“For many centuries, almost all businesses were run by families,” Erin Meyer writes, explaining the persistence of the metaphor to describe modern corporate communities. “The family represents belonging, comfort and commitment to helping one another over the long term.”
She might add that leaders have redoubled their emphasis on such values since the pandemic disrupted the office-based community, flinging most of its members into uncertain homeworking exile, there to worry about their future health and careers.
Meyer and her co-author Reed Hastings, founder of Netflix, make clear, though, that family is a faulty model for ambitious, growth-hungry businesses such as the video-streaming and media group.
A better, though equally hackneyed, metaphor is that of the professional sports team, Hastings explains, “working to create strong feelings of commitment, cohesion and camaraderie, while continually making tough decisions to ensure the best player is manning each post”.
The slogan “we are a team, not a family” crops up at the halfway point of No Rules Rules. It is central to the image of Netflix that emerges from the book: a group of highly skilled, highly motivated, hard-edged professionals whom Hastings and his lieutenants trust to perform well within a radical, no-rules corporate culture. If that performance starts to flag, they know they will be dropped.
The way Netflix works has fascinated Silicon Valley since Hastings released its 125-slide internal “Culture Deck” on the internet 11 years ago. Sheryl Sandberg of Facebook described it as possibly “the most important document ever to come out of the Valley”. Yet the fact that few other companies have been able to apply the whole template successfully is one reason why this book exists.
No Rules Rules takes the form of an exchange between Hastings and Meyer, an academic and expert on business culture. She injects a tiny note of scepticism, and some chunky references to relevant research, to offset Hastings’ faintly superior air of “do not try this at home” superiority, as they walk readers through the process of establishing a “high-talent-density workplace”.
As an example of the executive memoir-manual, the book is colder than another top-down view of West Coast knowledge work — Creativity, Inc, Ed Catmull’s endearing 2014 trial-and-error account of how he and others built Pixar, the animation studio. It is also significantly less self-deprecating.
Hastings does acknowledge failures and mis-steps. In fact, he sets up an earlier venture, a software business called Pure, as though it was a clumsy anti-Netflix — rules-bound, hierarchical and secretive. Yet as Meyer points out, Pure’s annual revenue doubled four years in a row and it was ultimately sold for $750m, providing Hastings with the seed-funding for Netflix.
Hastings also describes his humiliating attempt to phase out Netflix’s DVD-by-mail service, by creating Qwikster in 2011. But he turns the debacle into an epiphany, which prompted the group to start soliciting dissent from staff who had previously been afraid to contradict the founder.
More valuable is the way in which Hastings and Meyer highlight the paradoxes hinted at in the book’s title. That famous slide deck is one. More than 100 pages of principles were required to establish a culture based on freedom. Those principles, as the Qwikster fiasco demonstrated, need constant tweaking and polishing, while freedom is only available to those who also demonstrate responsibility — the second part of an “F&R” mantra proclaimed by all Netflix staff.
The question for Netflix is how well such principles will hold up as it continues to expand globally. As Hastings told the Financial Times in a recent interview, when asked why he did not step back from his co-chief executive role, “I don’t feel we have entertained the world!”
It is here where Meyer, whose last book The Culture Map was a guide to cross-border working, comes into her own. She and Hastings make clear that applying some of the original Netflix ideals across its global footprint, from the upfront Dutch to the more diffident Japanese, was almost as great a challenge as sourcing suitable programming for its diverse customers around the world.
Some of the lessons they draw for other multinational businesses may seem obvious — “Adapt . . . your delivery and your reaction to the culture you’re working with to get the results that you need”, for example. But that does not make such lessons any easier to apply, as close-knit families reluctantly admitting new members know only too well.
No Rules Rules: Netflix and the Culture of Reinvention, by Reed Hastings and Erin Meyer, WH Allen, RRP £20, Penguin Random House, RRP $28, 320 pages
Andrew Hill is the FT’s management editor