Making the rounds this week is this slidedeck apparently put together by Netflix upper management about their culture. There is no reference or name, so can’t be sure it’s real, but I doubt someone would go through the trouble to create a 128 slide fake Netflix deck.
There’s plenty of good, some bad, and some downright weird. Of course I have no idea what someone might say over these slides, or how much of this is actually practiced, but here goes.
The most important thing, as you’ll see, is Netflix has
414 employees 2000+ employees. Some of the philosophies they advocate are not uncommon for highly successful tech start-up companies. When Microsoft or Google had 500 or 1000 employees some of these principles were at work – perhaps not by executive decree, but they do happen and are workable, perhaps preferable when you’re still a small corporation.
The goal of “few big products vs. many small ones” (Slide 25) is natural when you are a small company, with one or two profit streams that haven’t maxed out their growth potential. Things change when growth slows. But that is not Netflix’s problem yet.
Many of these concepts are much harder to apply at 1000, 5000 or 10,000 people. But that’s not Netflix’s problem. At least not now.
- They makes fun of similiar corp culture slide-decks (Slides 5 to 8). Many corporations have manuals and slidedecks like this one, but they serve the purpose of codifying the fantasy view of the company the HR department and executives want to pretend is real – Netflix makes fun of this by showing Enron’s value statements. Platitudes are cheap. But I have to ding them as their list of core values is pretty close to what I’ve seen at a dozen or so different companies (Courage, passion, judgment, etc.)
- You are your rewards. They rightfully point out that instead of of what you say, your culture is what you do. “the real company values… are shown by who gets rewarded, promoted, or let go.” Rock on.
- Effectiveness matters more than Effort (Slide 33). This is gold, but hard in practice since effort (e.g. hours worked, who stays late) is much easier to measure than effectiveness.
- Increase freedom as we grow (Slides 39-52). This is the most interesting part of the deck, as they describe a variant of the innovator’s dilemma as it effects culture and how they intend to avoid the traps of growth and success. Their answer is to increase talent density faster than complexity, which is nice. The problem is, even if you sucessfully fire the less talented people, the talented people you keep, who often have egos to match their talents, protect their previous work as much as untalented people do. As years go by they defend their old ideas.
- Good processes vs. Bad processes (Slide 61)- This is solid. They offer that any process or rule should help talented people work faster. Bad processes protect and limit people’s behavior to prevent things from happening, often things that have low recovery costs (Approval chains, forms, endless interview loops, etc.).
- No vacation or expense tracking (Slides 65 to 72). When I worked at Microsoft most of my managers practiced vague vacation tracking. They didn’t care what I put into the HR tool, as long as all my work kicked ass, and I negotiated time off with them. It worked perfectly and I practiced the same thing myself as a manager. Netflix apparently doesn’t bother with the pretense of the tool. It’s 100% up to your manager. The risk becomes, like at Microsoft, people who don’t take enough of their vacation to life healthy, happy, long lives.
- They practice the Lefferts law (If you manage, it’s your fault). They believe managers set context, and if a talented employee failed the manager failed to set the right context. People who can set the right context for plans, situations and decisions are more valuable than people who can only work (Slides 77-84).
The interesting or weird:
- They pay top of market for all full time employees (Slides 93-107). Since they depend on high talent density, they expect to pay above market rates for employees. They assume this will retain talent as leaving the company guarantees a pay decrease. They also focus on salary and not other benefits, believing their employees should choose how to use their “income”. No bonuses. No granted stock options. And they do not believe in tying pay to company performance. I’ve honestly never heard of this before. I can’t see why you wouldn’t tie company performance in some way to rewards, especially for a small company, but I need to think more about this.
- Highly aligned / Loosely coupled org. (Slides 85-91). This is the weakest part of the slide deck – very heavy in management consulting jargon (ad-hoc, cross-functional, blah blah). They seem to say you set the right strategy and get buy in and don’t worry much about the rest. They run with the motto “Big and Fast and Flexible” which doesn’t mean very much. I’ve yet to see a company say they’re trying to be “Big and slow and rigid”, but many are.
- The keeper test (slide 28). They suggest managers ask “which of my people, if they told me they were leaving, would I fight hardest to keep at Netflix.” They suggest firing the rest with a nice severance package. Whoa. There’s a local factor involved here: your second best person might be much better than another manager’s best person. There’s also the all-star team effect, where you might need people with different talents, or a mix of talents, to make the team function. Zappos pay to quit approach makes more sense as it rewards unhappy people for leaving, regardless of talent.
- My force powers sense a cuthroat vibe. It’s reading between thin lines, but there isn’t any real mention of teamwork, collaboration or even pride. My biggest gripe about my Microsoft years was how the reward system paid no respect to teams. No overt rewards for people who learned to work well together as a unit. And since everyone knew reviews were done on curves there was often negative competitive energy. You end up with the NY Yankees, rather than the Boston Red Sox. This deck is a masculine, tech, analytical view of culture and I suspect there are things in their culture that they want to keep that are not well reflected in this deck. Perhaps it’s just the sting of a CEO/VP being totally honest, with no HR filtering or fluff, but there was definitely something missing for me.
Have you seen any of above in practice before? Or would want to try if you were CEO?