beside the point or counterproductive.
Most companies are clinging to the established command-and-control system of top-down decision making but trying to jazz it up by fostering “employee engagement” and by “empowering” people. Compelling but misguided ideas about “best practices” prevail: bonuses and pay tied to annual performance reviews; big HR initiatives like the recent craze for lifelong learning programs; celebrations to build camaraderie and make sure people have some fun; and, for employees who are struggling, performance improvement plans. These foster empowerment, and with that comes engagement, which leads to job satisfaction and employee happiness, and that leads to high performance, or so the thinking goes.
I used to believe this too. I started my career in HR at Sun Microsystems and then Borland Software, implementing the whole gamut of conventional practices. I negotiated all kinds of tantalizing bonuses. I dutifully rallied my teams for the dreaded performance review season and coached managers through the performance improvement process. When I ran diversity programs at Sun, I even spent $100,000 on a Cinco de Mayo party. But over time I saw that all of those policies and systems were enormously costly, time-consuming, and unproductive. Even more important, I saw that they were premised on false assumptions about human beings: that most people must be incentivized in order to really throw themselves into their work, and that they need to be told what to do. The “best practices” that have been developed on the basis of these premises are, ironically, disincentivizing and disempowering.
Yes, engaged employees probably deliver higher-quality performance, but too often engagement is treated as the endgame, rather than serving customers and getting results. And the standard beliefs about how and why people are engaged in their work miss the true drivers of work passion. As for empowerment, I simply hate that word. The idea is well intentioned, but the truth is that there is so much concern about empowering people only because the prevailing way of managing them takes their power away. We didn’t set out to take it away; we just overprocessed everything. We’ve hamstrung people.
What I came to understand deeply and in a new way once I made my way into the scrappier start-up world is that people have power. A company’s job isn’t to empower people; it’s to remind people that they walk in the door with power and to create the conditions for them to exercise it. Do that, and you will be astonished by the great work they will do for you.
Managing People Like Managing Innovation
As I introduce the alternative management methods we developed at Netflix, I’m going to challenge all of the basic premises of management today: that it is about building loyalty and retention and career progression and implementing structures to ensure employee engagement and happiness. None of that is true. None of this is the job of management.
Here is my radical proposition: a business leader’s job is to create great teams that do amazing work on time. That’s it. That’s the job of management.
At Netflix we did away with virtually all of the hidebound policies and procedures. We didn’t do it in one fell swoop. We did it experimentally, step by step, over the course of years. We approached developing the culture in the same way we approached innovating the business. I understand that such a radical transformation is simply not feasible for some companies. And many team leaders are not free to do away with policies and procedures. But every company and every manager is free to institute the practices we used to instill the core set of behaviors that made the Netflix culture so limber.
The Discipline of Freedom and Responsibility
Doing away with policies and procedures and giving people agency didn’t at all mean that the culture became a free-for-all. As we stripped away bureaucracy, we coached all of our people, at all levels and on all teams, to be disciplined about a fundamental set of behaviors. I’ve often said that while I’ve removed the words “policy” and “procedure” from my vocabulary, I love discipline. My whole career I have gotten along well with engineers, because engineers are very, very disciplined. When engineers start to whine about a process you’re trying to implement, you want to really dig into what’s bothering them, because they hate senseless bureaucracy and stupid process. But they don’t mind discipline at all.
The most important thing to understand about transforming a culture, whether that of a team or a whole company, is that it isn’t a matter of simply professing a set of values and operating principles. It’s a matter of identifying the behaviors that you would like to see become consistent practices and then instilling the discipline of actually doing them. We fully and consistently communicated to everyone at Netflix the behaviors we expected them to be disciplined about, and that started with the executive team and every manager. We were so intent that every single employee understand our philosophy and the behaviors we wanted them to execute on that Reed started writing a PowerPoint about them, which I and many other members of the management team also contributed to. It ultimately became known as the Netflix Culture Deck. You may have read it.
When Reed posted it on the Web several years ago, he had no idea it would go viral, with more than fifteen million views and counting. We hadn’t created it for broadcast. We created it as an internal company document, using it to communicate the culture to new hires and make sure we were perfectly clear about how we wanted them to operate. We also stressed that it laid out not only what we expected of them but also what they should expect of us. The Deck wasn’t written in one fell swoop and it wasn’t written just by Reed and me. It was a living, breathing, growing, changing set of realizations we came to as we built the culture, with leaders from all around the company making contributions. Reading the Deck would be a great complement to reading this book, and one reason I’ve written this book is that I get so many questions when I speak and in my consulting about the Deck and how to actually enact its concepts.
I’ve thought hard about that, and I have boiled down the lessons we learned about how to instill these principles and behaviors in teams. Not all of the specific practices implemented at Netflix and outlined in the Deck apply to every team or company. Even at Netflix, the culture varied in many respects from department to department. Marketing, for example, was run in many ways that were quite different from the management of the engineering groups. But there was a core set of practices that underpinned the culture:
• We wanted open, clear, and constant communication about the work to be done and the challenges being faced, not only for a manager’s own team but for the company as a whole.
• We wanted people to practice radical honesty: telling one another, and us, the truth in a timely fashion and ideally face to face.
• We wanted people to have strong, fact-based opinions and to debate them avidly and test them rigorously.
• We wanted people to base their actions on what was best for the customer and the company, not on attempts to prove themselves right.
• We wanted hiring managers to take the lead in preparing their teams for the future by making sure they had high performers with the right skills in every position.
We asked all managers, starting at the top with our executive team, to model these behaviors, and by doing so, they showed everyone on their teams how to embrace them as well.
The prospect of getting teams to operate according to these requirements may seem daunting. More than a few Netflixers I’ve talked with as I’ve worked on this book have commented that they were reluctant about one or another of the practices, such as giving totally honest feedback to people face to face. They have also recalled that as they forced themselves to go ahead, they saw how responsive their people were and how dramatically their team’s performance improved.
