A Cultural Target State: Netflix
I recently came across the Netflix Culture Slides. I highly recommend you give it a look if you are interested in organizational culture and change.
As a member of a SaaS startup, OnShift, the engineering culture is very important within the IT department. We even go as far as to brag about it.
Yet, thought-leading organizations like Spotify and Netflix pave the way in demonstrating how good fundamentals and common sense can scale.
Here is a cliff notes version of the 124 slides. (Italics are my own personal thoughts.)
ASPECTS OF CULTURE:
These high bullet points are the overarching themes contained within the slides.
- Values are what we Value
- High Performance
- Freedom & Responsibility
- Context, not Control
- Highly Aligned, Loosely Coupled
- Pay Top of Market
- Promotions & Development
VALUES
I have personally experienced negative effects of 'nice-sounding values' in organizations...
"The actual company values, as opposed to nice-sounding values, are shown by who gets rewarded, promoted, or let go"
Judgement
- wise decisions, identify root cause, think strategically
Communication
- listen well, concise and articulate, maintain calm poise
Impact
- accomplish amazing amounts of important work
Curiosity
- learn rapidly and eagerly, seek to understand, broadly knowledgeable
Innovation
- practical solutions, create new ideas, minimizing complexity and simplify
Courage
- say what you think, make tough decisions, smart risks
Passion
- inspire others, care intensely, celebrate wins, tenacious
Honesty
- candor and directness, non‐political, quick to admit mistakes
Selflessness
- seek what is best, ego‐less, time to help, share information openly
HIGH PERFORMANCE
The Netflix culture drives individuals to continuously improve.
Keeper Test
- "Which of my people, if they told me they were leaving, for a similar job at a peer company, would I fight hard to keep at Netflix?"
- The others should get a generous severance now
Candor is not just a leader's responsibility, and you should periodically ask your manager: "If I told you I were leaving, how hard would you work to change my mind?"
"Unlike many companies, we practice: adequate performance gets a generous severance package."
Hard Work - Not Relevant
- We don't measure people by how many hours they work or how much they are in the office
- We do care about accomplishing great work
- Sustained B-level performance, despite "A for effort", generates a generous severance package, with respect
- Sustained A-level performance, despite minimal effort, is rewarded with more responsibility and great pay
Procedural work, the best are 2x better than average; Creative/inventive work, the best are 10x better than average.
FREEDOM & RESPONSIBILITY
How can a company not fully trust an individual they pay around 100k a year to keep?
"Responsible People THRIVE on Freedom, and are WORTHY of Freedom."
Freedom is attractive.
Avoid Chaos as you grow with Ever More High Performance People, not with Rules.
Avoid Rule Creep:
- "Bad" processes tend to creep in - preventing errors just sounds so good.
Vacation policy (Since 2004):
- "We don't track hours worked per day or per week, so why are we tracking days of vacation per year?"
Expensing, Entertainment, Gifts & Travel policy (Since 2002):
- "Act in Netflix's Best Interest."
"There is also no clothing policy at Netflix, but no one comes to work naked."
CONTEXT, NOT CONTROL
Dream big and share your vision.
"If you want to build a ship, don't drum up the people to gather wood, divide the work, and give orders. Instead, teach them to yearn for the vast and endless sea."
Embrace: Strategy, Metrics, Assumptions, Objectives, Clearly-defined roles, Knowledge of the stakes, Transparency around decision-making.
Avoid: Top-down decision-making, Management approval, Committees, Planning and process valued more than results.
Control can be important:
- during an emergency
- someone is still learning the area
- misaligned person in role
HIGHLY ALIGNED, LOOSELY COUPLED
Truly autonomous aligned teams are an organizational force to be reckoned with.
Highly Aligned: Strategy and goals are clear, specific, broadly understood.
Team interactions focused on strategy not tactics.
Loosely Coupled: Minimal cross-functional meetings (outside of alignment).
TRUST between groups
REQUIRES: "high performance people and good context."
PAY TOP OF MARKET
The below statements should be considered by organizations of all sizes. I have moved several times in my career because of salary growth rate in "traditional" organizations.
"One outstanding employee gets more done and costs less than two adequate employees."
Three Tests (Compensation):
- What could person get elsewhere?
- What would we pay for replacement?
- What would we pay to keep that person?
- If they had a bigger offer elsewhere
GOAL: Keep each employee at top of market FOR THAT PERSON:
- Pay them more than anyone else likely would
- Pay them as much as a replacement would cost
- Pay them as much as we would pay to keep them if they had a higher offer from elsewhere
"At many firms, when employees are hired, market compensation applies, BUT at comp review time, it no longer applies!" At Netflix, market comp always applies:
Top market comp is re-established each year for employees.
At annual comp review, the manager has to answer the Three Tests for the personal market for each of their employees.
"Compensation Not Dependent on Netflix Success" Sports teams with losing records still pay talent the market rate, to get back to winning.
"It's a healthy idea, not a traitorous one, to understand what other firms would pay you, by interviewing and talking to peers at other companies."
PROMOTIONS & DEVELOPMENT
IF someone is worthy, award them right away.
"Should celebrate someone leaving Netflix for a bigger job that we didn't have available to offer them."
Three Necessary Conditions for Promotion:
- Job has to be big enough
- Person has to be a superstar in current role
- Person is an extraordinary role model of our culture and values
- Three tests still apply
"Mediocre colleagues or unchallenging work is what kills the progress of a person's skills."
Not Career Development, instead Self-Improvement High performance people are generally self-improving through experience, observation, introspection, reading, and discussion.
People should not rely on a corporation for "planning" their careers.
"Economic Security is based on your Skills and Reputation."
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