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Ideas. Insights. Inspiration.

No Rules Rules

No Rules Rules, the recently released book jointly written by Netflix co-founder and CEO Reed Hastings and Professor Erin Meyer, is an absolutely fascinating read.

I suspect readers will fall into one of two categories.

The first group will consist of people who are comfortable with the status quo when it comes to work. They like the structure of formal hierarchies and the inherent safety net offered from having all big decisions signed-off by upper management. They believe clear policies and corporate guidelines are both helpful and necessary. And they take comfort in annual performance reviews, in merit increases based on their individual performance, and in the knowledge that if business is good and their performance is adequate, their job will be relatively secure.

I'm in the second group.

I think most workplaces are broken, and that we need to understand how innovative, disruptive companies like Netflix achieve superior results by thinking about things differently.

And do they ever think about things differently!

I find the notion of "Freedom and Responsibility" outlined thoroughly in the book, where you have the ability and authority to make huge decisions on your own but are held fully accountable for the subsequent results, completely exhilarating. Most companies want to give you the responsibility but without the freedom... and that doesn't work nearly as well when your goal is rapid innovation.

I love that Netflix looks for "stunning employees" -- people who are absolutely exceptional at what they do -- and then proactively pays them more than those individuals could get anywhere else. Unlike most companies, an employee's compensation at Netflix isn't based on their performance... because performance is expected to be stellar at all times. (At Netflix, they say, "Adequate Performance earns a generous severance package" because they want to always make room for someone who can generate exceptional performance.) Instead, compensation is based on the top-end of what an individual's talent is worth in the market. To that effect, Netflix encourages employees to speak with recruiters and explore other job opportunities in order to know their true value... so that their value is accurately reflected in their compensation at Netflix.

I love the company's approach to their policies: hire exceptional people, trust that they'll do the right thing for the business, and deal with those who make bad decisions on a case-by case basis rather than burdening everyone with cumbersome rules. That's how the company can offer employees unlimited vacation (taken at the employees discretion and without requiring manager approval) and have an expense policy that consists only of five words: "Act in Netflix's best interests".

Not everybody would be comfortable with Netflix's approach. And not every company would be able to follow their lead even if they wanted to do so.

But Netflix's success over the past twenty years has been remarkable.

And taking the time to understand how high-performers are able to do what they do is time well spent.

- dp

P.S. No Rules Rules goes into far more detail than I can cover in a single newsletter post, but if you're looking for a really interesting read, I highly recommend it.

P.S.S. And while we're on the subject of Netflix, co-founder and first-CEO Marc Randolph also published an incredible book last year called, "That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea", and the Kindle version is on sale right now for just $2.99! It was one of my very favourite books of 2019 -- I own a hardcover, e-copy, and Audible version of it! -- and I think it's a must-read for any entrepreneur or anybody interested in how something like Netflix goes from idea to everywhere.


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