I've been always interested in alternative ways to do things. Questioning why is this done in such a way could get you either to the fundamental understanding of the process nature, or you possibly would, as a common lazy person find a way to "optimize" it in some way.

This book resonates with some ideas I had during the few last years and crystalizes into something meaningful. To me, the book has focused on an ongoing experiment and the process is getting better.

During vacation, there is plenty of time and it seems like perfect timing to elaborate on this topic a bit deeper.

Culture eats strategy for breakfast. (Peter Drucker)

Whatever is dictated in a hierarchical (and probably any other type of) company will fail to be implemented rigorously if it doesn't fit the culture.

The Netflix culture has two significant features that are rarely found in the other companies:

People over Processes (people are the most valuable resource)
Innovation over efficiency (tendency to pay more for the extended flexibility, just because future is unknown)

3 blocks are helping to build the culture. One block is a preliminary requirement or rather a foundation to the next one.

Build up talent density
Increase candor
Reduce controls

By having these blocks the principle of Freedom and Responsibility (F&R) could be preached.

Let's go one-by-one through these blocks and explore what's unique behind them

Build up talent density

There is a solid distinction between adequate and talented, which is taken to an extreme, but it makes perfect sense if you consider the efficiency discrepancies between transactional and creative positions.

The transactional worker. It's a person that does the same thing over and over again. E.g. Ice-Cream scooper, barista, package delivery guy, or even a hairdresser.

The creative worker. It's a person that creates new things of different value. E.g. painter or designer, software developer or an architect, director, and scriptwriter.

The best transactional worker may deliver 2-3 times more value by doing more machanical work, while with a creative one this number could be many times larger.

For Netflix (and IT companies) the creative type is the most important one. Within the creative group, you can distinguish between adequate and top performers. Adequate ones are doing the job fine, but not shining with excellence or some extraordinary outcomes.

The adequate creative performers could (or potentially will)

Sap manager’s energy, so they have less time for the top performers
Reduce the quality of group discussions lowering the team’s overall IQ.

Never argue with stupid people, they will drag you down to their level and then beat you with experience. (Mark Twain)

Force others to work around them, reducing the efficiency.

I did that many times: there was a need to work around different personnel at various hierarchical levels and departments.

Drive staff who seek excellence to quit. Here is a nice article about this
And Show the team, that you (as manager) accept mediocrity thus multiplying the problem

Hiring not the best + feeling of immense pressure to succeed = micromanagement

The reader may disagree on these points. An adequate person might have other useful skills, which are beneficial to the team, yet in the end, it is important to distinguish that person by saying that he is not an informed captain and has less responsibility. The adequate notion is biased, and therefore the context of lightning speed collaboration and efficiency should be taken into account to set this notion.

The Top creative performers

It’s about the joy of being surrounded by people who are both talented and collaborative. The ones who can help you be better. When every member is excellent, performance spirals upward as employees learn from and motivate one another.

Performance is contagious

Once you stop learning or stop excelling, that’s the moment for you to pass that spot onto someone who is better fitted for it and make move on to a better role for you.

On salary and bonuses

Any employee has a household to keep and bills to pay. The market nowadays is not static and therefore hordes of recruiters are constantly in search of talented people, so why not take advantage of a better salary? We're talking about job-hopping that would aid this. As a manager, you would like to ensure that employee is not worried about being underpaid. Netflix always pays on the top of the market, asks employees to talk to recruiters, and share the outcome. Could you imagine this? This is brilliant! On the downside of that - if there is someone better to fit your role - you will receive a generous payout as a mutual agreement when you are asked to quit.

Bonuses are bad for flexibility. The entire bonus system is based on the premise that you can reliably predict the future, and you can set the objective at any given moment that will continue to be important down the road. Having this, employees will focus on target instead of what’s best for the company in the present moment.

Annual Performance evaluations are bad, even if you correct the goals semi-annually. After numerous corrections, fake goals, goals that are misaligned within the company or the ones where there is no personal sense of ownership, and last but not least, goals that are not supported by the company the one could decide to make PE goals as abstract as possible, thus working around the fact that a team is extremely agile and receives course correction more often than organizational processes may adapt to.

At the end of the day If crediting bank is not taking into account your performance bonuses, why should you?

To sum up, the salary topic let's iterate approaches

Netflix way

Pay your Top of the Market worth

Probably your company’s way

Raise pool ( This pool funds all salary increases for the fiscal year, including performance increases.)
Salary band (the minimum and maximum amount a company is willing to pay someone within a job level)

Increase candor

Candor

the quality of being open and honest; frankness.

Once there are talented and collaborative people around, it's time for the next shift - improve everything with feedback. This looks similar to reinforced learning in ML.

Guidelines

Say what you think (with positive intent), but get feelings, opinions and feedback out onto the table, where they could be dealt with.

Only say about someone what you would say to their face. The qualifying question would be: “What did that person say when you spoke to him about this directly?”

The efficiency recipe

High performance + selfless candor = extremely high performance.

Preach feedback anywhere, anytime. Clarify and reinforce the difference between being a selflessly candid and brilliant jerk. It’s important to remember that asking questions triggers self-reflection

Be aware of your state:

Never give criticism when you are still angry
Use a calm voice giving corrective feedback

4A Feedback

4A is about feedback that makes sense. There shouldn't be any space for questions like " And what am I supposed to do with this feedback?" or "Did she do anything about my feedback?".

Giving feedback

Aim to assist
Actionable

Receiving feedback

Appreciate
Accept or Discard

Reduce controls

If you want to build a ship, Don’t drum up the people To gather wood, divide the Work, and give orders. Instead, teach them to yearn For the vast and endless sea. (Saint-Exupéry)

Only direction matters. A qualified professional would be able to figure out the best way to do this.

Lead with context, not control (Leslie Kilgore)

There are no rules, but there is context. Context sets some limitations to guide creativity in a proper direction.

Highly aligned, Loosely coupled (Netflix mantra)

Freedom could lead to the wrong direction, and therefore aligning appropriate colleagues would aid to get feedback when something goes wrong. There is a notion of being an informed captain, meaning that you are more informed and fully responsible for your project or endeavor.

Whisper wins and shout out loud the mistakes

Some project bets would work, some not. Innovation is about being risky and betting on something new, succeeding, or learning from failure. As long as you’ve already shown yourself to be competent, talking openly and extensively about your own mistakes - and encouraging all your leaders to do the same – will increase trust, goodwill, and innovation through the organization.

Do not seek to please your boss. Seek to do what is best for the company. The more people are given control over their projects, the more ownership they feel, and the more motivated they are to do their best work.

Steps to take before (and after) you place your bet

The Netflix innovation cycle

“Farm for dissent”, or “socialize” the idea
For a big idea, test it out
As the informed captain make your bet
If it succeeds, celebrate. If it fails, sunshine it.

3 steps that help to learn from failure

Ask what learning came from the project
Don’t make a big deal about it
Ask to “sunshine” the failure

Feedback. Extending 4A to 5A

Adapt – your delivery and your reaction to the culture you’re working with to get the results that you need.

The best reference to describe this would be “the culture map” book.

The topic is better explained by multiple examples to get that perception difference of various communication means.

Some cultures prefer direct feedback, some prefer indirect. Some cultures build trust based on tasks, while others on relations.

An example from my own experience is related to Pull Request comments.

Receiver’s perception was that there is a commanding tone, high critic and strong opinion on how things should be. The review style was the same that was used with another team for a couple of years and was accepted as standard. So why does a new recipient understand it differently? He has another culture! One of the fixes was adding “these are all recommendations, use them under your discretion” to the review notes.

Conclusion

It’s Jazz, not a symphony. Jazz emphasizes individual spontaneity.

Embrace a constant change. Operate a little closer to the edge of chaos.

Denis Liapin's Blog