Netflix: Lessons in Building a High-Performance Organization

Netflix has long been admired not only for its market dominance in the streaming industry but also for its unique and influential company culture. The "Netflix Culture Deck," which has been widely circulated and discussed, outlines the key principles that have driven the company’s success. This article synthesizes the teachings from the Netflix culture deck, providing insights into how organizations can cultivate a high-performance environment that fosters innovation, accountability, and sustained success.

1. Values Are What We Value

Netflix begins with a simple yet profound premise: real company values reflect who gets rewarded, promoted, or let go. Unlike many organizations where values are mere words etched on a wall, at Netflix, values are the behaviors and skills that are genuinely encouraged and upheld. The company has identified nine key behaviors and skills that they value most in their employees: Judgment, Communication, Impact, Curiosity, Innovation, Courage, Passion, Honesty, and Selflessness. By aligning actions with these values, Netflix ensures that its culture is lived, not just stated.

2. High Performance

Netflix places a premium on performance. The company operates with the philosophy that adequate performance earns a generous severance package. This might sound harsh, but it reflects Netflix’s commitment to building a team of top performers. By treating its workforce like a professional sports team rather than a family, Netflix emphasizes the importance of having “stars” in every position. This high-performance culture is maintained through the "Keeper Test," where managers regularly assess whether they would fight to keep an employee if they were to leave for a similar role at a competing company.

3. Freedom and Responsibility

One of the most defining aspects of Netflix’s culture is the balance between freedom and responsibility. Employees are granted significant freedom to make decisions and take action without being bogged down by unnecessary rules and processes. However, this freedom comes with the responsibility to act in the best interests of the company. Netflix’s approach to policies like vacation time and expenses is minimalistic, focusing on principles rather than detailed rules. For example, instead of a rigid vacation policy, Netflix simply trusts employees to take time off as needed, based on their judgment and the demands of their role.

4. Context, Not Control

Netflix believes in managing through context rather than control. This means providing employees with the necessary context, such as strategy, goals, and clear communication, so they can make informed decisions independently. The company avoids micromanagement and instead invests in setting a clear direction. Managers are encouraged to articulate the broader picture and trust their teams to execute. This approach not only empowers employees but also fosters a culture of accountability and innovation, where individuals are motivated to contribute meaningfully to the company’s success.

5. Highly Aligned, Loosely Coupled

Netflix strives to create a balance between alignment and autonomy. Teams are highly aligned in terms of goals and strategy but are loosely coupled in terms of how they achieve those goals. This structure allows for flexibility and speed, enabling teams to innovate and adapt quickly without being hindered by excessive coordination or bureaucracy. Leaders focus on setting clear goals and strategies while trusting teams to determine the best tactics to achieve them. This model is particularly effective in a creative environment, where agility and responsiveness are crucial.

6. Pay Top of Market

Compensation at Netflix is designed to attract and retain top talent by paying at the top of the market. The company’s philosophy is that one outstanding employee is worth more than two adequate ones. Netflix regularly reviews and adjusts salaries to ensure that employees are compensated at a rate that reflects their value in the market. This approach not only helps in retaining talent but also ensures that employees feel valued and motivated to perform at their best.

7. Promotions and Development

Netflix views employee development as a responsibility of the individual rather than the corporation. The company doesn’t rely heavily on formalized development programs; instead, it creates an environment where high-performing employees can thrive and grow through challenging work and interactions with stunning colleagues. Netflix believes that individuals should manage their own career paths, with the company providing opportunities for growth rather than prescribed career trajectories.

Netflix’s culture is a deliberate, evolving framework designed to support the company’s goals of continuous innovation and excellent execution. By fostering a high-performance environment where freedom is balanced with responsibility and where employees are empowered to make decisions in the right context, Netflix has built a culture that not only supports but drives its business success. As markets evolve and new challenges arise, Netflix’s culture of flexibility, accountability, and high performance ensures that the company can adapt and continue to lead the industry.

The lessons from Netflix’s culture deck are applicable not only to companies in the tech and entertainment industries but to any organization seeking to cultivate a high-performance, innovative workplace. By focusing on values that are lived, not just stated, and by creating an environment where top performers can thrive, organizations can achieve sustained success in an ever-changing business landscape.