Reinventing Your Culture – What Happened at Netflix that is so Important

by Feb 13, 2014

In the recent Harvard Business Review article, Patty McCord talks about how Netflix “reinvented” HR. Now when I mention the term HR, many of us feel a shiver go down our spine. Which is very very unfortunate. What we need to think about is how we can apply innovation and re-imagination to the most important asset that we have in the company: our people, and their management.

The basis for Patty’s article is a series of 127 slides that were shared on Slideshare by Patty and her co-author Reed Hastings. The slides have been viewed over 5 million times on the Internet. Yes, 5 million. here they are:

It’s a fabulous set of slides, but the article is a “must read”. here are the five tenets that they used th reshape their HR management:

  • Hire, Reward, and Tolerate Only Fully Formed Adults
  • Tell the Truth About Performance. Netflix stopped doing formal performance reviews, and instituted informal 360-degree reviews instead. They kept them fairly simple: People were asked to identify things that colleagues should stop, start, or continue. In the beginning they used an anonymous software system, but over time they shifted to signed feedback, and many teams held their 360s face-to-face. HR people can’t believe that a company the size of Netflix doesn’t hold annual reviews. “Are you making this up just to upset us?” they ask. They are not. If you talk simply and honestly about performance on a regular basis, you can get good results—probably better ones than a company that grades everyone on a five-point scale.
  • Managers Own the Job of Creating Great Teams. They continually told managers that building a great team was their most important task. They didn’t measure them on whether they were excellent coaches or mentors or got their paperwork done on time. Great teams accomplish great work, and recruiting the right team was the top priority.
  • Leaders Own the Job of Creating the Company Culture
  • Good Talent Managers Think Like Businesspeople and Innovators First, and Like HR People Last
  • Patty concludes:

    “Here’s a simple test: If your company has a performance bonus plan, go up to a random employee and ask, “Do you know specifically what you should be doing right now to increase your bonus?” If he or she can’t answer, the HR team isn’t making things as clear as they need to be.

    At Netflix I worked with colleagues who were changing the way people consume filmed entertainment, which is an incredibly innovative pursuit—yet when I started there, the expectation was that I would default to mimicking other companies’ best practices (many of them antiquated), which is how almost everyone seems to approach HR. I rejected those constraints. There’s no reason the HR team can’t be innovative too.”

    Wonderful article. Read it here.

    Jeffrey Tobias

    About Jeffrey Tobias

    Dr Tobias is an accomplished innovation consultant and entrepreneurship strategist, drawing expertise from the academic, entrepreneurial and corporate worlds. Jeffrey’s commercial and business experience is particularly focussed on lean startup, design thinking and leadership. Prior to The Strategy Group, Jeffrey was Cisco’s Global Lead for Innovation in the Internet Business Solutions Group helping Fortune Global 500 companies improve customer experience and grow revenue by transforming how they do business.
    Jeffrey is a professor of innovation and entrepreneurship teaching MBA students at the Australian Graduate School of Business at the University of New South Wales. An active angel investor, Jeffrey is on the board of various well-known startups.

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    Managing Director, The Strategy Group

    Dr Tobias is an accomplished innovation consultant and entrepreneurship strategist, drawing expertise from the academic, entrepreneurial and corporate worlds. Jeffrey’s commercial and business experience is particularly focussed on lean startup, design thinking and leadership. Prior to The Strategy Group, Jeffrey was Cisco’s Global Lead for Innovation in the Internet Business Solutions Group helping Fortune Global 500 companies improve customer experience and grow revenue by transforming how they do business.
    Jeffrey is a professor of innovation and entrepreneurship teaching MBA students at the Australian Graduate School of Business at the University of New South Wales. An active angel investor, Jeffrey is on the board of various well known startups. Jeffrey’s corporate background includes leading global innovation strategy at Cisco, working with large corporates such as Adobe, Westpac, Telstra, Woolworths, and Perpetual.

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