Netflix’s No Rules is a story about a modern organization that is made up of talented people and driven by talented people. The story is based on the book No Rules Rules – Netflix and the culture of reinvention.
In an era where video rentals are almost a classic memory and DVDs are the stuff of fly repellent in restaurants, Netflix has evolved into an app that lets you watch movies, shows, series and more in more than 190 countries. In 2018, Netflix generated $13 billion in revenue. What has made it so successful?
Let’s find the answer with this book, Netflix’s Rules Without Rules, which will take everyone into the world of Netflix’s creative work culture, which completely breaks the rules of business work in this era. The philosophy they believe in and the organizational culture they use are the ingredients that have created the success they have today, and are the reason why their organization has only talented people.
“Making money from the stupidity of customers”
Blockbuster was the world’s largest movie rental company in the 1990s. The company made its money primarily from renting movies and charging small fees when customers failed to return tapes. Reed Hastings wasn’t comfortable with the business model at the time, so he started thinking about how to create a new business model that was different from the old one.
“Always be open to new avenues in your business and career.”
Hastings and his partner Marc Randolph created a website where customers could rent movies and mail them to them. However, the business didn’t go as well as they had hoped, so they switched from a website-based rental model to a monthly subscription model. Their company grew rapidly during that time and became a leader in the film industry.
“In an organization, there will always be two types of quality employees.”
In an organization, there are two types of quality employees: the first type is employees whose abilities are appropriate for the job they do; the second type is employees whose abilities are outstanding. Employees whose abilities are appropriate will complete the job, but employees whose abilities are outstanding will look for alternative jobs that will allow them to further develop their abilities. An organization still needs employees who can complete the job, but if they have the ability to complete the job, the organization’s outstandingness will decrease.
“Maintain your organization’s potential by hiring and retaining top talent.”
Hastings learned this principle at one point in his career. From his experience, the potential of people really matters. He said that when his company had 120 employees, he had to let go of a third of the employees who were just “good enough” to grow Netflix. It’s amazing that the 80 employees who were left with the company were doing a better job than when we had 120. This is an example of Netflix’s philosophy and practices that they still use as their core principles in managing people today, even though they now have over 7,000 employees.
“You can’t ask for everything to turn out well just because you’re a good person.”
Working with kind and compassionate people will create more quality work. Therefore, executives should create a business that allows employees to be in a good environment and have a positive influence on employees so that they can reach their full potential. However, no matter how good you are or what kind of person you are, if employees do not have the skills and qualifications that meet your standards, do not hesitate to find better or more standard options to replace them. Because kindness is not something that can be accumulated and then you can win a lottery and ask for success.
“Outstanding capabilities can only be achieved when employees are given enough freedom to work and have enough belief.”
Startups can attract more talent than large companies when the salary is the same because startups are small companies with highly specialized skills and less regulation (meaning there are not as many rules and regulations that are imposed on employees as large corporations). For example, in a startup, employees have the freedom to use company funds in case of emergency first, and then write a report to clear the expenses later. In this case, if the same employee worked at a large company, they could be investigated for their honesty.
“Give employees freedom in their work, but also set up a system of responsibility that employees understand.”
Netflix allows its employees the freedom to decide on the use of company funds in matters related to the company’s business and operations. Employees will have the freedom to spend money related to the business without having to get permission from their supervisors. This is a high level of freedom that we cannot imagine working in other places. They expect employees to perform their duties for the greatest benefit of the company. This means that employees may have big problems if they have unwanted expenses or expenses that do not benefit the company at all. If you ask about cheating, of course, there is a chance that it can happen. But with a tight structure and operation, this policy makes the company profit more than a loss.
“A Rockstar is a creative employee who can produce a dozen or more pieces of work.”
Some employees have a higher market value than their colleagues, despite having the same experience or seniority. Creativity is in high demand in the job market. Rockstar employees are employees whose value is multiplied by others because they have clear and distinct potential. They can help enhance the organization’s potential. Sometimes, companies or organizations may have to lay off some employees in order to be able to pay Rockstar employees a salary equal to their value. And of course, companies or organizations will receive commensurate or even better compensation from these Rockstar employees.
“Giving bonuses to employees does not guarantee that you will produce quality work.”
While giving away big bonuses is a strategy to motivate employees to do great work, Netflix doesn’t think that way. Tiing bonuses to performance metrics sets the wrong target for employees, causing them to focus only on chasing bonuses. It removes flexibility from work and also limits creativity. Instead, paying employees fairly and rewarding them for hard work will result in higher-quality, more creative work.
“Family business is an idea that leads to business failure.”
Businesses are often driven and passed on by family members who are related by blood, are closely related or have ties to each other, forcing them to work together in the organization without considering their efficiency or ability to work. Countless times, employees may have to endure having to listen to explanations about the family succession culture, which will definitely lead the business to failure.
“An organization is like a team of athletes.”
In fact, an organization is like a team of athletes, all with the same goal of winning. Every coach is always interested in winning. He will not think twice when he wants to replace a team member with a new one with “outstanding” ability. There is no reason to keep an employee when he has proven that he is not a good fit for the position. This is the way that businesses in this era should use to drive the organization forward.
Conclusion
Netflix’s corporate philosophy and culture are like footprints on snowy ground, their footprints becoming more visible with the weight of their success.
Tony Robbins, an American motivational speaker, often says, “Success is a clue.” You can learn from following in their footsteps by adding some creativity, and you will achieve the same results as them, or even better. Their journey is a path that opens up opportunities for us to learn from.
If any organization or company wants to be successful, the management must give importance to the concentration of the employees’ abilities, the influence of the environment in the workplace, dare to give them freedom, eliminate unnecessary systems, rules, and controls. The management must show that they believe in the responsibility of every employee, are ready to pay the full amount to the Rockstar employees who help push the business to the top. They must know how to find and keep them well. And another important thing is that giving bonuses is not the best way to retain and support them. And the family business idea will easily cause the organization to fail.
“Every job is temporary, so we should always be open to exploring new avenues in our business and career.”
