Facebook COO Sheryl Sandberg called it “One of the most important documents that Silicon Valley has ever produced”: the Netflix Culture Deck. Since it was shared online it has been viewed over 11 million times, downloaded more than 60,000 times and shared nearly 30,000 times. Not bad for a 124-page organizational identity statement. In this blog I examine what makes the Netflix approach to organizational culture so special.
The Netflix Culture Deck is filled with remarkable ideas. Most controversial: the unprecedented emphasis on performance: ”outstanding” employees only”. When you do your job merely adequately, you are not living up to to the standard and you will be asked to leave. With an excellent “severance package” of course. And quite unique in the American culture: hard work does not count as a merit, the one thing that does are results. Why? Netflix says that one outstanding employee gets more done and costs less than two who only perform well. Netflix acknowledges upfront that this is not a culture for everyone and makes the comparison with professional sports “We are a pro-sports team”. But “cut-throat competition” is not tolerated. Collaboration is a cornerstone of the Netflix culture: “Brilliant jerks are not accepted.”
To meet these high expectations, employees have a lot of freedom. At Netflix everything is aimed to let employees make decisions for themselves. Managers are only there to provide direction and support. And speaking of freedom: private calls at work or even making a few xeroxes for private purposes is not a problem at all, it’s seen as “more efficient and inconsequential.” Netflix has also abolished all vacation policies. Everyone is allowed to take vacation at their own discretion and is encouraged to be gone for at least 30 days per year. The rules for claiming expenses have been eliminated as well: “Act in the best interest of Netflix,” reads the message.
Highly aligned, loosely coupled
Under the motto “highly aligned, loosely coupled” Netflix is committed to spend as little time as possible to coordinate between different departments and silos. Notable exceptions concern alignment on objectives and strategy. Trust is considered as more important than previewing and pre-approving proposals. The goal is “to be big and fast and flexible.”
The more freedom, the greater the importance of a shared compass. Netflix puts a lot of effort into “clarifying the context” for its employees. Such as on strategy, objectives and the assumptions upon which they are based. Why? Research shows that high-flyers perform better if they understand the context well. So Netflix has a training program for new employees, organizes department meetings frequently and exercises maximum openness about strategy and results.
What also helps to provide employees with more context are shared identity and values. Netflix rightly states that “corporate values” are often a paper tiger. At Netflix, and this is perhaps the most interesting aspect of the culture deck, this is not the case. The values are explained in a very elaborate manner and elaborated into clear and concrete behaviors, such as: “you treat people with respect, independent of their status or disagreement with you” and “You are non-political when you disagree with others.” And just as importantly, there are consequences to the core values. These “non-negotiable behaviors” as Netflix describes it, serve as a basis for compensation, promotion and dismissal.