Powerful: Building a Culture of Freedom & Responsibility at Netflix by Patty McCord
I want to help you to grow your mindset and share my passion for impact. Thus, in this blog series, I have hand-picked the bestselling publications and essential managerial tools. This enables you to make a sustainable renewal to your business and personal life. The goal of the first season is to build a common body of knowledge and a starting platform for you. Depending on your experience with the subject matter, some of the issues represented might be obvious to you, however, try to dig deeper and connect any missing dots for your benefit. By reading further you will:
- save your scarce reading time on renewal, culture and the best performing teams
- extend your leadership toolbox to support your business decisions
- build your personal growth-mindset, required to excel as an evolutionary leader
Netflix Culture of Freedom & Responsibility
The focus of this episode is on the best organisational culture practices of Netflix during the time when Patty McCord was working as chief talent officer in the company. The basis of this blog is her book published in 2018 and the Netflix open-source culture deck.
The first slide of Netflix´s culture deck, viewed over 15 million times, communicates that the company has two values; freedom and responsibility, which work together to create a mutually inclusive whole. Both cultural themes of Netflix are co-dependent and mandatory. The second slide of the culture deck sets the cultural standards for the organisation to seek excellence. The role of the company´s culture in achieving that is clearly stated.
“Our culture focuses on helping us to achieve excellence”
My purpose is to dig deeper into these expected ‘best cultural daily behaviours and practices’ at Netflix that have generated them financial growth with higher employee motivation. By reading this blog and watching my related video:
- You learn, concretely, how a small market entrant company can swiftly conquer an entire industry
- You see, in a compelling way, how responsibility and freedom, normally considered as counterforces, can work well combined
- You get insights into the Netflix combination of EX and CX creates growth and excellent financial results
Culture = Values + Behaviors
As mentioned in my previous blogs; cultures are a group phenomenon and unique to every single organisation in relation to time, operating system, market environment, managerial legacy, espoused values, resources available and personal relationships involved. Culture is the way people behave and the output is the evolution of the organisation, hopefully into an expected direction. Therefore, there doesn’t exist a right or wrong culture and “the Holy Grail of the best culture” can not be found. Culture is one of the most profound and, at the same time fragile, competitive advantages of any organisation and cannot be just copied to any other organisation.
What is important to understand is that the building blocks of culture are shared values, but in the end, it is the daily behaviours are those that count. As Simon Sinek defines in his new book2, “Culture equals values plus behaviours”. Culture is constantly progressing. This evolution should be systematically led and communicated but, unfortunately, according to Harvard Business Review1 study, this vital leadership action is very often neglected, leading to situations where the strategic intent of management doesn´t materialize.
Netflix Operating System
Before going into the radical freedom present at Netflix, let´s look at where their success comes from. The growth drivers of Netflix have been a high-performance focus and leadership through context, not control. The basis of leadership is trust in people rather than over-controlling them. However, trust doesn´t mean allowing for any possibility to deviate from the ethical code of conduct. At Netflix, leaders are expected to not lie, cheat or steal and to not tolerate these from anyone in the company hierarchy.
These two drivers related to performance and leadership have created the space for Netflix to grow in a fast, big and bold way. In addition, the way people operate on a daily basis at Netflix makes a difference. People at the company say that they are surrounded by “stunning colleagues”. At Netflix people do not consider themselves as a family, but rather like a sports team playing for a common goal helping each other to succeed during good and bad times.
The seven building blocks of Netflix culture are:
- Values are what we value
- High performance, without accepting free-riders
- Leadership thru context, not control
- Teams are highly aligned, but loosely coupled
- At the high end of market compensation
- Promotions and development are primarily within the company
- Operating with freedom and responsibility
The key to Netflix success has been to increase talent intensity meaning acquiring a higher number of the best talent and keeping them in-house when they adhere to the Netflix culture buildings blocks. How does Netflix increase talent density?
Some of these actions are straightforward, no-brainers. Unfortunately, they are often not prioritised, and effort is not put on them in our organisations. Why it is so? What stops us acting in the same way?
In short at Netflix this means:
- To attract the best talent and nourish them with top-line compensation
- To give people the freedom to create impact, making daily work more meaningful
- To demand high performance and integrity from everyone, especially leaders
As we all know, recruitment is very costly in time, effort and money. When the talent finally has been hired, it is important to proactively think about how to keep them happy and performing. The keeper test – the question at Netflix, which is also valid for every leader is:
- Which of my people would I fight to keep at my company?
Radical freedom at Netflix means to question time-consuming company policies and approvals procedures constantly to find a better way. The goal is to have less and less of them to serve the company´s purpose and to achieve better customer delivery. If there is a need for such policies, they should always be short & sweet like, for example, “Act for the company’s best interest”, nothing else. There is no need for a hundred pages of manuals. At Netflix flexibility comes first, efficiency second.
Building a culture of freedom and responsibility at Netflix means scaling talent density with radical freedom. This means understanding as a leader that people have power, they will make or break your business. It is vital to surround people with other stunning colleagues who have ‘high performance’. This also increases talent flexibility that supports growth. Diminishing the number of policies, approvals and other unnecessary not value-generating internal procedures speeds up the business and decreases related costs. At the same time increasing motivation and meaningful work. This requires a leadership style beyond command and control based on trusting your people more. More trust allows for faster growth as an individual, team or organisation.
A key question for you to ask yourself when becoming a leader with a growth-mindset
- Are your people allowed to disagree with authority? When? How often?
My next blog will be about self-directed successful workplaces, where empowered and happy people deliver sustainable performance. Keep following.
1 HBR, Jan-Feb. 2018 : Changing your organization’s culture can improve its performance by Groysberg, Lee, Price, and Yo-Jud Cheng
2 Simon Sinek, The Infinite Game (11/2019)
Jere Talonen – Your co-pilot helping you to bridge the gap between strategy, values and behaviours from the boardroom to the shop floor by combining EX with CX. In the blog series, he shares his learnings from a multi-industry international career extending over 20 years as a leader, entrepreneur, business coach & consultant, as well as an executive team and board member. Currently, Jere acts as Principal Consultant – Recoding Culture and the Future of work at Gofore Plc.