Netflix CEO Reed Hastings is speaking out about the company culture that he has worked to cultivate, and he says there are six tactics that he implements in order to elevate the streaming service’s performance.
Hastings had a conversation Reid Hoffman, the LinkedIn co-founder and host of Masters of Scale, in which he opened up about the workplace dynamic he prefers. The Netflix company culture is laid out in an infamous document, “Netflix Culture: Freedom & Responsibility,” and has become quite legendary in business circles.
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“It may well be the most important document ever to come out of the Valley,” Sheryl Sandberg, Facebook’s COO said.
Hastings dished on the “Freedom & Responsibility” document saying: “Our general model of freedom and responsibility, having amazing talent density, giving people great freedom and room to make mistakes has been very successful for technology, marketing, and original content.”
In addition to the document, Reed Hastings listed six of the effective tools and tactics he uses to cultivate a one-of-a-kind company culture.
1. No “Shiny-Object” Syndrome
Hastings made sure that his company did everything they could to avoid the “shiny-object” syndrome, which is a common occurrence with entrepreneurs who get tired of one problem and move onto a new one.
“When Netflix had a big battle with Blockbuster — this is 10 years ago, 2005-2007 — we did many things to compete with them,” he says. “We added online ads, banner ads, on the Netflix website. We sold used DVDs like eBay. We bought some films at Sundance, and put them on DVDs.”
Instead of attempting to tackle a slew of different issues, Netflix focused simply on its core product, which was DVD rentals at the time.
“When we processed the lessons learned from how we beat Blockbuster — we realized how important it was to do excellence and focus,” said Hastings.
2. Everyone Has To Buy Into To The Culture
Hastings doesn’t solely take it upon himself to implement the company culture at Netflix. He says that the business will be the most successful when all employees take interest in bettering the company.
“I believe there are many good company cultures and many bad company cultures, but a winning company culture emerges when every employee feels they personally own the culture,” Hoffman in says in the Masters of Scale podcast.
Hastings agreed with Hoffman’s statement and responded by saying: “We try to constantly encourage employees to figure out how to improve the culture, not how to preserve it. So everyone is trying to add value by, ‘Here’s a place we can improve in what we do.’”
In doing so, the employees breathe life into the company culture and take ownership of the success of the brand.
3. No Family In Team
While many companies like to view their employees as a family, Hastings does not.
“You’ll never hear him refer to his colleagues as a family,” Hoffman says. “It’s a term that visibly grates at him.”
The traits that typically make a family strong – loyalty and continuous support – aren’t the most effective attributes in a company setting, according to Hastings.
“Lifetime employment, unconditional support no matter what the performance is – I don’t see how that makes sense for organizational excellence and contribution to society,” Hastings says.
The Netflix CEO prefers a sports team dynamic rather than a family approach.
He continued by saying: “In team sports that really succeed, there often is a lot of warmth between the players. It’s emphasizing those aspects and demonstrating that when people come in, everyone tries to help them.”
4. Trust Employees With Their Own Time Management
Hastings doesn’t buy into the standard eight-hour Monday through Friday workdays. He says it doesn’t mesh with culture.
“We don’t have a nine-to-five policy,” he said. “People just work as they see appropriate.”
Netflix also does not have a vacation policy. Employees are allowed to take off when they want and for however long they want.
“I try to set a good role model by going on a bunch of vacations, because I find it very stimulating,” Hastings said.
Before Netflix, Hastings was at Pure Software, where he never took a vacation.
“It was always, ‘How much harder can I work?’” he says. “And now I realize it’s about living a rich and varied life, whether that helps specifically with the storytelling, or whether it really is just relaxing, and learning, and hanging out with friends.”
Because of the laid-back time management policy, Hastings spent a year in Rome as the CEO.
“I did two weeks there, two weeks here, back and forth,” he said while speaking of the 2005 experience. “It was a challenging year in some ways, but it also made us more disciplined in terms of meeting schedule.”
5. Honesty Is The Best Policy
One way in which Hastings manages to get his team to be brutally honest with one another is by having “start, stop, continue” dinners. During the meal, every person will take a turn giving feedback to their colleagues. Everyone tells the others what they think they should begin, quit, and carry on.
“Even though you could say that during the normal workday, many times there’s not really that much license to,” says Hastings, adding, “It’s very helpful.”
Another tactic Netflix uses is the “keeper test.”
“You can always ask your manager, ‘Hey, if I were leaving, how hard would you work to change my mind to stay?’” he says.
This may seem like a cold way to go about learning of your job security, but it will eliminate any surprises in the future. It also can inspire people to be at the top of their game.
6. One-On-One Meetings
Reed Hastings modeled the management tricks of the famous CEO of General Electric Jack Welch in order to understand his employees. Hastings has one-on-one meetings with them to get to know them on a more personal level.
“I have lots of one-on-ones with top 500 people throughout the company, so many levels,” he says. “I try to do is be clear with them that I’m not trying to be their manager. I’m trying to learn about what’s going on, and then help them also get a sense of what’s going on with the company, and I find having that extensive network is very helpful.”
Hastings has an admiration for the way Jack Welch was able to meet with his top 1,000 people.
“[Welch] knew everything about them, and he had a direct connection with them — that’s what I aspire to be someday,” Hastings said.
