Netflix's "Culture" Presentation and What It Says

Culture

View more presentations from Reed Hastings.

Netflix's "Culture" presentation has become a cult classic on the tech startup subculture on the internet, so it's probably worth the while to read (and blog about). This became a hit because of the way it went against received corporate wisdom on many things - sometimes saying exactly what geeks have been mumbling in corridors everywhere, sometimes bringing a new light to bear on problems.

What I found most interesting was the approach to valuing individuals and their abilities - by giving them freedom to do what they know best. A lot of places claim to hire "only the best" but then shoot themselves in the foot by not trusting the judgment of the alleged rock stars they hired.

Where Netflix goes against established corporate practice is in rejecting overly detailed processes, and relying instead on hiring the best and relying on their judgment to do things right. What they get absolutely right is that it's most often wasteful to institute a process to prevent correctable mistakes. The only mistakes to avoid are the absolutely catastrophic ones. The rest are best recovered from.

Since a process-driven culture drives out superstars, Netflix takes the opposite approach. As complexity increases, they try to hire more superstars to handle it, rather than relying on processes.

In an environment filled with such superstars, a command-and-control approach to management would not work, so they rely on "setting context" and letting things develop in what they call an "aligned, but loosely coupled" environment.

And to keep those superstars happy, they have a "top-of-the-market" pay policy. No wimpy "average-performance-gets-average-pay" policies for them. Average performance gets you a "generous severance package" while star performers get top-of-the-market salaries - in cold cash.

Unfortunately, all this doesn't seem scalable, and that's the primary objection most people have to that model. Netflix asserts that they're actually able to scale the model in spite of general skepticism. Without inside information, I cannot comment on that beyond taking it at face value. For what that's worth, Google states that Netflix has 1883 employees as of Q1 '10. That's a substantial amount of scaling for a model like that!

Quotable quote:

Netflix Vacation Policy and Tracking
“there is no policy or tracking”
“There is also no clothing policy at Netflix, but no one has come to work naked lately.” – Patty McCord, 2004