Its basically a requirement for any company and especially for tech companies in the last few decades to boast about having a unique culture and corporate values.
That doesnt mean those things have much to do with the way the company operates.
Netflix, for better or worse, is different: The leaders of the streaming company take their culture very, very seriously. They credit it with the success theyve had upending the media world and forcing giants like Disney, Apple, and AT&T to chase after Netflix. They expect its 7,000 employees to take it seriously, too.
And so for the first episode of Land of the Giants: The Netflix Effect our new seven-part podcast about the company and the impact it has made on Hollywood and the world we wanted to dive into Netflixs culture.
The company was happy to talk about it. Netflix has long been known for its culture deck a slideshow about its HR philosophy it made public years ago and that has been broadly influential in the startup world.
And CEO Reed Hastings has a book No Rules Rules coming out this fall about Netflixs culture. He thinks you may want to run your company the way he does.
When we told people outside of Netflix that we were making an episode about the companys culture, we often got blank looks. But when we told current and former employees about our plan, they got excited. Netflix can be a weird place to work, and most people who dont work there dont get how weird it is.
For instance, Netflix uses its own cult-like language, like keeper test and sunshining. It also pays employees top-of-the-market salaries and gives them perks like the absence of an expense policy employees are just supposed to use common sense. And it encourages workers to meet with recruiters from other companies so they can figure out what the top pay is for their position.
The company also tells employees that they should think of themselves as members of a pro sports team, not a family. Which means they should expect to be replaced by better performers for their spot if Netflix can find them. And it often goes out of its way to tell employees when a coworker has been dismissed and why.
The downside of that kind of intensity and pressure can be employees who feel overwhelmed and insecure. Wall Street Journal reporters Shalini Ramachandran and Joe Flint did an excellent job in 2018 of documenting the difficulty some Netflix employees had with the companys culture, which the Journal characterized as ruthless, demoralizing and transparent to the point of dysfunctional.
The upside is a company where employees feel they have meaningful autonomy about the way they work, and the power to get things done.
One of Netflixs overarching tenets, for instance, is freedom and responsibility the ability to make decisions on your own, with accountability. Chief Content Officer Ted Sarandos said thats what enabled him to lead a pivot into original content in 2011, by spending $100 million for two seasons of House of Cards, sight unseen and without permission from his boss.
I told Reed about the deal after we did it, Sarandos told us.
Another tenet farming for dissent came out of one of the companys biggest failures. You might remember it as a punchline: Qwikster.
The short version: In 2011, Hastings wanted to move his company from its core DVD-by-mail service to online streaming, which was growing quickly but was still a smaller part of his business. So he tried splitting Netflix into a DVD business and a streaming business named Qwikster. Which meant that if his customers wanted the same services they were already getting before, they would have to subscribe to both and end up paying 60 percent more.
Netflix veterans still wince about the experience: The company was skewered on social media and by SNL. Its stock dropped 70 percent, and more than 700,000 people canceled their subscriptions.
Eventually, Hastings admitted that Qwiksters name, the price hikes, and the way the company talked about it all had been a huge blunder. He rolled back the changes.
But in Hastingss narrative, the failure was useful for Netflixs culture. He thinks that many of his top employees could have told him he was wrong but were too afraid or at least too in awe of their CEOs former successes to say anything.
Everyone knows the tale of the self-absorbed, arrogant CEO who doesnt listen. And theres an element of that, because we have been so successful at so many things before that, Hastings told us earlier this year at Netflixs offices in Los Angeles. But the more subtle one is that I had been so successful before that most of the executives thought … But Reed has been right on so many things. Ill bet hes right on this one. And Im just not seeing it.
After the debacle, Hastings instituted farming for dissent, a formal practice where employees are supposed to run their big ideas by colleagues and have them tell you candidly on a Google Doc thats open for everyone to see whats wrong with it. Its considered integral to the company that your coworkers tell you what they really think of your idea, even if perhaps especially if youre their boss.
So if thats the kind of thing youd like to hear more about, youre in luck: Weve got a whole episode you can listen to right now.
And well have six more, covering everything from Netflixs battle with Blockbuster Video to the way it uses its famed recommendation algorithm to the way it has remade Hollywood, coming up. Please tell us what you think: Were on Twitter at @ranimolla and @pkafka.
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