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Netflix Culture:
Freedom & Responsibility
We Seek Excellence
Our culture focuses on helping us
achieve excellence
Seven Aspects of our Culture
• Values are what we Value
• High Performance
• Freedom & Responsibility
• Context, not Contr...
Many companies have nice sounding
value statements displayed in the
lobby, such as:
Enron, whose leaders went to jail,
and which went bankrupt from fraud,
had these values displayed in their lobby:
The actual company values,
as opposed to the
nice-sounding values,
are shown by who gets
rewarded, promoted, or let go
Actual company values are the
behaviors and skills
that are valued
in fellow employees
At Netflix, we particularly value the
following nine behaviors and skills
in our colleagues…
…meaning we hire and promote
You make wise decisions
(people, technical, business, and
creative) despite ambiguity
You identify root causes, and get
You listen well, instead of
reacting fast, so you can better
You are concise and articulate in...
You accomplish amazing
amounts of important work
You demonstrate consistently
strong performance so
colleagues c...
You learn rapidly and eagerly
You seek to understand our
strategy, market, customers, and
You are b...
You re-conceptualize issues to
discover practical solutions to
hard problems
You challenge prevailing
You say what you think even if it
is controversial
You make tough decisions
without agonizing
You take smart ri...
You inspire others with your
thirst for excellence
You care intensely about
Netflix‘s success
You celebrate win...
You are known for candor and
You are non-political when you
disagree with others
You only say things...
You seek what is best for Netflix,
rather than best for yourself or
your group
You are ego-less when searc...
Seven Aspects of our Culture
• Values are what we Value
• High Performance
• Freedom & Responsibility
• Context, not Contr...
Imagine if every person at Netflix
is someone you
respect and learn from…
Great Workplace is
Stunning Colleagues
Great workplace is not espresso, lush benefits,
sushi lunches, grand parties, or ni...
Like every company,
we try to hire well
Unlike many companies,
we practice:
adequate performance gets a
generous severance package
We’re a team, not a family
We’re like a pro sports team,
not a kid’s recreational team
Netflix leaders
hire, develop and c...
The Keeper Test Managers Use:
Which of my people,
if they told me they were leaving,
for a similar job at a peer company,
The Keeper Test Managers Use:
Which of my people,
if they told me they were leaving,
for a similar job at a peer company,
Honesty Always
As a leader, no one in your group
should be materially surprised of
your views
Honesty Always
Candor is not just a leader’s responsibility,
and you should periodically ask your
manager: “If I told you ...
All of Us are Responsible
for Ensuring We Live our Values
“You question actions inconsistent with our
values” is part of t...
Pro Sports Team Metaphor is
Good, but Imperfect
Athletic teams have a fixed number of
positions, so team members are alway...
Corporate Team
The more talent we have,
the more we can accomplish,
so our people assist each other all the time
Internal ...
We Help Each Other
To Be Great
Isn’t Loyalty Good?
What about Hard Workers?
What about Brilliant Jerks?
Loyalty is Good
• Loyalty is good as a stabilizer
• People who have been stars for us, and hit a bad
patch, get a near ter...
Hard Work – Not Relevant
• We don’t measure people by how many hours
they work or how much they are in the office
• We do ...
Brilliant Jerks
• Some companies tolerate them
• For us, cost to effective teamwork is too high
• Diverse styles are fine ...
Why are we so insistent on
high performance?
In procedural work, the best are 2x
better than the average.
In creative/inve...
Why are we so insistent on
high performance?
Great Workplace is
Stunning Colleagues
Our High Performance Culture
Not Right for Everyone
• Many people love our culture, and stay a long time
– They thrive on ...
Seven Aspects of our Culture
• Values are what we Value
• High Performance
• Freedom & Responsibility
• Context, not Contr...
The Rare Responsible Person
• Self motivating
• Self aware
• Self disciplined
• Self improving
• Acts like a leader
• Does...
Responsible People
Thrive on Freedom,
and are Worthy of Freedom
Our model is to increase
employee freedom as we grow,
rather than limit it,
to continue to attract and nourish
innovative ...
Most Companies
Curtail Freedom as they get Bigger
Employee Freedom
Why Do Most Companies
Curtail Freedom
and Become Bureaucratic
as they Grow?
Desire for Bigger Positive Impact
Creates Growth
Growth Increases Complexity
Growth Also Often Shrinks Talent Density
% High Performance Employees
Chaos Emerges
% High Performance Employees
Chaos and errors spike here – business
has become too complex to run
Process Emerges to Stop the Chaos
No one loves process, but
feels good compared to the
pain of chaos
“Time to g...
Process-focus Drives More Talent Out
% High Performance Employees
Process Brings Seductively Strong
Near-Term Outcome
• A highly-successful process-driven company
– With leading share in i...
Then the Market Shifts…
• Market shifts due to new technology or
competitors or business models
• Company is unable to ada...
Seems Like Three Bad Options
1. Stay creative by staying small, but therefore
have less impact
2. Avoid rules as you grow,...
A Fourth Option
• Avoid Chaos as you grow with Ever More High
Performance People – not with Rules
– Then you can continue ...
The Key: Increase Talent Density faster
than Complexity Grows
Increase Talent Density
• Top of market compensation
• Attract high-value people through
freedom to make big impact
• Be d...
Minimize Complexity Growth
• Few big products vs many small ones
• Eliminate distracting complexity (barnacles)
• Be wary ...
With the Right People,
Instead of a
Culture of Process Adherence,
We have a Culture of
Creativity and Self-Discipline,
Is Freedom Absolute?
Are all rules & processes bad?
Freedom is not absolute
Like “free speech”
there are some
limited exceptions to
“freedom at work”
Two Types of Necessary Rules
1. Prevent irrevocable disaster
– Financials produced are wrong
– Hackers steal our customers...
Mostly, though, Rapid Recovery is
the Right Model
• Just fix problems quickly
– High performers make very few errors
• We’...
“Good” versus “Bad” Process
• “Good” process helps talented people get more done
– Letting others know when you are updati...
Rule Creep
• “Bad” processes tend to creep in
– Preventing errors just sounds so good
• We try to get rid of rules when we...
Example: Netflix Vacation Policy
and Tracking
Until 2004 we had the standard
model of N days per year
We’re all working online some nights and
weekends, responding to emails at odd
hours, spending some afternoons ...
An employee pointed out…
We don’t track hours worked per day
or per week, so why are we tracking
days of vacation per year...
We realized…
We should focus on what people get done,
not on how many days worked
Just as we don’t have an 9am-5pm workday...
Netflix Vacation Policy
and Tracking
“there is no policy or tracking”
Netflix Vacation Policy
and Tracking
“there is no policy or tracking”
There is also no clothing policy at Netflix,
but no ...
No Vacation Policy Doesn’t Mean
No Vacation
Netflix leaders set good examples by
taking big vacations – and coming
back in...
Another Example of Freedom
and Responsibility…
Most companies have complex
policies around what you can
expense, how you travel, what gifts
you can accept, etc.
Plus the...
Netflix Policies
for Expensing, Entertainment,
Gifts & Travel:
“Act in Netflix’s Best Interest”
(5 words long)
“Act in Netflix’s Best Interest”
Generally Means…
1. Expense only what you would otherwise not
spend, and is worthwhile fo...
Freedom and Responsibility
• Many people say one can’t do it at scale
• But since going public in 2002, which is
Summary of
Freedom & Responsibility:
As We Grow, Minimize Rules
Inhibit Chaos with Ever More
High Performance People
Seven Aspects of our Culture
• Values are what we Value
• High Performance
• Freedom & Responsibility
• Context, not Contr...
If you want to build a ship,
don't drum up the people
to gather wood, divide the
work, and give orders.
Instead, teach the...
The best managers figure out how to
get great outcomes by setting the
appropriate context, rather than by
trying to contro...
Context, not Control
Context (embrace)
• Strategy
• Metrics
• Assumptions
• Objectives
• Clearly-defined roles
• Knowledge...
Good Context
• Link to company/functional goals
• Relative priority (how important/how time sensitive)
– Critical (needs t...
Managers: When one of your
talented people
does something dumb,
don’t blame them
ask yourself what context
you fa...
Managers: When you are tempted
to “control” your people, ask
yourself what context you could set
Are you articulat...
Why Managing Through
High performance people will do
better work if they understand the
Investing in Context
This is why we do new employee
college, frequent department meetings,
and why we are so open internal...
Exceptions to “Context, not Control”
• Control can be important in emergency
– No time to take long-term capacity-building...
Seven Aspects of our Culture
• Values are what we Value
• High Performance
• Freedom & Responsibility
• Context, not Contr...
Three Models of Corporate Teamwork
1. Tightly Coupled Monolith
2. Independent Silos
3. Highly Aligned, Loosely Coupled
Tightly Coupled Monolith
• Senior management reviews nearly all tactics
– e.g., CEO reviews all job offers or advertising
Independent Silos
• Each group executes on their objectives with
little coordination
– Everyone does their own thing
• Wor...
#3 is the Netflix Choice
1. Tightly Coupled Monolith
2. Independent Silos
3. Highly Aligned, Loosely Coupled
Highly Aligned, Loosely Coupled
• Highly Aligned
– Strategy and goals are clear, specific, broadly understood
– Team inter...
Highly Aligned, Loosely Coupled
teamwork effectiveness
depends on
high performance people
and good context
Goal is to be
Seven Aspects of our Culture
• Values are what we Value
• High Performance
• Freedom & Responsibility
• Context, not Contr...
Pay Top of Market
is Core to
High Performance Culture
One outstanding employee gets more done
and costs less than two adeq...
Three Tests for Top of Market
for a Person
1. What could person get elsewhere?
2. What would we pay for replacement?
3. Wh...
Takes Great Judgment
• Goal is to keep each employee at top of
market for that person
– Pay them more than anyone else lik...
Titles Not Very Helpful
• Lots of people have the title “Major League
Pitcher” but they are not all equally effective
• Si...
Annual Comp Review
• At many firms, when employees are hired,
market compensation applies
• But at comp review time, it no...
No Fixed Budgets
• There are no centrally administered “raise
pools” each year
• Instead, each manager aligns their people...
Compensation Over Time
• Some people will move up in comp very
quickly because their value in the marketplace
is moving up...
Compensation Not Dependent
on Netflix Success
• Whether Netflix is prospering or floundering,
we pay at the top of the mar...
Bad Comp Practices
• Manager sets pay at Nth percentile of title-
linked compensation data
– The “Major League Pitcher” pr...
When Top of Market Comp
Done Right...
• We will rarely counter with higher comp when
someone is voluntarily leaving becaus...
Versus Traditional Model
• Traditional model is good prior year earns a
raise, independent of market
– Problem is employee...
Employee Success
• It’s pretty ingrained in our society that the size
of one’s raise is the indicator of how well one
did ...
Good For Each Employee to
Understand Their Market Value
• It’s a healthy idea, not a traitorous one, to
understand what ot...
• Big salary is the most efficient form of comp
– Most motivating for any given expense level
– No bonuses
– In...
No Vesting or Deferred Comp
• We don’t want managers to “own” their people
with vesting – all comp is fully vested
• We wa...
No Ranking Against Other Employees
• We avoid “top 30%” and “bottom 10%”
rankings amongst employees
• We don’t want employ...
Seven Aspects of our Culture
• High Performance
• Values are what we Value
• Freedom & Responsibility
• Context, not Contr...
In some time periods, in some
groups, there will be lots of
opportunity and growth at Netflix
Some people, through both lu...
Baseball Analogy: Minors to Majors
• Very talented people usually get to move up, but
only true for the very talented
• So...
Netflix Doesn’t Have to Be for Life
• In some times, in some groups, there may not
be enough growth opportunity for everyo...
Three Necessary Conditions
for Promotion
1. Job has to be big enough
– We might have an incredible manager of something, b...
• If a manager would promote to prevent an
employee from leaving, the manager should
promote now instead of waiting...
• We develop people by giving them the
opportunity to develop themselves, by
surrounding them with stunning co...
Career “Planning” Not for Us
• Formalized development is rarely effective,
and we don’t try to do it
– e.g., Mentor assign...
We Support Self-Improvement
• High performance people are generally self-
improving through experience, observation,
We want people to manage
their own career growth,
and not rely on a corporation
for “planning” their careers
Your Economic Security is based
on your Skills and Reputation
We try hard to consistently provide
opportunity to grow both...
Seven Aspects of our Culture
• Values are what we Value
• High Performance
• Freedom & Responsibility
• Context, not Contr...
We keep improving
our culture as we grow
We try to get better
at seeking excellence
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