(I took these loose notes from the audio book, so some of the material may not be under the
correct chapter heading).
The feeling Netflix wanted was for people to come to work not despite the challenges due to
change, but because of them. They wanted work to feel like it was exhilarating. Netflix management
tried to thread the needle between challenging versus hair-raising.
People are motivated when they perceive they're part of a "dream team" and are facing intense
challenges. Those are the ultimate motivators.
"If you want to build a ship, don't drum up the people to gather wood, divide the work, and give
orders. Instead, teach them to yearn for the vast and endless sea." - The Little Prince.
Treat people like adults (chap 1)
Great teams are forged when the problem is hard and they have to dig deep. The best teams are made
when the startup is running out of venture funding and it must pivot to a new great idea or die.
You want people to think "God, this is hard; I'm so excited to be doing this. Because it's making
a difference in the world."
Patty learned in her experience prior to Netflix that bigger teams and more structure to support
those teams doesn't get you a better outcome. The smaller, well-coordinated team has the great
advantages of speed and flexibility. It's hard to turn a big ship. A big team can't grow and
change in response to changing market dynamics.
"It's a misconception that more people make better stuff." Instead, focus on discipline and lean
process.
After having to fire 40% of their staff:
Everyone was working harder but having more fun. It was because only top performers were left.
Also, they now had smaller, more nimble teams.
It's hard work to manage large numbers of people.
So, with this in mind, they just started cutting things out of their process and their teams to
see if they could keep getting improved productivity and happiness by doing so.
Abolishing yearly planning
They realized that their yearly plan was always off. It was false precision to think that they
could make yearly headcount plans. So, they stopped doing them. They switched to only doing
quarterly plans at that time, because that's the level of planning that was useful. Everything
else was just wasted effort.
They didn't do any more yearly roadmap planning or yearly revenue projections because they were
wrong all the time. They were making it up. So they switched to quarterly.
She experimented with everything she could think of to get rid of unnecessary rules and
constraints on teams. Once she got rid of all expense tracking and budgets and said "just use
your judgment; spend the company's money wisely." And it was fine.
Communicate the challenge; the job to be done (chap 2)
When everyone is intimately up to speed on the business, controls and management are less
necessary.
Employees need to see the view of the business landscape from the C suite.
To provide education, Netflix instituted an employee college. This was a day of education with
long presentations from all of the executives about their departments, the goals of those
departments, and the challenges they expect.
Show a business overview deck to every new employee who joins. They found that the business
changed and the questions changed pretty quickly, so they had to update the deck every single
quarter. They had to be on top of changing the message and evolving it all the time.
Practice radical honesty (chap 3)
What adults need from you most is honesty. They need to be able to feel like they are getting your
true opinion.
Being blunt with people is a way of making them feel respected if they can handle it. It shows
they are being honest and digging into the core of the issue and you really want to hear their
true opinion.
Encourage employees to give feedback to each other face-to-face. If an employee came to her as a
manager and had feedback about one of her reports, she would encourage that person to just go talk
to the report directly.
In her experience, when people first join Netflix, the amount of direct negative feedback they get
from peers is a bit of a shock. But they could get over it, and then are thankful for the feedback
because it's helping them improve. And they start delivering that type of feedback to others.
Any constructive critical feedback needs to provide specific examples of the behavior change being
requested. And it needs to be actionable.
As opposed to criticizing some essential quality of their being that they can't change, like
"you're forgetful", "you don't seem to get enough things done."
Most people value getting a better view of themselves from the eyes of others if the feedback is
not delivered in a hostile way.
Debate vigorously (chap 4)
She likes using the phrase "data informed", rather than "data driven". No key decision is made
entirely in response to a data set. Every product decision they made which moved the needle
required a huge amount of judgment applied.
Consumer science meeting
(This sounds like a product review meeting or an experiment review meeting.)
People would present the results and the data and the conclusions from all of the consumer
testing they had done that month. Heads of product and founders would attend. These meetings
required a lot of prep for the people presenting the data, but it helped ensure that the level
of rigor was high.
One important benefit of this meeting was that it helped them realize that no one person could
intuit what customers wanted or needed based on their own judgment. The data always run counter to
somebody's expectations.
When hosting debates about product issues, they favored small groups. Small group allows the
debate to stay civil, and it also ensures that no one can hide and not voice their opinion. Also
it's a good way to mix together people from different functions so that everybody can learn about
different viewpoints on the problem.
Focus on the future: hiring, promoting, managing teams (chap 5)
"A company is like a sports team, not a family."
Their cultural model is that of a sports team. They want the very best team composition. As the
business changes, the team composition must also change. And so they made it explicit that the
goal of management was to put together the best team and that would mean sometimes, they must
bring in people from outside, or let existing people people go, or have people change roles. Just
like a sports team: they're always scouting for new talent and shaping the best team given the
talent they have.
Career planning
Patty thinks it's an outdated notion that managers have to also be career planners. The only
thing they do for their employees is make the best possible product, and the best possible team
to build that product. That's what gets everybody motivated and that's what's good for the
company and that will ensure that their careers are successful. Over-optimizing for career
planning leads to specially-crafted roles which don't make sense, or promoting people into
positions they're not qualified for.
They would regularly encourage the employees to interview elsewhere just to get a survey of the
opportunities and make sure that they thought that their current role of Netflix was the very best
for them. If it wasn't, they wanted them to go elsewhere.
Hire the people you need for the future, now. Create a vision of the org 6 months out and build a
roadmap for it, just like you would a product.
Good managers are constantly scouting for new talent and culling their current talent.
Don't be afraid to ask questions like: would you be better off by getting a more expensive person
on the team and reducing the team's size to account for that?
If you're not good at hiring great people, you'll never feel comfortable letting good people go.
Good managers can let even good people go if their contributions are no longer the right fit for
the team.
The most competitive companies are the ones that manage to stay limber. She thinks the way to do
that is to have malleable talent — constantly bringing in the best talent and changing teams to
maximize skill to task.
What motivates people? (chap 6)
She doesn't think it's related to perks at all. Nobody stays or quit the company because of perks.
What makes for lasting engagement is a feeling of success that the company is doing something
useful and they're good at it and achieving success with the customers in the market, and the
effort is a team effort.
"The best thing you can do for employees is hire only high performers to work alongside them."
"Excellent colleagues, a clear purpose, and well-understood deliverables: that's the powerful
combination."
Netflix pays competitive salaries just so they can compete with Google and Facebook for top tech
talent. "I didn't discuss compensation in the interview process until they knew that the candidate
was willing to accept the offer; I wanted to weed out people who were there for the money. Because
that's not a stable motivator." In fact if somebody was very concerned about whether Netflix can
improve upon the compensation, they would say "you're not the right fit for us at this point in
your career, and you should go chase the money."
They didn't feel like they were constrained by being able to make a good offer. They didn't have
strict salary bands, or a strict bell curve distribution, where people get 6% raises each year.
They're able to do what they needed to get a talent.
She didn't believe in bonus programs. Intense challenge is what generates motivation.
Performance reviews (chap 7, 8)
You must decouple the performance review process from compensation. The performance review process
is not a good input into what somebody should be paid. It's ridiculously expensive and imprecise.
It doesn't account for the value that the person has accrued working for the company. If they
become the single expert for an important area, then you must recognize that with a lot more pay.
Rather than keeping them in the standard salary bands. Or the external market will recognize that
and give them much higher offers.
If you can't pay market for every position, focus on paying the highest rates for the most
important position for your company. It seems like a no brainer. Having a universal compensation
schedule where you you tie your compensation to some percentile of what you perceive as market is
too coarse of a strategy. There are some positions which are much more important to have stars and
then others.
Proactively let people go. Make that a part of your culture. It's good for the business, for the
team, and it's good for the person. The worst thing for a relationship is to have a sense of
dishonesty about it. That you've known for a while that they have been performing and haven't
fully told them. Or, they weren't informed about the change of requirements of the job and that
they were keeping up. Or, that you made a false promise, like they'll always be head of the
department woods just can't be true is not in this not a promise you should've made.
Get rid of PIPs. They're not great tools for genuinely changing performance. Instead, just be
candid and give very regular feedback in every 1:1.
Have a high bar. Ask yourself is this person excellent, do they love wheat they do, and does the
company really need someone great in that position?