Designing Culture – Netflix Case Study

Netflix is a Global Internet TV Network with 70 million members broadcasting in 190 countries. They have been phenomenally successful evolving a business model that started out as ‘online film rental’ to their current subscription based streaming service.

They are well known for their success with their revenues in 2015 reaching $5.5bn.

What is perhaps less well known is that they have built their organisation on a firm ‘cultural foundation’.

They have taken time to think about the key elements that will make their firm successful in the long-term. This is articulated in a slide deck that they place on their jobs page – https://jobs.netflix.com/

It is a great example of being absolutely clear on ‘what good looks like’.

Good people and good behaviour from the Netflix perspective.

Some will love this type of culture – some will hate it but at least those that don’t think they’ll be successful here will save everyone time and won’t bother applying!

I have been through the deck and taken out a few key themes that really stood out for me as being remarkable.

Firstly, they are very clear on the value of culture. That is why they’ve spent time designing their own to help them be successful in the creative industry. Their culture is a foundation for everything that they do – it percolates through the entire organisation informing the decision-making context at every level of the organisation.

Everything is geared towards high performance.

‘Adequate performance gets a generous severance package’ to make way for someone that is a ‘star’. Most companies expect a bell curve of performance – some great, some average, some below average. Netflix only accepts great performance. Anyone who doesn’t fit the description is pushed out of the organisation.

Take a minute to think about that. Average people are ‘performance managed’ out to make way for exceptional people.

They view the organisation as a professional team, not a family. The role of the leadership at Netflix is to hire, develop and cut people smartly.

Brilliant jerks (we’ve all worked with them!) are not tolerated – for them the cost to team work is too high. Sir Alex Ferguson knew this. He regularly got rid of people that damaged team cohesion despite their brilliance. Kevin Pieterson take note.

Hard-work although easier to measure is not relevant. It is effectiveness that counts.

They are clear on who they want to join them.

Like focussing on a niche of the market – they are focussed on attracting a niche group of people.

They are looking for what they define as the ‘rare responsible person’. Most people consider themselves responsible but against Netflix criteria, relatively few measure up. They define responsible as…

• Self-motivating
• Self-aware
• Self-disciplined
• Self-Improving
• Acts as a leader
• Doesn’t wait to be told what to do
• Never feels like ‘that’s not my job’
• Picks up rubbish on the floor
• Behaves like an owner

These people thrive on freedom and are worthy of it.

That is why Netflix are able to grab headlines with their holiday policy because it doesn’t exist. People are measured against delivery and able to take time-off whenever they want.

Their policy on expensing entertainment, gifts and travel is five words long – ‘Act in Netflix’s best interests’.

An organisation can only offer this level of freedom if it is very careful about the people that it employs and the people that it promotes. It needs to be absolutely clear on what a good culture looks like – and keep it alive in the organisation by using it as the foundation for their decision-making at every level.

They use Enron to set the context of why culture is important using a great example of a company that got it wrong.

What does your culture look like? Is it as clearly articulated as Netflix’s? Does your leadership adhere to the organisation’s values or are they as relevant as Enron’s?

Why not start the culture discussion at your organisation? What does a good culture look like for us and how do we build it?

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If you’d like to have a conversation about anything I’ve mentioned here or you’re interested in improving your culture, please feel free to get in touch via the contact page.