No Rules Rules

by Reed Hastings

  When you don’t respond to emails from my team, it feels hierarchical and discouraging, even though I know this is neither how you work nor how you think. Perhaps it is because we need to establish more trust, but I need you to be more generous with your time and insights, so my team can serve your organization better.

  Your “old married couple” disagreements with Cindy are not the best role model of exec interchange. There should be more listening and understanding on both your parts.

  Stop avoiding overt conflict within the team; it simply festers elsewhere and comes back bigger. The seeds of Janet’s flaming out and the drama of Robert’s role were planted well over a year ago. It would have been better to address both directly and head-on a year ago rather than have everyone suffer, and morale drop.

  Ted read these items just like he was reading a list of food to buy at the supermarket. I thought, “Wow, could I be brave enough to share my feedback with my own staff?”

  Apparently, Larry could: “Ever since that meeting I try hard to model what Ted did with us for my own team, not just at written 360 time but any time someone provides me with developmental feedback. And I’ve suggested that those leaders who work for me, do the same thing with their own teams.”

  Although the 360 written exercise established regular candid feedback, and many chose to discuss the feedback after the reports came out, it didn’t ensure that those open discussions were actually happening. If Chris-Ann gives written 360 feedback to Jean-Paul that his whispering in client meetings is hurting his sales, but Jean-Paul never talks to Chris-Ann or anyone else about the comment, it turns into the stuff of secrets. Reed’s next process was put in place in order to address that problem.

  2: LIVE 360S

  By 2010, we had firmly instituted our version of the written 360 process with a lot of success. But, given the other steps we’d taken to increase transparency throughout the company, I felt that we could go further. So I began to run some experiments to see if increasing transparency in my own executive team would help it trickle down to the rest of the organization. The first thing I tried was an activity with my direct reports.

  We met in the old Silicon Valley Netflix building at 100 Winchester in a little bird’s nest perch of a room called The Towering Inferno. Leslie and Neil paired up and went to one corner of the room, Ted and Patty went to another, and so on. The exercise was a little like speed-dating except it was speed-feedback. Each pair had a few minutes to give one another feedback following the “Start, Stop, Continue” method and then we rotated, creating new pairs. Afterward, we came back into a circle as a group of eight and reported back what we’d learned. The pair exercise went fine, but the group discussion was by far the most important part of the session.

  So the next time, we jumped right into the group discussion. I decided to do this second experiment over dinner with nothing else on the agenda, so we wouldn’t feel rushed. We met at a restaurant called the Plumed Horse in Saratoga, a quaint little village just a short drive from the office. When we pulled up, the trees were lined with lights, like fireflies in a forest. We walked in and the seemingly small restaurant opened up into a big cavern, leading to a quiet, reserved room.

  Ted volunteered to go first. We went around the circle and each person gave him feedback using Start, Stop, Continue. At that time Ted was one of just a few employees based in Los Angeles and he would commute up to Silicon Valley one day a week. Every Wednesday he’d race into the office and try to cram in three days’ worth of discussions into six hours. David, Patty, and Leslie all gave Ted feedback about how hectic his one day in the office was for everybody else. “When you leave on Wednesday afternoon it feels like a jet boat came through and left a massive wake behind it,” Patty explained. “It’s stressful and disruptive for the entire office.”

  I’d been meaning to talk to Ted about this, but now I didn’t have to. After that session he reorganized his schedule to come to Silicon Valley for longer trips and to handle more over the phone before his visits. Ted saw how his actions were disturbing everyone and talking about it openly made him find a better way.

  The live 360s are so useful because individuals become accountable for their behavior and actions to the team. Given how much freedom we grant employees, along with the general “don’t seek to please your boss” climate, this co-responsibility provides a safety net. The boss doesn’t tell the employee what to do. But if the employee acts irresponsibly, he will get feedback from the group.

  Next it was Patty’s turn. Neil told her, “During our meetings you speak so much, I can’t get a word in edgewise. Your passion sucks up all the air.” But, as we worked around the table, Leslie disagreed: “I’m surprised about Neil’s comments. I think you’re a great listener and you always make sure everyone has equal time to talk.”

  At the end of the evening each person presented a short synthesis of their main takeaways. Patty said, “When I’m in meetings with people who are more reserved, like Neil, I compensate for that person’s quietness by talking more. When I’m with other talkative people, like Leslie, I don’t have that problem. On my own team I have many quieter people who don’t speak at all in our meetings. I’m going to start leaving the last ten minutes of every thirty-minute meeting for others to speak. If no one speaks we’ll sit in silence.”

  As a talkative person myself, I wasn’t even aware that some experienced Patty as hogging the airspace. I wouldn’t have known to give her this feedback, because it doesn’t characterize the interactions I have with her. This demonstrated why it’s so important employees receive feedback, not just from their boss but also from teammates. The session helped me—and everyone in the group—to understand team tensions in new and unexpected ways. I saw that the dinner was a way for us all to better understand the interpersonal dynamics that shaped our collective effectiveness and to work together to improve our collaboration.

  Soon after, many on my staff conducted the same exercise with their own teams, and eventually it became a common activity throughout the company. It’s not obligatory. You may meet a Netflix employee who has never gone through a live 360. But our managers have found such value in the method that today the vast majority of our teams conduct something similar at least once a year. By now, we understand the process pretty well, and it’s actually not that difficult to run, as long as you set the context and have a strong moderator. If you’d like to try the live 360 for yourself, here are a few tips:

  Length and location: A live 360 will take several hours. Do it over dinner (or at least include a meal) and keep the group small. We sometimes have sessions with ten or twelve people, but eight or fewer is more manageable. For a group of eight you’ll need about three hours. A group of twelve could run to five hours.

  Method: All feedback should be provided and received as an actionable gift following the 4A feedback guidelines outlined in chapter 2. The leader will need to explain this in advance and monitor it during the session.

  Positive actionable feedback (continue to . . .) is fine, but keep it in check. A good mix is 25 percent positive and 75 percent developmental (start doing . . . and stop doing . . .). Any nonactionable fluff (“I think you’re a great colleague” or “I love working with you”) should be discouraged and stamped out.

  Getting started: The first few feedback interactions will set the tone for the evening. Choose a feedback receiver who will receive tough feedback with openness and appreciation. Choose a feedback provider who will give the tough feedback, while following the 4A guidelines. Often the boss chooses to be the first to receive.

  Live 360s work because of our high talent density and “no brilliant jerks” policy. If your employees are immature, have bad attitudes, or lack the self-confidence to show public vulnerability, you might not be ready to run these events. And even if you’re in a state of perfect readiness, you’ll need a strong moderator who makes sure all feedback falls within the 4A framework and st
eps in if someone says anything out of line.

  Scott Mirer, VP of device partner ecosystem, shared an incident when someone stepped out of line during his team’s live 360, but he failed to address it in real time. This type of situation is rare, but dangerous when it happens, so the leader needs to be on the ball:

  I had my management team of nine people going through the Live 360 dinner. We have a very nice manager named Ian, and he was giving feedback to his colleague, a woman named Sabina. When it was Sabina’s turn to receive feedback, Ian said, “The way you work reminds me of the movie, Women on the Verge of a Nervous Breakdown.” He said it with a smile and Sabina nodded her head and took notes. For some reason at that moment it didn’t hit me—or I guess any of the others on the team—as to how inappropriate that statement was, because we all let it slide. I learned a week later that Sabina had been upset for days after that event. “It is not selfless or helpful to use gender-charged comparisons when giving feedback,” she confided with a colleague.

  If someone moves out of the 4A feedback guidelines to speak in a way that is sarcastic, aggressive, or generally unhelpful during the live 360, the leader needs to step in and correct the comment in real time. This situation is particularly important because we’ve been working extensively with our leaders to make sure that everyone feels included and to understand how off-the-cuff comments can feed bias even unconsciously. Scott missed his opportunity. But, in this case the company’s culture of candor saved the situation:

  I called Sabina and apologized for not catching the inappropriateness of Ian’s comment. But Sabina told me she was no longer upset. She had already spoken to Ian, he had apologized, and they had met for over an hour to work through it. So although it was a car-crash 360 dinner moment, overall I believe it was good for their relationship. Since then I’m a lot more careful to jump any time a piece of feedback starts to step over the line.

  Public humiliation? Group isolation? Communal shaming? If these words have been popping into your head as you read the last few pages, you’re not alone.

  A majority of Netflix employees do enter their first live 360 with trepidation. VP of content Larry Tanz (the guy who was shocked to hear Ted detail his 360 feedback to the team) explained the experience like this:

  Getting publicly ripped apart sounds like torture. Each time I go to a live 360 I’m nervous. But after you get started, you see it will be fine. Because everyone is watching, people are careful to be generous and supportive in the way they give the feedback—with the intention of helping you succeed. No one wants to embarrass or attack you. If anyone steps out of line, they will almost always get immediate feedback about their feedback: “Hey—that’s not helpful!” If the live session goes well, everyone gets a lot of tough advice, so you’re not singled out. When your turn finally comes around, it might be difficult to hear what people have to say, but this is one of the greatest developmental gifts of your life.

  Just about every Netflix employee has a story about how a live 360 helped them. Some think the evenings are an enjoyable way to build bonds with their colleagues. Others like them just about as much as Reed enjoys those annual trips to the dentist. They know it’s useful, but they dread it until it’s over. Sophie, a French communications manager working out of the Amsterdam office, fell into the second category:

  Like most French people, I build an argument the way we are trained in school. I introduce the principle, build up the theory, address any challenges to the argument, then come to my conclusions. Introduction, thesis, antithesis, synthesis, that’s how we French learn to analyze over many years in school.

  Americans often learn “get to the point and stick to the point.” To the French person it’s like, “How can you come to the point when you haven’t explained your argument?!” Netflix is of course an American company by origin. I have an American boss, and most of my teammates are American. Unbeknownst to me, my communication approach wasn’t working for them as intended.

  It was November 2016 and my boss led a live 360 event for the team. We were in a private room at the Waldorf Astoria hotel in Amsterdam for a four-course dinner. It was literally a “dark and stormy night,” and we were in an ornate medieval style room where the only light was a big crystal chandelier hanging over a big wood rectangular table. I was nervous but had soothed myself by thinking about all I had accomplished in my short time at Netflix. I believed I was clearly a “stunning colleague.”

  When it was my turn to receive feedback, my colleague Joelle began by telling me that I need to improve my communication skills. She said I lose the listener’s attention and take too long to get to the point. I was like, “Me? A poor communicator? I am a communications specialist! My greatest skill is my ability to communicate!” That feedback made no sense to me, so I prepared to discard it.

  But then my other American colleagues, one after another, went around the room giving me feedback: a lot of nice things, but also “You’re too theoretical,” “Your messages aren’t crisp enough,” “Your writing loses the reader’s attention.” After the fifth person I was like, “Okay, I get it! No need to gang up on me.” By the seventh person I started to feel defensive. I felt like saying, “Hey American dude, try working in a French company and see how they like your writing style!”

  But even for Sophie receiving the feedback was worth the discomfort of the evening:

  That dinner happened two years ago and was the most important developmental moment for me in the past decade. I’ve made enormous strides with my adaptability. I’ve mastered moving back and forth between the American and French communication patterns, which is incredibly challenging, but my colleagues have congratulated me in more recent live 360 sessions. I hated that evening at the Waldorf, but without it eventually I would have failed the Keeper Test. I don’t think I’d be at Netflix.”

  This is the classic type of answer you get when you ask Netflix people what it’s like to have your “areas for improvement” dragged across the dinner table while everyone is listening. Sometimes it’s embarrassing. Often it’s uncomfortable. But ultimately it boosts your performance. And for Sophie, it may have saved her job.

  THE EIGHTH DOT

  If you’re serious about candor at some point, you do need to implement mechanisms to assure candor happens. With just two institutional processes you can ensure that everyone gets candid developmental feedback at regular intervals.

  ▶ TAKEAWAYS FROM CHAPTER 8

  Candor is like going to the dentist. Even if you encourage everyone to brush daily, some won’t do it. Those who do may still miss the uncomfortable spots. A thorough session every six to twelve months ensures clean teeth and clear feedback.

  Performance reviews are not the best mechanism for a candid work environment, primarily because the feedback usually goes only one way (down) and comes from only one person (the boss).

  A 360 written report is a good mechanism for annual feedback. But avoid anonymity and numeric ratings, don’t link results to raises or promotions, and open up comments to anyone who is ready to give them.

  Live 360 dinners are another effective process. Set aside several hours away from the office. Give clear instructions, follow the 4A feedback guidelines, and use the Start, Stop, Continue method with roughly 25 percent positive, 75 percent developmental—all actionable and no fluff.

  Toward a Culture of Freedom and Responsibility

  After implementing the Keeper Test system, you will have achieved a high level of talent density in your office. Now, with the implementation of the written and live 360 feedback processes, you don’t just have a climate of candor around the office; you have institutionalized tools to ensure employees are talking openly and honestly to each other. With this much talent and candor, you can now focus your time on teaching your leaders to let go of whatever controls they are holding on to. We spoke about decision-making freedom i
n chapter 6, so conceptually your workforce is ready. But to develop a true environment of Freedom and Responsibility you’ll need to teach all managers in your company to lead with context, not control. That’s the topic of the next chapter.

  AND ELIMINATE MOST CONTROLS . . . !

  9

  LEAD WITH CONTEXT, NOT CONTROL

  Adam Del Deo, Netflix’s director of original documentary programming, felt queasy as he hung up the phone. Standing in the lobby of the Washington School House Hotel in Park City, Utah, he leaned against the wall, took a deep breath, and closed his eyes. When he opened them, his colleague, senior counsel Rob Guillermo, was standing next to him. “Hey, Adam, is everything okay? Did you get news on the Icarus bid?”

  Adam and Rob were attending the Sundance Film Festival in January 2017. The previous day, they’d watched a documentary, Icarus, about the Russian doping scandal. According to Adam, it was one of the greatest documentaries he’d ever seen:

  It follows this crazy story of a Colorado-based journalist, Bryan Fogel, who is also a cyclist and wants to run an experiment to see if he can dope himself, get away with it like Lance Armstrong did, and show the extreme progress the doping allows him to make in a bike race. Through a contact he reaches out to the head of Russia’s anti-doping program, this guy Rodchenkov, who agrees to help. They become Skype friends. But partway through Bryan’s experiment, Russia is accused of doping its Olympic athletes—and it’s Rodchenkov who’s been running that doping program (alongside his anti-doping program!). Rodchenkov flees Russia and hides out in Fogel’s house, afraid Putin is going to have him killed.