacation policies, travel budgets, and expense reports, etc. All of these are signals of a low-trust command-and-control culture. What you want to do is to get a high-trust values based culture, where you can rely on folks doing what’s smart locally, rather than offloading their decision making to a rulebook.
The fourth chapter is about boosting the talent density by making sure you’re paying top of market for each employee. This basically implies the counterintuitive practice of encouraging folks to go out and interview and speak with other companies and figure out what the market is for their particular talents. And then Netflix would match that.
The fifth chapter is about increasing the feedback and transparency in the company by striving to make as much of the internal data as possible public. Including things like wall street report numbers that other companies keep very close to their chest. With the kind of folks Netflix has, this isn’t apparently an issue.
The sixth chapter is about pushing down decisions to the level where there’s the maximum information for them to be done. Which usually means that major decisions such as buying the rights to a new movie are made by relatively junior employees. The idea is that they have the most information. The organisation needs to provide them with the appropriate context, and challenge them constructively. But ultimately, they are “the ones”.
The seventh chapter is about continuously improving the talent density. Here the infamous Netflix “Keeper Test” is presented. In short, as a manager you should always evaluate whether you’d fight tooth and nail for one of your folks if they decided to leave. If ever the answer is “no” then you should rather let them go. Nice severance and all. But the idea is that you don’t want folks you’re not clear on their contribution and great fit for the role. The way this is framed is via the team metaphor. Netflix is not a family, or a tribe or any such business metaphor. Rather it is a high performing sports team and everyone needs to be in top shape to make the team.
The eight chapter is a set of tools to foster feedback and candor in feedback.
The night chapter is a reiteration on chapter six. Most controls are eliminated and you rather ask people to operate according to principles and informed by the context the organisation provides. There’s a big list of things Netflix doesn’t track except in aggregate trends.
The tenth chapter is an analysis of how the culture of Netflix applies across the world. Much of the material here was based on Erin Meyer’s (the other author) books “The Culture Map”. Netflix leadership seems to have taken the book to heart and did a lot of internal work based off of it. Enough that I’ve fast-tracked the book for my own reading.
There you go. There’s a lot of good stuff in this book. Definitely give it a chance.