No Rules Rules: Key Takeaways

No Rules Rules is a story of how Reed Hastings (Founder of Netflix) created a company that flipped the status quo. Instead of creating more rules as Netflix grew in popularity, Hastings gave his employees more freedom. At Netflix -

1. Adequate performance gets a generous severance, and hard work is irrelevant.

2. You don’t try to please your boss, you practice radical candor instead.

3. Employees never need approval, and the company always pays the top of the market rates.?

A. Increase Talent Density - A Great Workplace is Stunning Colleagues

“Once you have high talent density in the workplace and have eliminated less-than-great performers, you’re ready to introduce a culture of candor." – REED HASTINGS

B. Then Increase the Candor - Encourage your team to say what they think with a Positive Intent.

C. Go ahead and remove all kinds of Controls - Like Leave Policy, Travel and Expense Reimbursement?Approval?mechanism.

“Many employees will respond to their new freedom by spending less than they would in a system with rules. When you tell people you trust them, they’ll show you how trustworthy they are.”– REED HASTINGS

D. Strengthen Talent Density by Pay Top of Market.

E. No decision-making approval is required, release more control.

F. The Keeper Test?

“If you have a team of five stunning employees and two adequate ones, the adequate ones will sap managers’ energy, so they have less time for the top performers, reduce the quality of group discussions, lowering the team’s overall IQ, force others to develop ways to work around them, reducing efficiency, drive staff who seek excellence to quit, and show the team you accept mediocrity, thus multiplying the problem.” – REED HASTINGS

G. A Circle of Feedback - Netflix also introduced the concept of a circle of feedback, which was their dedicated sessions for feedback. Every six to twelve months, they ensured all employees took part in a circle of feedback. This is not the same as performance reviews, as these sessions do not encourage people to be candid. Performance reviews are for leaders, while a circle of feedback is for all employees. Therefore, sit your teams in a circle and avoid anonymity and numeric ratings. If you talk about outcomes, do not link them to raises or promotions. Plus, make sure the floor is open to all team members to comment on the team’s current state.?

The Four As

Erin Meyer (authors) recommends implementing the 4As to improve the feedback utilized by your team.

I. Aim to Assist -Your feedback should always be driven by a positive purpose. You should never be giving feedback based on frustration or hate. You can always turn a traditionally negative comment into a positive one by being careful with your words.?

II. Actionable -Your feedback should always have a potential action. Feedback without an action that could be taken is useless.?

III. Appreciate - As well as effectively giving feedback, you must also learn how to accept feedback. Instead of looking for an excuse when giving feedback, try to relax, and appreciate that feedback is coming from a positive place.

IV. Accept or Discard - Although positive feedback should be accepted, you will also sometimes receive non-constructive feedback. Non-constructive feedback can be discarded.

H. Eliminating Controls - With high-talent density and a candid environment with thoughtful feedback for improvement, Netflix has been able to eliminate most controls - this frees up Netflix employees to focus on doing their job to the best of their abilities and not worry about rules and policies.

The book clearly outlines how Netflix is a culture where leaders "Lead with context, not control" and how they are "Highly aligned but loosely coupled." What this means is that the leaders set the context/vision very clearly, and that is percolated well through the various layers of the "Netflix tree" where the CEO acts as the root (setting the vision and context). And each small branch is empowered to make decisions and get the job done. For those of you who want to try this, the book walks through the various steps of eliminating controls — starting from easier ones like Vacation and Travel policies and how to go about it.

Application

There are many actionable insights for startup leaders from this book, including eliminating various policies and the multiple ways of cultivating a candid environment. One specific framework for encouraging innovation, particularly caught my attention to try out - The Netflix Innovation Cycle:

• “Socialize” the idea?- talks about a specific framework to actively solicit feedback and dissenting voices on new ideas.
• For a big idea, test it out?- it is important to test out ideas even if the leaders don't believe in the idea - the team should feel comfortable testing out ideas.
• As the informed captain, make your bet?- the key to the innovation cycle is for the individual closest to the situation to make the call after considering all the inputs from the above steps. The person need not get consensus to move forward.
• If it succeeds, celebrate. If it fails, sunshine it?- not all ideas work out. If it works, make it a point to celebrate - particularly if someone went ahead with an idea despite a leader's apprehension and was right about it. And if it fails, boldly "sunshine it" on why the idea failed and learnings. For promoting a culture of innovation, leaders' sun shining failed ideas is a key step, and without this, we won't have an innovative environment.

Would love to hear from you on your critical takeaways on this topic of "No Rules Rules". Have you read this book, do share some of your learnings. Looking forward to hearing from you about your experience while setting F&R for your startup :)