Building an Enterprise Netflix Style

A recent TechCrunch Article introduced the Netflix Culture with the quote from Sheryl Sandberg that this was “The Most Important Document Ever to Come Out Of The Valley”.  While overblown (Moore’s law anyone?) the monster 128 page deck does contain some gems:

• The valley of death for big companies comes from scaling up complexity with procedures.  These procedures enable mediocre employees to persist while making the business more inflexible.  This creates a cost effective juggernaut that has no ability to respond to market conditions. 
• I’ve seen this in every single big company I’ve been around.  Netflix makes the big bet that they can survive by having a team of superstars with a high degree of flexibility who fanatically drive down business complexity. 
• Treat you team like a pro sports team. Keep only superstars in specific positions your team needs.  Cut everyone else.
• In the same vein – pay them like superstars.  Everyone should be paid at the top of their market worth and employees should be ‘re-hired’ every year at the appropriate salary.  This is HUGE.  If I stayed an engineer at Microsoft I’d have to get 2-3 promotions to get to the same base as the incoming class of college hires from my alma mater. Ridiculous and common for almost any big company.  This is the leading cause for folks to bounce around the big five tech companies.  What an inefficient process.  
• Give up the complex expense policy.  Make the process transparent (so everyone can see what you spend on), but don’t try and legislate every single spending rule.  Microsoft wouldn’t buy me a GPS ($150), but it would expense one on rental car ($1000/yr).  Go figure.
• “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.” –Antoine De Saint-Exupery The Little Prince
• Netflix seeks to create well aligned but loosely coupled teams.  With really high performers, if you can get them behind the mission, and take compensation off the table (by paying ridiculously well), they can dedicate manic focus to doing the right thing.  Make it about the work.

While Netflix is certainly an embattled company with some MASSIVE BLUNDERS in its past (that call to question the whole superstar idea), the dream that this deck outlines is one of the first legitimate templates for building a big business with multi-generational potential.

Cheers to you Mr. Hastings!

Culture (2009) from Reed Hastings