Powerful (Patty McCord)
Netflix has a workplace culture quite different from the other members of the so-called “FAANG” group (Facebook, Amazon, Apple, Netflix, Google). Instead of trying to get talent as cheaply as possible, Netflix explicitly aims to pay at the very top of the market. They have very few internal rules and controls, and instead give staff a huge degree of autonomy – for example: Netflix doesn’t have expense accounts, just a “buy what you need and don’t abuse the privilege” policy. It’s not all sunshine and rainbows: they’re also famous for firing people very quickly. And not just for poor performance: if a team’s direction changes and someone’s no longer a fit, even if they’ve been a top performer for years, they can be easily fired.
Patty McCord was Netflix’s first head of HR and a member of its executive team for 14 years. She (along with Reed Hastings, Netflix’s founder and CEO) is the primary person responsible for this culture. She’s probably best known as the co-author (with Hastings) of Netflix’s Culture Deck, a 125-slide deck that lays out this unusual culture. My understanding is that some things have changed since that deck was published in 2009, but by and large, Netflix still operates this way. The deck’s a great read; I recommend reading through it if you haven’t already
I expected Powerful: Building a Culture of Freedom and Responsibility (2017) to be a rehash of the culture deck. I wasn’t expecting it to go as deep as it does, nor to enjoy it as much as I did. It’s a lot more than a drawn-out Culture Deck. It’s also a memoir of the early days of Netflix and the backstory that went into creating this culture, and that backstory helps explain some of the Culture Deck’s most counterintuitive parts. It also digs deep into parts of that culture, with quite a bit of detail about how these ideas work in practice.
The best parts are when McCord mixes her creating and understanding of this culture with her personal experience of the culture. The most vivid example – and my favorite part of the book – is in her telling of how she came to leave Netflix.
When McCord and Hastings were building Netflix’s culture, they didn’t want to use the common (and problematic) “family” metaphor. Instead:
[W]e realized it was important that everyone understand we were going to make sure our teams were constantly evolving. In discussing this, we decided to use the metaphor that the company was like a sports team, not a family. Just as great sports teams are constantly scouting for new players and culling others from their lineups, our team leaders would need to continually look for talent and reconfigure team makeup.
The most controversial part of this metaphor comes up around letting people go. For athletes, being cut is a normal part of their career. It’s rare for them to take being cut or traded personally; most of the time, it’s well understood that the coach’s goal is to win a championship, and that means putting together the best team possible. When someone’s not a fit for the team it’s not necessarily a reflection of their skills in any sort of absolute sense, merely a question of how these skills fit (or don’t) into the rest of the team. McCord wants us to think about work teams the same way.
Netflix is famous for eschewing most of the rules around departures, and simply showing people the door. McCord has little patience for the charade that is Performance Improvement Plans (PIPs):
The conventional wisdom is that a company should put an employee it’s thinking of saying good-bye to on a PIP (performance improvement plan). The way PIPs are often carried out is particularly cruel, because they’re really all about proving someone is incompetent. Often the problem isn’t even that a person is not a high performer or doesn’t have the potential to be a high performer in another job at another company. Often there is nothing wrong with the way they work or the effort they’re putting in or the way they are interacting with colleagues or their boss. They might be fabulous. They’re just not right for their job as it is evolving, or they won’t be high performing in the next job you need done. And there’s no reason to put people who simply don’t have the skills you need on a performance improvement plan.
I also came to realize that when you hire someone and it turns out that they can’t do the job, the problem is with the hiring process, not the individual. You simply hired the wrong person. It’s not their fault! So you shouldn’t make them feel like it is.
So, McCord created this culture where managers think of their teams more like sports teams, and where it’s very easy to “cut” team members who aren’t working out. How do you think she ended up leaving Netflix? That’s right, she got cut:
Eventually, when we worked together at Netflix, Reed and I both had to come to terms with the fact that it was time for me to go. Like anyone who has worked hard and helped to build something they are proud of, I found the thought of leaving painful. Walking away from an exciting future that I wouldn’t be part of was perhaps the most difficult part. I had experienced this many, many times from the other side of the table. I was not immune to the emotion of the situation. But I had tremendous respect for Reed’s discipline to choose his team for the future.
I enjoyed Powerful, much more than I thought I would. I don’t agree with everything in it; in particular, I’m not sure I agree 100% with the “team” analogy. Sports teams have a sort of imperative to win championships; there’s deep competitiveness built into the very nature of sport. But not every company needs to strive to be “the best”; companies can have other goals that aren’t this nakedly competitive.
Powerful is great: one of the better dissections of what “culture” really is and how it works. I recommend it to anyone in a position to influence company culture. You may or may not want to mimic Netflix, but thinking through which parts of Netflix’s culture you do and don’t want to mimic is an excellent exercise – it certainly was for me.