Companies around the world have triggered a trend of learning Netflix culture. As far as I know, at least in China, many start-up companies have clearly proposed to learn Netflix culture.
This time, Netflix founder and CEO Reed Hastings personally wrote a book about Netflix’s culture. It’s called "Economy". The English book is called No Rules Rules, which is directly translated as "No Rules." Rules of rules". After you understand the core of web culture, I believe you will immediately understand the meaning behind the title of this book.
Why do everyone favor Netflix culture? I think: this kind of culture has no nonsense, no vain things, uses the simplest language to point directly to the core of management, and it is simple and effective to implement. For example, only recruit adults, communicate frankly, performance first, etc. The building of this kind of culture does not require too much investment, everyone can learn it. Once the landing is successful, the economic returns it brings are amazing.
Netflix's own success has also greatly contributed to the endorsement of this culture:
2020 is the 18th year of Netflix’s listing. Its stock price has risen from US$1 to more than US$480 today, a nearly 500-fold increase, while the Nasdaq Index in the same period rose only 3-4 times. .
Not only did Netflix’s stock price rise amazingly, it also made excellent products and content. This company has won more than 300 Emmy Awards and multiple Academy Awards in the past few years. It has received more nominations for the Golden Globe Awards than any network television media company.
In the past ten years, Netflix has successfully achieved three major evolutions: 1) from a DVD mailing service to an Internet media service; 2) from providing programs produced by others to being able to create original programs; 3) from a company in the United States The company evolved into a truly global company.
Why is Netflix able to achieve such impressive results? Its founder and CEO Hastings attributed the company's success to a unique corporate culture on various occasions.
Hastings summed it up in one sentence: If Netflix is different, it is that it does not adhere to rules.
Making rules is the most common routine in business management. Hastings himself did the same for the first company he ever started: there were not so many rules and regulations at the beginning, but as the management problems accumulated, the company formulated one after another. These systems ultimately limit the initiative and creativity of employees. Finally, when the market changes, employees can no longer actively respond to such external changes, and the company was eventually sold to competitors.
Therefore, Hastings was determined not to rely on processes and systems to restrain employees at the beginning of the second startup Netflix.
Everyone knows the importance of processes and systems in management. Once these things are abandoned, how can the company ensure the orderly progress of daily work? The answer given by Netflix is mainly three points:
First, talent density. The original intention of the process and system is for employees who want to be lazy. The truly outstanding talents have a high degree of self-drive, and they do not need any external force to drive themselves. So how to ensure that without so many processes and systems, the work will still operate normally? It's very simple, only recruit the best people and increase the density of talents.
Second, communicate frankly. When good people get together, they can learn a lot from each other. However, if the communication is not frank, it will restrict them from giving opinions that can improve and grow. Conversely, once all communication is straightforward and frank, it is easier to reduce the cost of communication, and it is easier for everyone to see helping each other grow as their responsibility.
Third, reduce control. Hastings urged the thinning of the employee handbook so that all relevant regulations such as travel, expenditures, and vacations can be eliminated. Then, as the density of talents increases and feedback becomes more frequent and frank, you can cancel the approval process for the entire organization.
Increase talent density
How did Netflix realize the importance of talent density? It's also accidental. In 2001, the Internet bubble burst, Netflix's business was severely affected, and it was no exception forced to lay off employees. Although every employee was excellent at the time, the company still had to select 40 people from 120 who were not so good and cut them off.
Hastings was uneasy after the layoffs, and he worried that the remaining employees would be negatively motivated by the layoffs. However, to his surprise, the two-thirds of the people who remained were more enthusiastic and motivated to work, and their work efficiency was greatly improved.
From this incident, Hastings realized that talent density is the most important factor in improving employee morale. Excellent people desire to work with excellent people, so that they can feel inspired, inspired and excited.
If most of the team is excellent people, but if even one or two mediocre people are mixed, the following problems will arise:
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It greatly consumes the energy of team leaders, making them have to spend a lot of time on these low performers;
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Reduce the quality of the team’s usual work discussions;
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Forcing others to work in a way acceptable to low performers, thereby reducing team efficiency;
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Cause those employees who pursue excellent performance to leave voluntarily;
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Invisibly also tell the team that as a leader you tolerate low performance, thereby destroying the team atmosphere.
Frank communication
In addition to frankness, Netflix's requirements for communication must be positive. Otherwise, too simple and direct communication will easily hurt colleagues' feelings and will not help everyone's mutual cooperation.
An effective way to give feedback is constructive feedback, that is, when giving feedback, it also gives specific suggestions to help the other party improve. For example: an employee was too nervous to give a presentation at a meeting. If you give constructive feedback, you can't just say that you are too nervous today. You can also add an effective suggestion. For example, if you can practice several times before the meeting next time, you won't be as nervous as today.
Netflix’s internal employee feedback has two major characteristics: First, instant : Anyone who finds a problem with the other party will give feedback as soon as possible, even if the other party is the first person to meet; second, frank : even This feedback is negative, and you must tell it to let you know how to improve next time.
It is not easy for employees to give feedback frankly. Netflix has done a lot of training and practice for employees before finally achieving today's results. In summary, Netflix uses a 4A rule to train employees how to give feedback:
The first two A are for the giver of feedback: 1) Aim to Assist: The purpose of giving feedback is to help the other party to improve, so constructive feedback must be provided; 2) Actionable: The advice given must be easy for the other party to implement.
The last two A are for the recipient of the feedback: 1) Appreciate: How can I express my gratitude? How can I prevent myself from being angry or wary? 2) Accept or Discard: You judge others' feedback yourself, and then decide whether to accept or discard.
No vacation and reimbursement system
Netflix's cancellation control has a very independent feature: there is no vacation system, and employees can choose when and how long they will take their vacation.
Why does Netflix take Hugh this seriously? Because Hastings discovered that many major innovations in the company's history were created when employees were not at work. If an employee spends all his time at work without taking a break, he has no time to examine his work with a new perspective, and innovation is impossible.
However, if you one-sidedly understand Netflix's approach as anyone can take free vacations, you would be wrong. Netflix has one sentence to summarize employee vacations: personal vacations cannot cause trouble for the rest of the team. For example, if other people on the team have to work overtime because of your vacation, it will cause trouble for others.
While Netflix delegates full options to employees, it will also provide them with sufficient context, and then let them make their own judgments and decisions.
For example, the manager will discuss with employees in advance which time periods are more suitable for vacation and what length of vacation is in the interest of the team. In addition, employees are also obliged to allow sufficient time for the manager to arrange the corresponding work before the vacation.
In terms of employee expense reimbursement, Netflix's requirements are the same as those on vacation: there is no reimbursement system, and employees can reimburse them freely.
Netflix went through an interesting process when formulating its employee reimbursement system. In the beginning, the company asked its employees to "spend the company's money like you would spend your own money." However, it turned out later that some employees are spending their own money on a lavish basis. As a result, the reimbursement principle was later revised to "spend money in a way that is in the best interest of Netflix."
What if someone abuses this reimbursement policy? Netflix's approach is to dismiss them mercilessly, and the reason for the dismissal is disclosed within the company.
Hastings believes: The real world is grayscale, there is no absolute white and black. Similarly, there is no perfect rule and process in the world to solve all problems. If someone abuses the policy, there is no need to overreact to formulate more rules and regulations, deal with these cases, and then move on.
The facts have also proved that Netflix did not lose control of expenses due to the absence of a reimbursement system. Instead, employees made their own choices more self-disciplined under this full trust. As a result, the company greatly reduced management costs and improved Management efficiency.
Pay top salaries to talents in the market
Netflix's salary payment approach is beyond the reach of many companies. However, this does not prevent us from learning the logic behind this approach.
Netflix believes that since I have recruited the top players in the market, I should pay them the top salaries in the market. Here, I want to remind everyone that don’t just focus on Netflix’s high salary. It has a very important prerequisite for doing so, that is: the employees recruited are the top talents in the market. .
To repeat: The premise of paying top salaries for talents is that the company has recruited top talents in the market. As the saying goes, three heads are better than Zhuge Liang. However, in today's business operations, we have to replace three heads with one Zhuge Liang to ensure that the company can achieve its business goals in a low-cost and efficient manner.
Bill Gates once said in an interview: The salary of an excellent workshop operator is several times that of an ordinary workshop operator. But for many companies today, those creative positions, such as software engineer positions, an excellent engineer may bring thousands of times the value of an ordinary engineer.
Therefore, Netflix also divides the company's positions into creative and operational categories, and pays the highest salary in the market for creatives and pays according to the market average level for operational categories. I remember a previous report about Huawei, which also mentioned: Huawei’s positions are divided into business, technology, and operation. Business and technology recruit the top talents in the market, and eliminate those who fail to meet the requirements at any time according to their performance; operational positions give employees a certain degree of stability in their work, even if they are older, they can continue to do it.
I can't help but think of the company I am in today. Our company is doing 2C business, and e-commerce and marketing jobs are typical creative jobs. The industry is changing rapidly. If people in these positions do not have strong learning and innovation capabilities, their skills will become obsolete in a short time, and they are easily surpassed by new entrants.
Moreover, in actual work, I also found that talent management in this kind of enterprise cannot do simple addition and subtraction. The value created by an extremely talented person for an organization far exceeds the sum of the value created by a group of mediocre people.
For example, a small-scale battle can generate tens of millions in revenue for the organization because of the proper command and organization of the team leader. Compared with the huge profits that companies get, what is it to pay a little more to the outstanding talents who play a key role?
Information is extremely transparent
Many high-performance organizations have a characteristic, that is, the internal information is highly transparent, the purpose is to enable all employees to grasp the information related to their work, and reduce the cost of internal communication within the organization.
Netflix is no exception in terms of information transparency, even to a "heinous" level. Hastings himself does not have a separate office in the company, and he can't even find a locked drawer in his open office. He believes that all company information can be opened to employees, there are no secrets at all, and of course there is no need to lock drawers.
Netflix's Singapore office used to equip each employee with a locker. Later, Hastings believed that this approach did not conform to the cultural principles advocated by the company and ordered that all locks on these lockers be removed.
Another example: Netflix is the only company among all US listed companies that announces quarterly financial information to all management (about 700 managers) before each company's quarterly report. This measure is quite bold. You should know that after receiving this kind of information, anyone may turn around and get it on the stock market to make a profit.
However, after Netflix explained the pros and cons to employees, it still chose to share this confidential information with them. The employees also did not live up to the company's expectations. In the company's history, there has been almost no leakage of such confidential information before its release.
Netflix has a policy called "Sunshining", which means that every employee is responsible for sharing all kinds of work information with colleagues around him. Even if you mess up a job, you can do "sunshine sharing" with your colleagues: share your gains and losses with others without reservation, so that others can benefit from your lessons and avoid repeating the same mistakes .
Why do such extreme information sharing? Hastings' philosophy is: Every employee is an adult, and they have the ability to screen information and make analysis. Now that we have recruited these outstanding adults, we must believe in their ability to make the best decisions at work. And what often prevents a person from making the best decision is that they fail to grasp all the information relevant to the decision.
It is worth noting that even in sensitive matters such as employee dismissal, Netflix still chooses to disclose the true reason for an employee's dismissal to the team owner. In real life, when an employee is dismissed by the company due to poor work performance, the company usually gives a high-sounding reason for resignation, such as personal reasons or family reasons, which is called protecting the privacy of employees.
However, Netflix believes that even if you do not publish these facts, in the end other employees will still know the real reason behind them, and they will feel that those managers who try to cover up the facts appear hypocritical. This way of handling also cannot allow other employees to really learn lessons from such incidents.
On this point of "sharing the sun," Hastings himself is also a pioneer. As long as he made a mistake, such as hiring the wrong candidate or making a wrong business decision, he will openly and thoroughly share with all employees (say it clearly and loudly).
The biggest benefit of "Sunshine Sharing" is to make everyone realize that making mistakes is a normal thing. Only in this way, everyone dares to take risks and trial and error, and this also promotes the business innovation of the entire company.
The company is not a family
A few days ago, there was an article on the Internet, which probably means that the back-office department of a real estate company is better at creating an office atmosphere, giving new employees a family-like warmth. Later, the chairman of this company questioned, thinking that the responsibility of the company's back-end management department should be to create performance, rather than creating a comfortable "home culture" for employees.
Netflix clearly put forward a slogan: We are a team, not a family.
Treating the company as a family is a concept advocated by many corporate cultures. I have seen companies call every employee a "family." However, Netflix believes that there is a clear difference between a family and a company: the relationship between family members is permanent, while the relationship between the company and employees only exists during a specific period; no matter how big a mistake is made by a family member, other members All need to be tolerated and accepted, and doing so may bring disaster to the company, and so on.
Since the company is not like a family, what is it like? Netflix believes that the closest organization is a professional team. In a professional team, all players must also collaborate with each other and unselfishly strive for victory. However, more importantly, the team coach must ensure that every position has the best player. If any player loses the chain, the team usually does not give him too much time to improve, often the first time to replace it. A better player.
In order to ensure that Netflix has the best players in every position, Netflix uses a method called "Keeper Test". The specific method of this test is to let managers ask and answer a question:
If a subordinate is leaving tomorrow, are you going to desperately try to change his decision, or are you ready to accept his resignation?
If your answer is the latter, you should consider improving the employee's work performance as soon as possible, or directly give him a generous resignation compensation to ask him to leave, and then start looking for the next star player for this position.
If an employee is dismissed by the company so easily, does it seem particularly unkind? Hastings used a metaphor: If your team is an Olympic champion team, anyone eliminated from it will not feel shameless. On the contrary, because they are from a championship team, even after they leave, they will be sought after by others.
Therefore, you will see that those employees who left Netflix passively in history can still successfully achieve CTO and CFO positions in other companies.
Netflix has such strict requirements on employee performance, will it cause many people to leave without adapting?
Quoting a set of data released by American media: The average passive turnover rate of American companies is 6%, and Netflix is 8%, which is only two percentage points higher than the national average; the active turnover rate of American technology companies is about 13%, and the media And the entertainment industry is about 11%, while the voluntary turnover rate of Netflix in the same period is 3% to 4%, far below the national average.
This set of data also illustrates once again: The most attractive factor for outstanding talents is the environment where they can work with other equally outstanding talents.
Once they are in such an environment, it is difficult for them to easily choose to leave.
Extremely honest feedback mechanism
If we want to realize the "freedom and responsibility" culture like Netflix, the two important prerequisites are to increase the density of talents and increase the transparency of the company's information dissemination, but these measures are not enough to ensure that everyone in the organization can be honest with each other. Thorough and frank communication among members of an organization is the third important condition for an organization to achieve continuous innovation.
Some time ago, I saw an article that some domestic companies canceled calling their leaders "general." The essence of this approach is to create an equal and relaxed environment for employees to achieve frank communication between people.
Netflix's approach goes far beyond simply abolishing the name "total", but instead encourages employees to communicate extremely candidly through a unique company-wide feedback mechanism. Many companies have similar feedback mechanisms, such as performance feedback or 360-degree feedback, but in contrast, Netflix has done it to the extreme.
Netflix’s feedback mechanism has the following characteristics:
First of all, anyone can give feedback to anyone regardless of time and place. Unlike many companies, Netflix’s feedback is real-time and real-named: real-time feedback can make the meaning of the feedback more realistic and help the respondent improve their work in time; while real-name feedback can create a stronger sense of trust among colleagues , This is complementary to the transparent communication environment emphasized by Netflix.
Second, the feedback content needs to include three parts: start, stop and continue. The person giving the feedback should tell the other party what is not yet done and start to do it; what is not done well, stop doing it; and what is done well, continue to do it.
A boss of a large company once told me that they used Netflix's practice in their work feedback, requiring employees to start-stop-continue three steps when giving feedback. The results were amazing. In the past, people were reluctant to give negative feedback. Now that they have rigid requirements, it is easier.
Third, give constructive feedback. While giving feedback, also include specific recommended measures. The real purpose of giving feedback is to help the other person improve their work. Remember the Netflix 4A feedback rule mentioned earlier? Use this set of principles well to make your feedback practical.
Finally, extremely candid feedback. Netflix requires employees to be blunt when giving feedback. Even some very negative feedback should be raised to the other party as soon as possible. This culture makes some new Netflix employees feel uncomfortable, especially for some who come from cultural backgrounds. Then directly communicate with employees in countries such as Japan and Thailand. Netflix has continued to train its employees around the world, so that all employees are able to frankly give feedback to others in accordance with company standards.
Imagine working in such an environment, if you do not do well in any part of your work, colleagues around you will come forward to tell you at any time, and at the same time give you effective suggestions.
In this place with the highest density of talents in the world, you can absorb suggestions from the best people in the world anytime and anywhere, and how fast you can grow.
Therefore, it is not surprising that even if the pressure is great, the voluntary turnover rate of employees is surprisingly low at Netflix.
Scenario management instead of control management
I remember reading an article about the construction of ByteDance corporate culture before. Zhang Yiming mentioned a principle called: Context, not Control, which means to give the scene rather than control. The earliest source of this principle is from Netflix. Netflix put forward another sentence before and after this sentence, called: highly aligned and loosely coupled, which translates to highly consistent and loosely coupled.
These two sentences highly summarize the internal decision-making principles of Netflix: The first sentence means to provide employees with as much information as possible when making decisions, and do not control them in detail; the second sentence means that the organization Everyone must form a high degree of consensus on the strategic direction, and the design of the various departments within the organization must be relatively independent, so that changes in a certain department will not affect the overall situation.
Because there is such design, Netflix is easy to put into the front line of decision-making, so that a large number of junior staff and teams also have charged freedom of decision points. At the same time, even if there is a problem with a certain decision, it will not bring serious consequences for the entire company.
Zhang Yiming, the founder of ByteDance, once compared this decision-making model to a distributed computer, where there are many machines to handle many tasks together. In this case, more people are involved in decision-making, and more ideas can emerge from the bottom up, which frees the organization from relying on the CEO alone to make decisions.
Of course, this design is closely related to the nature of Netflix's business. Because Netflix is engaged in creative business, it needs to fully release everyone's potential so that everyone can boldly innovate and make timely decisions without being restricted. On the contrary, if a company is engaged in a production industry, and this type of industry often requires strict safety production process control, then this principle is not applicable.
As mentioned earlier, Netflix implements transparent communication of all information within the organization. So, in what ways does Netflix fully communicate context information to employees?
First of all, all the executive team (E-staff) meetings that report to the CEO. These are the core dozen or so executives of the company. The company will use them as the core to spread various information throughout the organization.
Secondly, Netflix holds a business review (QBR) meeting every quarter. At this meeting, hundreds of director-level and above personnel of the company will participate in a two-day meeting and dinner. The two-day event has two purposes: the first is to fully communicate with everyone on the company's development strategy to ensure that everyone is working in the same general direction; the second is to discuss and debate on the main issues that arise in management, and reach an agreement Unanimous understanding.
Finally, the CEO himself also took the lead, spending a lot of time on one-on-one communication with executives to ensure that important information within the organization can be spread unimpeded to the most important people. For example, Hastings will guarantee to arrange a 30-minute one-on-one meeting with each of the company's 500 directors every year, and arrange a one-hour one-on-one meeting with each of the company's more than 100 vice presidents every quarter.
Based on this calculation, Hastings himself spends at least a quarter of his time every year on in-depth communication with his subordinates, and truly provides sufficient context for his subordinates.
postscript
To realize a corporate culture like Netflix, high talent density is a major prerequisite. If the candidates recruited by the organization are all "adults" who meet the standards of Netflix, it will naturally lay the foundation for the implementation of "rule by doing nothing" in the future.
At the same time, the leadership by example of the most powerful founders and other executives in the organization is key. "Do unto others, do not impose on others". No matter what the organization advocates, if the executives cannot do it themselves, the corporate culture will naturally become empty talk.
We can see from the front that whether it is talent recruitment, transparent communication or candid feedback, Hastings and Netflix executives always demand themselves with the highest standards, and they are always examples for other employees to learn from.
Finally, the corporate culture and management mechanism implemented by Netflix are inseparable from the nature of its own innovative business. Any company wishing to learn the culture of Netflix needs to combine its own industrial characteristics and cultural foundation, and select elements suitable for it from Netflix culture in a targeted manner. If you do it mechanically, not only will it fail to achieve the expected results, but it may also bring unexpected troubles to the organization.