No Rules Rules

No Rules Rules by Reed Hastings and Erin Meyer explores the work culture at Netflix. It explains the culture through three mechanisms: talent, candor (feedback), freedom (remove controls). The three mechanisms are explained at three levels (three feedback loops of more and more talent, candor, and freedom).

When I wrote this, the principles did not seem to apply to my business or likely to change my work substantially. But, as with similar books, like Rework, I think I can incorporate parts of the lessons in my own work and working together with others on projects.

Here is a quick summary, based on the chapters of the book. Do note that the steps are sequential. And although this is no exact science, I do think that you need the earlier steps to make the latter possible.

1. Build talent density. Netflix’s argument is that in creative roles, high performers vastly outperform mediocre ones, while jerks and slackers bring down the rest. The book therefore urges managers to let poor performers go quickly.
2. Increase candor. Feedback can be hard to receive but valuable in hindsight. The book asks people giving it to aim to assist and be actionable; recipients should appreciate it, then accept or discard it. That loop is meant to help high performers improve.
3. Begin removing controls. Netflix’s examples include vacation, travel and expense policies. The book says that removing a vacation policy left time taken roughly the same while improving flexibility and satisfaction. On expenses, employees should spend as if the money were their own, act in Netflix’s best interest and face occasional random audits.
4. Fortify talent density. For creative rather than operational roles, the book favours paying at or above the top of the market instead of bonuses, on the grounds that future performance is difficult to predict. It argues that most Netflix jobs are creative.
5. Pump up candor. Organisational transparency means sharing numbers and other supposedly ‘confidential’ information with employees.
6. Release more controls. Remove decision approvals: “don’t seek to please your boss, seek to do what is best for the company”. Let the person closest to the issue decide. For an idea, the book’s innovation cycle is to (1) seek dissent and socialise it, (2) test a big idea, (3) make the bet and (4) celebrate or ‘sunshine’ what went wrong.
7. Maximise talent density. The Keeper Test asks whether you would fight to keep someone who wanted to leave. The book says “We’re a team, not a family” and urges openness about why someone is let go, so that departures do not create a culture of fear. It says Netflix’s turnover is not extremely high.
8. Maximise candor. Use named 360-degree feedback without ratings or a link to pay, including live feedback dinners.
9. Eliminate most controls. Lead with context. The book says this works for a ‘loosely coupled’ company with few interdependencies, unlike building an aeroplane: “Highly aligned, loosely coupled”. It pictures alignment as a tree rather than a pyramid, with people working on smaller branches of a shared trunk or goal.