What freedom in a humanized culture looks like [case study]

Jamie posted about this last week, and I think we’re both just at the beginning of a whole series of possible posts about the human attributes we see in this Netflix slide deck about their corporate culture. In his post, Jamie talked specifically about part 1 of the deck, how they handle company values – as the values we want in our fellow employees, but even more than that, as tangible values that can be measured in performance and peer reviews.

I’d like to ask Jamie to address part 2 – High performance – and how Netflix defines that. But in this post, I’m going to take a look at  part 3 here – FREEDOM AND RESPONSIBILITY.

Look at the rest of the slides around this section – slides 40 – 77. A quick summary that doesn’t do this justice (please look at the slides!):

– a responsible employee is defined as self-motivating, self-disciplined, self-improving.

– as companies grow they tend to curtail freedom, instituting more and more processes as the company becomes more complex.  More complexity also “shrinks talent density” as people are hired to fulfill very specific roles (you can’t run a company informally, like you used to when it was small – what Les McKeown calls the “whitewater” stage)

– process-driven businesses are run like machines (and we know what Jamie and I think of those!) – optimized for performance and efficiency, but unable to be agile and plagued with engagement problems

– the market shifts, and the company can’t adapt – it “generally grinds painfully into irrelevance” (love that phrase! Just like a machine rusting and groaning to a halt!)

– So what to do? Stay creative and small? Avoid rules and suffer chaos? or the status quo, where creativity and agility is crippled?

– Netflix’s solution – avoid chaos by giving responsible people more freedom.  TRUST your best employees to do what they are capable of.

– How to do this? Keep hiring great people. Pay them well and be demanding about your high performance culture. Get rid of the dead weight.

– Minimize complexity growth by avoiding product creep – program creep – feature creep. (Sound familiar?)

– “With the right people, instead of a culture of process adherence, we have a culture of creativity  and self-discipline, freedom and responsibility”

– So… is all process bad? No. There are necessary rules – to prevent crisis, and moral, ethical, legal rules.

– fix problems quickly – prevention is NOT cheaper than fixing mistakes in  creative environments

– good process helps talented people do more, bad process restricts. Eliminate rules when you can

– Netflix example – you don’t need vacation policies if you trust your people.  (We all know Americans don’t even take the vacation days they should). There’s no clothing policy, but no-one comes to work naked. Leaders show by example – take vacations and come back energized.

– Netflix’s policy for expensing, entertainment, gifts, and travel: “Act in Netflix’s Best Interest”. That’s it. Check out what that means in practice on slide 75.

– Summary – as we grow, minimize rules. Inhibit chaos with high performing people. Flexibility is more important than efficiency in the long term.

All of this speaks for itself, I think.  These are the kinds of thing we talk about in Humanize when we’re explaining the concept of OWNERSHIP.

“Ownership means you don’t have an excuse for not taking action. For an open organization to work, the entire system needs to be primed for action. Anything less, and the system will not perform to its full capacity. In too many organizations, capacity is wasted because the individuals are not given what they need to truly take ownership.”

For employees to have ownership, they need to have full information about the strategic goals of the organization. They need to have the ability to make decisions and be responsible for those decisions. They need to be trusted.

I’ll look at the context and control section next week.