No Rules Rules – Emmah Kithinji

DID YOU KNOW

As of Q4 2021, Netflix has over 218 million subscribers worldwide.
Netflix’s revenue in 2021 was approximately $29.6 billion, with a net income of $3.3 billion.
In 2021, Netflix’s most popular TV show was “Bridgerton,” which was streamed by over 82 million households in its first 28 days.
As of September 2021, Netflix had a library of over 15,000 titles, including TV shows, movies, and documentaries.
In Q3 2021, Netflix spent approximately $4 billion on content.
Netflix is available in over 190 countries around the world, with the United States being its largest market.
The average Netflix subscriber spends around 2 hours and 10 minutes per day watching content on the platform.
In 2021, the most-watched Netflix movie was “Red Notice,” which was viewed by over 160 million households in its first 28 days.
The most common reason people cancel their Netflix subscription is due to the lack of new content.
In 2020, Netflix’s share of the global streaming market was estimated to be around 31%

“No Rules: Netflix and the Culture of Reinvention” by Erin Meyer and Reed Hastings is a fascinating and thought-provoking book that offers insights into one of the most successful and innovative companies of our time. As a book reviewer, I have had the opportunity to read many books on leadership, management, and organizational culture, but this one truly stands out for its unique and refreshing perspective.

At its core, “No Rules” is a book about how Netflix, a company that started as a DVD-by-mail service and has since become a global media powerhouse, has been able to disrupt and reinvent itself repeatedly, often in the face of significant challenges. It is also a book about the unconventional culture and management philosophy that has enabled Netflix to stay ahead of the curve and maintain its position as a leader in the entertainment industry.

One of the most striking things about this book is the honesty and transparency with which the authors share their experiences and insights. Reed Hastings, the co-founder and co-CEO of Netflix, and Erin Meyer, a professor at INSEAD and expert on cross-cultural management, provide readers with an insider’s view of how the company operates and the thinking behind its decision-making. This level of access is rare and provides readers with a deep understanding of how Netflix has been able to stay ahead of the curve.

The book is divided into three parts, with the first part providing an overview of Netflix’s history, culture, and management philosophy. The second part focuses on some of the key elements of that philosophy, including the company’s approach to talent management, decision-making, and innovation. The final part takes a closer look at some of the challenges that Netflix has faced over the years and how it has been able to navigate them successfully.

One of the things that stood out to me about the book was the emphasis on talent and the role it plays in Netflix’s success. The company’s approach to hiring and managing people is unapologetically data-driven and focused on results. For example, rather than relying on resumes and interviews, Netflix looks at candidates’ past accomplishments and their ability to contribute to the company’s mission. Once hired, employees are given significant autonomy and are expected to take ownership of their work. This approach has resulted in a highly motivated and engaged workforce, which has been critical to the company’s ability to innovate and stay ahead of the competition.

Another key element of Netflix’s culture is its focus on decision-making. Rather than relying on consensus or top-down decision-making, the company empowers its employees to make decisions on their own. This approach is built on the belief that people who are closest to the work are in the best position to make informed decisions. To support this approach, Netflix has developed a set of decision-making tools and frameworks that help employees make better decisions and stay aligned with the company’s broader objectives.

Innovation is another area where Netflix has excelled, and the book provides numerous examples of how the company has been able to disrupt and reinvent itself repeatedly. One of the keys to its success has been its ability to stay nimble and adaptable, even as it has grown to a global scale. For example, the company was able to pivot from its DVD-by-mail business to streaming video, despite facing significant technical and regulatory challenges. It has also been able to create original content that resonates with audiences around the world, even as traditional media companies struggle to keep up.

“No Rules: Netflix and the Culture of Reinvention” is a highly informative and engaging book that provides readers with a deep understanding of how Netflix has been able to disrupt and reinvent itself repeatedly, often in the face of significant challenges. The book is notable for its honesty and transparency, with the authors sharing their experiences and insights in a way that is both relatable and inspiring.

Overall, “No Rules” is a highly recommended read for anyone interested in leadership, management, and organizational culture. It offers valuable insights into the thinking behind one of the most successful and innovative companies of our time and provides a roadmap for how other organizations can adopt some of Netflix’s best practices. Whether you are a manager, entrepreneur, or simply someone interested in understanding how great companies are built, this book is well worth your time.

While “No Rules: Netflix and the Culture of Reinvention” does not explicitly list out “regrets,” the authors do reflect on areas where Netflix struggled or could have done things differently. Here are ten such areas:

The company’s original approach to DVD rentals, which was initially based on late fees, ended up causing customer frustration and led to a significant PR crisis.
The decision to separate the DVD and streaming businesses in 2011 was controversial and led to a significant backlash from customers.
The company’s foray into original content was met with resistance from the traditional entertainment industry, which saw Netflix as a threat.
In 2011, Netflix tried to spin off its DVD rental business into a separate company called Qwikster, but the move was widely criticized and ultimately abandoned.
The company’s initial attempts to expand internationally were difficult, with challenges in finding local partners and navigating local regulations.
The decision to split the company into two separate businesses in 2011 was ultimately reversed, but not before causing significant confusion and dissatisfaction among customers.
The company’s focus on data-driven decision-making has sometimes led to oversights in areas where qualitative factors are important, such as employee morale.
Netflix’s early approach to managing talent, which emphasized high performance and low tolerance for underperformance, was criticized by some employees as being overly harsh.
The company’s approach to pricing changes, which included increasing the price of its most popular plan by 60%, was met with significant customer backlash.
Netflix’s decision to pull out of the Cannes Film Festival in 2018 was controversial, with some seeing it as a missed opportunity to gain more mainstream recognition for its original content

Here are some examples of how Netflix addressed some of the issues

Late fees and customer frustration: Netflix addressed this issue by removing late fees and adopting a flat-rate subscription model, which made the service more convenient and affordable for customers.

Separation of DVD and streaming businesses: Netflix ultimately decided to reunite its DVD and streaming businesses, after realizing that the separation was causing confusion and dissatisfaction among customers.

Resistance from the traditional entertainment industry: Netflix persisted in its approach to original content, investing heavily in creating high-quality programming and working with established directors, writers, and actors.

Qwikster: Netflix quickly realized that the Qwikster spinoff was a bad idea, and abandoned the plan after it was widely criticized.

International expansion: Netflix learned from its early international expansion efforts, and has since been successful in launching its service in over 190 countries.

Splitting the company: Netflix quickly reversed its decision to split the company into two separate businesses, after realizing that it was causing confusion and dissatisfaction among customers.

Data-driven decision-making: Netflix has worked to strike a balance between data-driven decision-making and qualitative factors, such as employee morale, by encouraging employees to share feedback and ideas.

Talent management: Netflix has evolved its approach to talent management, with a greater emphasis on supporting employees to develop their skills and achieve their goals.

Pricing changes: Netflix responded to customer backlash over its price increase by apologizing and reversing the decision for some users, while still maintaining a long-term focus on investing in high-quality content.

Cannes Film Festival: Netflix has continued to pursue recognition for its original content through other avenues, such as the Academy Awards, while also exploring new models for distributing and promoting films.

Lessons that leaders can learn about culture from “No Rules: Netflix and the Culture of Reinvention”

Culture is key to success: Netflix’s culture is a major contributor to its success, and leaders should invest time and resources into developing a strong and distinctive culture for their own organizations.
Culture should be intentional: Netflix’s culture was developed intentionally, with clear values and practices that were reinforced consistently over time.

Culture can evolve: Netflix’s culture has evolved over time, reflecting changes in the company’s strategy and priorities, and leaders should be open to evolving their own cultures as circumstances change.
Values are important: Netflix’s culture is based on a set of values, such as freedom and responsibility, that serve as a guide for decision-making and behavior.
Diversity is important: Netflix’s culture emphasizes diversity and inclusion, recognizing that a diverse workforce can help the company better understand and serve its customers.
Talent is key: Netflix’s culture emphasizes recruiting and retaining top talent, and leaders should prioritize building strong teams and developing employees’ skills and capabilities.
High-performance culture can be challenging: Netflix’s culture places a premium on high performance, which can create pressure and stress for employees, and leaders should be mindful of the potential downsides of a high-performance culture.
Feedback is important: Netflix’s culture emphasizes giving and receiving feedback, which helps employees improve their performance and develop their skills.
Decision-making should be data-driven: Netflix’s culture emphasizes data-driven decision-making, which helps leaders make better and more informed decisions.
Constant reinvention is necessary: Netflix’s culture encourages constant experimentation and reinvention, recognizing that the company must constantly adapt and evolve to stay ahead of the competition. Leaders should be willing to take risks and try new approaches to stay ahead of the curve

Lessons that we can learn about reinvention and disruption from “No Rules: Netflix and the Culture of Reinvention”

Disruption is inevitable: Disruption is a fact of life in business, and companies must be prepared to adapt and change to stay ahead of the curve.

Reinvention requires a strong culture: Companies that are successful at reinventing themselves, like Netflix, have a strong and distinctive culture that enables them to be flexible and adaptable.

Innovation is key: Netflix’s success is due in large part to its constant innovation, both in terms of technology and content.

Experimentation is necessary: Netflix’s culture encourages experimentation and taking risks, recognizing that not all experiments will be successful, but that learning from failure is an important part of the process.

Customer focus is critical: Netflix’s customer-centric approach is a key factor in its success, and companies that focus on delivering value to their customers are more likely to succeed.

Embrace new technologies: Netflix has embraced new technologies, such as streaming and artificial intelligence, to stay ahead of the competition.

Don’t be afraid to disrupt your own business: Netflix has disrupted its own business model several times over the years, recognizing that staying ahead of the curve requires being willing to disrupt your own business before someone else does.

Be willing to pivot: Netflix has made several major pivots over the years, such as shifting from DVD rentals to streaming, and leaders must be willing to make major changes to their strategy and operations when necessary.

Think long-term: Netflix has a long-term focus, and leaders should be willing to invest in the future of their company, even if it means sacrificing short-term gains.

Reinvention is an ongoing process: Companies that are successful at reinventing themselves, like Netflix, recognize that the process of reinvention is ongoing and that they must constantly adapt and evolve to stay ahead of the competition.

Some Quotes that stood out for me were:

“The best thing you can do for employees—a perk better than foosball or free sushi—is hire only ‘A’ players to work alongside them. Excellent colleagues trump everything else.” – Reed Hastings
“Leaders don’t want to cultivate followers. They want to cultivate other leaders.” – Erin Meyer
“There is nothing magical about process. Process should be easy to change, to improve. It should be an aid to decision-making, not the main driver of decision-making.” – Reed Hastings
“The highest-performing teams have one thing in common: psychological safety—the belief that you won’t be punished when you make a mistake.” – Erin Meyer
“The best HR leaders are business leaders who happen to specialize in people.” – Reed Hastings
“If you’re not failing, you’re probably not trying as hard as you could be. And that’s a big mistake.” – Erin Meyer

“If you want to build a great company, you need to have a culture of freedom and responsibility.” – Reed Hastings
“I’ve come to realize that feedback is a gift. It’s not always easy to accept, but it’s always important.” – Erin Meyer
“We try to create a sense of ownership among employees by giving them the autonomy to make their own decisions and empowering them to take charge of their own careers.” – Reed Hastings
“We believe that people thrive when they’re given the freedom to be creative and make their own decisions, but they also need to be held accountable for their work.” – Erin Meyer