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No Rules Rules

book cover image and link to amazon

I found this book when I was looking to buy Working Backwards. It seemed like this might provide some of the same benefits as the Amazon book, namely, a description of how Netflix solved problems in a unique way while describing the problem space within the company at the time. I wasn't disappointed! Overall, the book was great. I'll review it by describing some of my favorite parts in detail. Unlike the Amazon book, this one focused primarily on the culture, people, and processes around how Netflix operates.

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Superstars Only

Netflix has a culture where they work to keep only the superstars while letting go of the rest. They liken this model to a professional sports team rather than the family model many companies espouse. It's normal for good people to leave and it isn't personal. The idea of "good performance gets a generous severance" sounds hyperbolic, but it makes sense given the rest of the systems in place for their company.

Talent Density

The previous point tends to drive this one. Netflix is constantly looking for ways to drive up talent density. They would prefer to have one superstar rather than ten adequate performers. A key point is this lightens the load on management. This wasn't an angle I had thought about before.

Improved Rewards

Pushing for talent density drove a change in the way they manage pay bands, raises, and bonuses. They've moved to a system where people get paid at the top of their market without bonuses or pay bands. Pay bands are a pretty terrible system and nearly every big company has them. It makes it difficult to reward people near the top of their band no matter how good they are.

This also applies to forced distributions. Most of the companies I've worked for have had some form of this. It's a bad system that makes it impossible to have a team of superstars. I've been in many meetings where a manager says, "It's your turn to be the low performer this year even though you aren't." There aren't many ways to demotivate someone as effectively as this.

Freedom and Responsibility

Finally, Netflix has a culture of freedom and responsibility. They don't have a lot of rules and they prefer it that way. By treating your employees like adults and giving them more freedom, you can see an outsized amount of delivery. This aligns well with an engineering finding from LinkedIn a year or so ago that found decisions in the direction of Treating People like Adults were generally the right ones from a value delivery and happiness standpoint.

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