No Rules Rules: Netflix and the culture of reinvention, by Reed Hastings and Erin Meyer – book review

No Rules Rules is meant to sound like a paradox, and it is. I come to Reed Hastings and Erin Meyer’s book about the Netflix culture with some suspicion. With a successful record of disruption and creativity, Netflix is hardly WeWork, but how different can it be, really? No Rules Rules turns out to be an extremely accessible and thought-provoking read and I recommend it to anyone thinking about corporate culture, building a team or leading change. My own organisation is as unNetflix as you can get, but there is plenty of material in this book to engage with even if it isn’t directly transferable.

No Rules Rules cover

The main paradox is that for an organisation with no rules, Netflix seems to operate under plenty of rules, both tacit and spelled out. They just aren’t the same rules as in a more traditional context. One of the most famous rules concerns holidays. But instead of a simple document outlining what is expected, managers have to be more hands-on ‘speaking to the team about what behaviours fall within the realm of the acceptable and appropriate’. Which sounds a bit like rules, but set semi-informally within the team. Expenses don’t need to be approved, but if there’s ‘monkey business’ then the employee is immediately and noisily fired. On the other hand, as Hastings writes, ‘When employees realise their managers are keeping an eye on expenses, they aren’t likely to test the limits much’. Which sounds like most companies. 

The general adage, ‘Act in Netflix’s best interest’, is simple, but could perhaps be devastatingly effective once it’s combined with two other factors. The first is that the company is incredibly careful to provide everyone with the information and context they need to make decent decisions. The second is that employees have a relationship with Netflix that is more like that of a sports team squad than a family. Now sports and family metaphors are over-used in business discourse, but the sports team one is easy to understand and a little bit chilling: Netflix is looking to build the strongest squad and if there are better players available, employees will be put on the transfer list – by which we mean they’ll get a pay-off which is meant to be ‘generous’ by American standards but which European eyes will find quite the opposite. The idea is to build up what Netflix call ‘talent density’ which means trying to find the best people. I tend to feel that people are most creative and do their best work in a place where they feel secure and trust is maximised. Netflix doesn’t offer the first – though some of the Netflix team find the sports analogy motivating – but through its maxim ‘freedom with responsibility’ the company offers trust on turbo. The effect seems to go some way to solving the classic principal/agent problem. Conflicts of interest are possibly reduced and the idea of being exploited is reduced for the employee, especially since Netflix makes a big thing about paying top whack for its stars.

I read this book just after watching The One, a stylish but empty Netflix thriller. There is a scene in No Rules Rules in which Adam asks his boss Ted for advice about whether to buy a particular documentary for Netflix. Adam really wants to buy it but there’s a bidding war on. As Adam describes it, ‘Ted looked me square in the eye and said, “Well, is it ‘THE ONE’?”…That made me nervous. It was my ONE. But was it his ONE?’ Ted repeats the question and then concludes ‘If it’s THE ONE, get the movie.’ You can see how The One made it through. But though the scene made me laugh and I’ve made Ted sound like an idiot, the quality of the anecdotes provided both by Hastings and by Netflix employees to Meyer, makes this a particularly worthwhile book. If you stop reading, it’s probably to reflect on what you’ve just read than because you’ve drifted away.

Does Netflix have a secret sauce? Well, maybe, but the whole point is that they are still working on the recipe. Their development of rules is iterative. International culture is something they are still having to work on. In a way, I find that quite refreshing. Netflix obviously think very deeply about their internal culture and are open to change. That is easy to say but hard to do, but it is that, as opposed to rules about rules that aren’t rules but are really, which I will take back to my organisation when we get back to work.

Thanks to Random House UK for the review copy

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