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Just finished No Rules Rules by Reid Hastings & Erin Meyer. Didn't have the highest expectations, but enjoyed it
The main idea is a pretty simple one, if you give your employees more freedom they will make better decisions and its easier to hold them accountable
To be able to give employees freedom, you need to build
a) talent density - if you have high performers you can get rid of most controls (sounds like $BRK)
b) increase candor - when you have more feedback, you get improved performance
a) talent density - if you have high performers you can get rid of most controls (sounds like $BRK)
b) increase candor - when you have more feedback, you get improved performance
Talent density came after layoffs @ NFLX in 2001.
Reid expected poor morale after the layoffs, the opposite happened, even though the remaining employees had more work to do
After the layoffs they had less talent overall, but the talent per employee, talent density improved
Reid expected poor morale after the layoffs, the opposite happened, even though the remaining employees had more work to do
After the layoffs they had less talent overall, but the talent per employee, talent density improved
They found that a co. with really dense talent is one everyone wants to work for. High performers thrive in this environment.
Adequate performers bring down the group by sapping energy, reducing qual of group discussion, etc.
Adequate performers bring down the group by sapping energy, reducing qual of group discussion, etc.
Openly voicing opinions & feedback reduced politics and allowed co. to be faster.
The more ppl heard what they could do better, the better every1 got @ their jobs
To not speak up is to be disloyal to the co.
When employees give feedback to leaders big benefits really take off
The more ppl heard what they could do better, the better every1 got @ their jobs
To not speak up is to be disloyal to the co.
When employees give feedback to leaders big benefits really take off
When receiving feedback you need to respond w/ gratitude and give "belonging cues" reassuring employee that their career will not suffer
They use 4A feedback
1) aim to assist - have +ve intent
2) actionable - focus on what to do different
3) appreciate
4) accept of discard
They use 4A feedback
1) aim to assist - have +ve intent
2) actionable - focus on what to do different
3) appreciate
4) accept of discard
If you want culture of candor, you need to get rid of the brilliant jerks b/c cost to effective teamwork is too high
w/ high talent density you can get rid of things like a vacation policy.
the freedom signals to employees that they are trusted to do the right thing, which leads to them acting responsibly
the catch is boss has to model the behavior of taking vacation or no 1 will take any
the freedom signals to employees that they are trusted to do the right thing, which leads to them acting responsibly
the catch is boss has to model the behavior of taking vacation or no 1 will take any
NFLX also got rid of expense policy.
Started w/ guidance of "spend co $ as if it were your own." that didn't work too well b/c some ppl stay @ the 4 Seasons on their own dime
Now "Act in NFLX's best interest"
Started w/ guidance of "spend co $ as if it were your own." that didn't work too well b/c some ppl stay @ the 4 Seasons on their own dime
Now "Act in NFLX's best interest"
This new approach was named "freedom and responsibility"
If someone abuses freedom you need to fire them & loudly
A lack of policy may lead to more cost but the benefits of avoiding bureaucracy outweigh it
If someone abuses freedom you need to fire them & loudly
A lack of policy may lead to more cost but the benefits of avoiding bureaucracy outweigh it
For hiring, there is a "rock star principle." the best aren't a few times better than average they are easily 10x better
NFLX wants to hire a few rockstars and pay them top of market
They also don't pay bonuses b/c the goals for the yr may need to change mid year
NFLX wants to hire a few rockstars and pay them top of market
They also don't pay bonuses b/c the goals for the yr may need to change mid year
Enhance candor by increasing transparency w/ confidential information including financial results or competitively sensitive info
it builds trust & ownership and makes employees smarter
it builds trust & ownership and makes employees smarter
Also increase transparency about mistakes. Biggest adv. of talking about mistakes is it encourages everyone to think of mistakes as normal
Next big idea is getting rid of decision making approvals.
The boss is not necessarily the best person to decide on the details
"Don't seek to please your boss, seek to do what is best for the company"
The boss is not necessarily the best person to decide on the details
"Don't seek to please your boss, seek to do what is best for the company"
When people are given more control over projects, they feel more ownership and more motivated.
Also, big risk for NFLX isn't making a mistake, it is lack of innovation. Distributed decision making leads to innovation
Also, big risk for NFLX isn't making a mistake, it is lack of innovation. Distributed decision making leads to innovation
The NFLX innovation cycle
If you have an idea you're passionate about
1) farm for dissent
2) for big idea, test it out
3) as informed captain, make bet
4) if succeeds, celebrate, if fails, talk about it
This is not consensus, it's indiv. decision w/ input
If you have an idea you're passionate about
1) farm for dissent
2) for big idea, test it out
3) as informed captain, make bet
4) if succeeds, celebrate, if fails, talk about it
This is not consensus, it's indiv. decision w/ input
If a project fails:
1) ask what learning came from project
2) don't make a big deal about it
3) ask that the failure get talked about publically
1) ask what learning came from project
2) don't make a big deal about it
3) ask that the failure get talked about publically
Controversial HR policy: we are not a family, we are a team.
Only stay in seat if you're the best to do the job.
Keeper test: if person were to quit tomorrow, would you try to change their mind? if not, give them a (generous) severance now
Only stay in seat if you're the best to do the job.
Keeper test: if person were to quit tomorrow, would you try to change their mind? if not, give them a (generous) severance now
To encourage orig. thinking, don't tell employees what to do. give them context to dream big and inspiration to think differently, and space to make mistakes. Lead with context.
It was striking to me how many of these principles could be applied to building a great investment firm, but don't seem all that common in the industry