Turns Out There Are Rules Reed Hastings - Even for Netflix

How much hype was there surrounding the book "No Rules Rules: Netflix and the Culture of Reinvention" by Netflix CEO Reed Hastings, which was published in 2020. It was written with INSEAD's Erin Meyer, who helps the "world's most successful leaders navigate the complexities of cultural differences in a global environment." In other words, she's the top expert in the world on how to mix cultures together in a way that is extremely successful for business. At the time of its release these two mortals achieved god-like status in the world of business. Even I bought into the beautiful things they were saying and posted about the book last April. But I did say that for any method to be successful it has to be an open source method that can be applied by all, which clearly this philosophy wasn't.

What was everyone so excited about? It appeared that Netflix had thrown all the conventional rules of business out the window, and were introducing something far better. The main focus was about creating an environment of innovation:

"In?No Rules Rules, Netflix CEO Reed Hastings and business professor and author Erin Meyer detail how the company achieved this level of success by implementing unconventional management practices that empower employees and promote innovation." shortform.com

"No Rules Rules?explained the incredibly unique and efficient company culture of Netflix and their innovative way of running the business." fourminutebooks.com

"It's time to do things differently. Trust your team. Be radically honest. And never, ever try to please your boss." mphonline.com

"Hastings rejected the conventional wisdom under which other companies operate and defied tradition to instead build a culture focused on freedom and responsibility, one that has allowed Netflix to adapt and innovate as the needs of its members and the world have simultaneously transformed." Google books

Innovation, trust, freedom - a global team of 10K people working on exciting creative projects together. What could possibly go wrong?

Netflix Hunts for Cost Cuts, From Cloud Computing to Corporate Swag WSJ report by Sarah Krouse and Jessica Toonkel

What Could Possibly Go Wrong?

The book was a New York Times best-seller and FT short-listed best business book of 2020. But now it's a couple of years later and Netflix is looking to cut costs by hiring people who they can pay a lot less.

LinkedIn's Chief Editor Daniel Roth commented: "Wow. This is a huge change from Reed’s previous philosophy of staffing the company as if it were an NBA team – only hiring the best and then paying so well that hiring and separating take limited time."

CommerceHub's CFO Matthew Hardy commented: "For anyone who has read "No Rules Rules", this definitely sounds like a change from their philosophy. Driving and maintaining culture is difficult when doing so runs into the reality of needing to deliver a certain level of profitability and the elements that make your culture unique also result in higher expenses. Will be interesting to see how the culture fundamentally shifts over the next 1-2 years."

What's the flaw? The same fatal mistake all CEO's are making these days, by not taking the growing human ego into account.

Designed With A Flaw

So reality has definitely hit home and let's all be clear on one thing - we're in business to make a profit. With all due respect to the wonderful culture they promoted, it was designed with a flaw that ultimately led to where the company is now, acting like a tiny startup instead of one of the greatest success stories of our time. What's the flaw? The same fatal mistake all CEO's are making these days, by not taking the growing human ego into account. They pay people a small fortune to come up with these brilliant theories, and promote them to the world. But these are ideas that a human ego came up with. So unless they include a full strategy for overriding the growing human ego, they are bound to fail now that we are heading into the new era. Why? Because the rules of the game have changed. And every CEO should start learning them.