Note: While reading a book whenever I come across something interesting, I highlight it on my Kindle. Later I turn those highlights into a blogpost. It is not a complete summary of the book. These are my notes which I intend to go back to later. Let’s start!

  • It was not obvious at the time, even to me, but we had one thing that Blockbuster did not: a culture that valued people over process, emphasized innovation over efficiency, and had very few controls. Our culture, which focused on achieving top performance with talent density and leading employees with context not control, has allowed us to continually grow and change as the world, and our members’ needs, have likewise morphed around us.  
  • If you give employees more freedom instead of developing processes to prevent them from exercising their own judgment, they will make better decisions and it’s easier to hold them accountable. This also makes for a happier, more motivated workforce as well as a more nimble company. But to develop a foundation that enables this level of freedom you need to first increase two other elements: + Build up talent density. At most companies, policies and control processes are put in place to deal with employees who exhibit sloppy, unprofessional, or irresponsible behavior. But if you avoid or move out these people, you don’t need the rules. If you build an organization made up of high performers, you can eliminate most controls. The denser the talent, the greater the freedom you can offer. + Increase candor. Talented employees have an enormous amount to learn from one another. But the normal polite human protocols often prevent employees from providing the feedback necessary to take performance to another level. When talented staff members get into the feedback habit, they all get better at what they do while becoming implicitly accountable to one another, further reducing the need for traditional controls. With these two elements in place you can now . . . - Reduce controls. Start by ripping pages from the employee handbook. Travel policies, expense policies, vacation policies—these can all go. Later, as talent becomes increasingly denser and feedback more frequent and candid, you can remove approval processes throughout the organization, teaching your managers principles like, “Lead with context, not control,” and coaching your employees using such guidelines as, “Don’t seek to please your boss.” Best of all, once you start developing this type of culture, a virtuous cycle kicks in. Removing controls creates a culture of “Freedom and Responsibility” (a term Netflix employees use so much that they now just say “F&R”), which attracts top talent and makes possible even fewer controls. All this takes you to a level of speed and innovation that most companies can’t match.

  • We learned that a company with really dense talent is a company everyone wants to work for. High performers especially thrive in environments where the overall talent density is high. Our employees were learning more from one another and teams were accomplishing more—faster. This was increasing individual motivation and satisfaction and leading the entire company to get more done. We found that being surrounded by the best catapulted already good work to a whole new level.  
  • Your number one goal as a leader is to develop a work environment consisting exclusively of stunning colleagues. Stunning colleagues accomplish significant amounts of important work and are exceptionally creative and passionate. Jerks, slackers, sweet people with nonstellar performance, or pessimists left on the team will bring down the performance of everyone.

  • Once you have high talent density in place and have eliminated less-than-great performers, you are ready to introduce a culture of candor.

  • I saw that openly voicing opinions and feedback, instead of whispering behind one another’s backs, reduced the backstabbing and politics and allowed us to be faster. The more people heard what they could do better, the better everyone got at their jobs, the better we performed as a company. That’s when we coined the expression “Only say about someone what you will say to their face.” I modeled this behavior as best I could, and whenever someone came to me to complain about another employee, I would ask, “What did that person say when you spoke to him about this directly?” This is pretty radical. In most situations, both social and professional, people who consistently say what they really think are quickly isolated, even banished. But at Netflix, we embrace them. We work hard to get people to give each other constructive feedback—up, down, and across the organization—on a continual basis.  
  • That’s when we coined the expression “Only say about someone what you will say to their face.” I modeled this behavior as best I could, and whenever someone came to me to complain about another employee, I would ask, “What did that person say when you spoke to him about this directly?” This is pretty radical. In most situations, both social and professional, people who consistently say what they really think are quickly isolated, even banished. But at Netflix, we embrace them. We work hard to get people to give each other constructive feedback—up, down, and across the organization—on a continual basis.   
  • HIGH PERFORMANCE + SELFLESS CANDOR = EXTREMELY HIGH PERFORMANCE  
  • If you work for Netflix, you probably do speak up. During the morning meeting, you tell your boss his plan for the retreat won’t work and that you have another idea you think will be better. After the meeting, you tell your colleague why you believe she should rethink the project she described. And for good measure, after stopping at the coffee machine, you visit with another colleague to mention that he came across as defensive when he was asked to explain a recent decision of his in the all-hands meeting last week. At Netflix, it is tantamount to being disloyal to the company if you fail to speak up when you disagree with a colleague or have feedback that could be helpful. After all, you could help the business—but you are choosing not to.   
  • A feedback loop is one of the most effective tools for improving performance. We learn faster and accomplish more when we make giving and receiving feedback a continuous part of how we collaborate. Feedback helps us to avoid misunderstandings, creates a climate of co-accountability, and reduces the need for hierarchy and rules.  
  • The first technique our managers use to get their employees to give them honest feedback is regularly putting feedback on the agenda of their one-on-one meetings with their staff. Don’t just ask for feedback but tell and show your employees it is expected. Put feedback as the first or last item on the agenda so that it’s set apart from your operational discussions. When the moment arrives, solicit and encourage the employee to give feedback to you (the boss) and then—if you like—you can reciprocate by giving feedback to them. Your behavior while you’re getting the feedback is a critical factor. You must show the employee that it’s safe to give feedback by responding to all criticism with gratitude and, above all, by providing “belonging cues.” As Daniel Coyle, author of The Culture Code, describes them, such cues are gestures that indicate “your feedback makes you a more important member of this tribe” or “you were candid with me and that in no way puts your job or our relationship in danger; you belong here.” I speak with my leadership team frequently about displaying “belonging cues” in situations when an employee is providing feedback to the boss, because an employee who is courageous enough to give feedback openly is likely to worry, “Will my boss hold it against me?” or “Will this harm my career?”  
  • A belonging cue might be a small gesture, like using an appreciative tone of voice, moving physically closer to the speaker, or looking positively into that person’s eyes. Or it might be larger, like thanking that person for their courage and speaking about that courage in front of the larger team. Coyle explains that the function of a belonging cue “is to answer the ancient ever-present question glowing in our brains: Are we safe here? What’s our future with these people? Are there dangers lurking?” The more you and others in your company respond to all candid moments with belonging cues, the more courageous people will be in their candor.  
  • Feedback guidelines while Giving Feedback
    • AIM TO ASSIST: Feedback must be given with positive intent. Giving feedback in order to get frustration off your chest, intentionally hurting the other person, or furthering your political agenda is not tolerated. Clearly explain how a specific behavior change will help the individual or the company, not how it will help you. “The way you pick your teeth in meetings with external partners is irritating” is wrong feedback. Right feedback would be, “If you stop picking your teeth in external partner meetings, the partners are more likely to see you as professional, and we’re more likely to build a strong relationship.”
    • ACTIONABLE: Your feedback must focus on what the recipient can do differently. Wrong feedback to me in Cuba would have been to stop at the comment, “Your presentation is undermining its own messages.” Right feedback was, “The way you ask the audience for input is resulting in only Americans participating.” Even better would have been: “If you can find a way to solicit contributions from other nationalities in the room your presentation will be more powerful.”
  • Feedback guidelines while Receiving Feedback
    • APPRECIATE: Natural human inclination is to provide a defense or excuse when receiving criticism; we all reflexively seek to protect our egos and reputation. When you receive feedback, you need to fight this natural reaction and instead ask yourself, “How can I show appreciation for this feedback by listening carefully, considering the message with an open mind, and becoming neither defensive nor angry?”
    • ACCEPT OR DISCARD: You will receive lots of feedback from lots of people while at Netflix. You are required to listen and consider all feedback provided. You are not required to follow it. Say “thank you” with sincerity. But both you and the provider must understand that the decision to react to the feedback is entirely up to the recipient.  
  • The only remaining question is when and where to give feedback—and the answer is anywhere and anytime. That might mean giving feedback in private, behind closed doors. Erin got her first Netflix feedback in front of a group of three or four people in the middle of a keynote. That is fine too. It can even be shouted out in front of a group of forty, if that’s where it will help the most.  
  • Even at Netflix, where we preach “No Brilliant Jerks,” we often have an employee who has difficulty finessing the boundaries. When this happens, you need to jump in. Original Content Specialist Paula was one example. Paula was exceptionally creative and had an extensive network, which was an enormous asset. She put in long hours reading scripts and visualizing how to turn a potential TV series into a big hit. Paula tried to live the Netflix culture by being forthcoming and candid in all instances. Often in meetings Paula spoke forcefully, repeating herself, sometimes pounding on the table to make her point. She frequently spoke over people if they weren’t getting her gist. Paula was clearly very efficient too, working on her computer while others were speaking, especially if she didn’t agree with their points. If people were long-winded or slow to get to the point, she would interrupt them and let them know, then and there. Paula did not feel she was being a jerk, just that she was living the Netflix culture with her honest feedback. Yet because of her difficult behavior, Paula no longer works at Netflix.  
  • With candor, high performers become outstanding performers. Frequent candid feedback exponentially magnifies the speed and effectiveness of your team or workforce. Set the stage for candor by building feedback moments into your regular meetings. Coach your employees to give and receive feedback effectively, following the 4A guidelines. As the leader, solicit feedback frequently and respond with belonging cues when you receive it. Get rid of jerks as you instill a culture of candor.

  • In the absence of written policy, every manager must spend time speaking to the team about what behaviors fall within the realm of the acceptable and appropriate. The accounting director should have sat down with the team and explained which months were okay to take vacation—and that January was off limits for all accountants. The puffy-eyed manager at the fruit bowl should have worked with the team to set vacation parameters, such as, “only one team member can be out at a time” and “make sure you’re not causing the rest of the group undue grief before booking your vacation.” The clearer the manager is when setting context, the better. That accounting director might say, “Please give at least three months’ advance warning for a month out of the office, but a month’s notice is usually fine for a five-day vacation.”

  • Trenton Moss, the CEO of Webcredible, also got rid of his company’s vacation policy, explaining how this attracts good candidates and increases employee satisfaction: The Netflix ethos is that one superstar is better than two average people. We very much follow their lead. There is currently a huge demand for good user-experience practitioners, so holding on to staff is a big challenge (lifting vacation policy helps). Members of our team are always being tapped on LinkedIn, and many professionals in our business are millennials who are fleet of foot and like to keep moving. Unlimited holiday is easy to implement—you just have to create an environment of trust, and ours is built through three company rules: (1) always act in the best interests of the company, (2) never do anything that makes it harder for others to achieve their goals, (3) do whatever you can to achieve your own goals. Other than that, when it comes to setting holiday time, staff can do whatever they want.

  • I thought the sky might fall after we stopped tracking vacations, but nothing much changed except that folks seemed to be more satisfied and our more maverick employees, like the one who wanted to work eighty hours three weeks in a row and then go visit the Yanomami tribe in the Brazilian Amazon, were particularly appreciative of the freedom. We’d found a way to give our high performers a little more control over their lives, and that control made everybody feel a little freer. Because of our high-talent density, our employees were already conscientious and responsible. Because of our culture of candor, if anyone abused the system or took advantage of the freedom allotted, others would call them out directly and explain the undesirable impact of their actions. About the same time, something else happened that provided a critical lesson. Patty and I both noticed people seemed to be taking more ownership around the office. Just little things, like someone started throwing out the milk in the refrigerator when it got sour. Giving employees more freedom led them to take more ownership and behave more responsibly. That’s when Patty and I coined the term “Freedom and Responsibility.” It’s not just that you need to have them both; it’s that one leads to the other. It began to dawn on me. Freedom is not the opposite of accountability, as I’d previously considered. Instead, it is a path toward it.

  • During the ten years that David Wells was CFO he set the first round of context for incoming recruits at our “New Employee College.” He explained it like this: Before you spend any money imagine that you will be asked to stand up in front of me and your own boss and explain why you chose to purchase that specific flight, hotel, or telephone. If you can explain comfortably why that purchase is in the company’s best interest, then no need to ask, go ahead and buy it. But if you’d feel a little uncomfortable explaining your choice, skip the purchase, check in with your boss, or buy something cheaper.   
  • When you offer freedom, even if you set context and clarify the ramifications of abuse, a small percentage of people will cheat the system. When this happens, don’t overreact and create more rules. Just deal with the individual situation and move forward.

  • When removing your vacation policy, explain that there is no need to ask for prior approval and that neither the employees themselves nor their managers are expected to keep track of their days away from the office. It is left to the employee alone to decide if and when he or she feels like taking a few hours, a day, a week, or a month off work. When you remove the vacation policy, it will leave a hole. What fills the hole is the context the boss provides for the team. Copious discussions must take place, setting the scene for how employees should approach vacation decisions. The practices modeled by the boss will be critical to guide employees as to the appropriate behavior. An office with no vacation policy but a boss who never vacations will result in an office that never vacations.  
  • When removing travel and expense policies, encourage managers to set context about how to spend money up front and to check employee receipts at the back end. If people overspend, set more context. With no expense controls, you’ll need your finance department to audit a portion of receipts annually. When you find people abusing the system, fire them and speak about the abuse openly—even when they are star performers in other ways. This is necessary so that others understand the ramifications of behaving irresponsibly. Some expenses may increase with freedom. But the costs from overspending are not nearly as high as the gains that freedom provides. With expense freedom, employees will be able to make quick decisions to spend money in ways that help the business. Without the time and administrative costs associated with purchase orders and procurement processes, you will waste fewer resources. Many employees will respond to their new freedom by spending less than they would in a system with rules. When you tell people you trust them, they will show you how trustworthy they are.

  • By avoiding pay-per-performance bonuses you can offer higher base salaries and retain your highly motivated employees. All this increases talent density. But nothing increases talent density more than paying people high salaries and increasing them over time to assure they remain top of market.

  • Shortly after committing to pay whatever was necessary to hire and retain the best employees, Han, a director of engineering, came to me and said that he’d found an amazing candidate for an open position. This candidate, Devin, had a rare skill set that would be an enormous asset to the team. But the salary he was requesting was nearly double what the other programmers on the team were getting. It was even more than Han was making. “I know he’d be great for Netflix, but is it right to pay that much?” Han wondered. I asked Han three questions: Were any of the programmers on his current team good enough to take the job at Apple that Devin had just left? No. Would three of Han’s current employees collectively be able to make the same contribution that Devin could make? No. If a fairy godmother suggested he could silently and without duress swap a few of his current programmers for Devin, would that be good for the company? Yes. I suggested that Han could easily afford to hire Devin. We would hire a fewer number of programmers in the future and use that money to pay Devin what he was asking for. Han looked thoughtful. “Devin’s skills are in really hot demand right now. If we are going to change our hiring strategy to pay Devin, I want to make sure we pay him enough not just to convince him to take the job, but to assure he isn’t soon lured away by another higher-paying competitor.” We decided to scour the market to find out how much our competitors would be willing to pay for Devin’s talents. Then we would pay him just over the very top of that range. Devin’s team went on to create many of the foundational features that make up the Netflix platform today. I wanted all of our employees to be as influential as Devin had been, so we decided to apply the same method to determine the salaries of all future new hires.

  • In a high-performance environment, paying top of market is most cost-effective in the long run. It is best to have salaries a little higher than necessary, to give a raise before an employee asks for it, to bump up a salary before that employee starts looking for another job, in order to attract and retain the best talent on the market year after year. It costs a lot more to lose people and to recruit replacements than to overpay a little in the first place. Some employees will see their salaries grow dramatically in a short time. If the market value for an employee shifts up because her skill set increases or there’s a shortage of talent in her field, we shift her salary up with it. The salaries of other employees may be flat year to year, despite their doing great work. The one thing we try to avoid doing when possible is adjusting salaries down if the market rate falls (although we might do this if someone moves from one location to another). That would be a sure way to reduce talent density. If we couldn’t afford our payroll expenses for some reason, we would need to increase talent density by letting go of some employees, thereby lowering our costs without lowering any individual salaries.

  • In order to fortify the talent density in your workforce, for all creative roles hire one exceptional employee instead of ten or more average ones. Hire this amazing person at the top of whatever range they are worth on the market. Adjust their salary at least annually in order to continue to offer them more than competitors would. If you can’t afford to pay your best employees top of market, then let go of some of the less fabulous people in order to do so. That way, the talent will become even denser.   
  • The methods used by most companies to compensate employees are not ideal for a creative, high-talent-density workforce. Divide your workforce into creative and operational employees. Pay the creative workers top of market. This may mean hiring one exceptional individual instead of ten or more adequate people. Don’t pay performance-based bonuses. Put these resources into salary instead. Teach employees to develop their networks and to invest time in getting to know their own—and their teams’—market value on an ongoing basis. This might mean taking calls from recruiters or even going to interviews at other companies. Adjust salaries accordingly.

  • That’s why I don’t have my own office or even a cubicle with drawers that close. During the day, I might grab a conference room for some discussions, but my assistant knows to book most of my meetings in other people’s work spaces. I always try to go to the work spot of the person I’m seeing, instead of making them come to me. One of my preferences is to hold walking meetings, where I often come across other employees meeting out in the open. It’s not just about offices. Any locked area is symbolic of hidden things, and signifies we don’t trust one another. On an early trip to our Singapore offices, I saw that our employees had been given lockers in which they could lock their things when they left every evening. I insisted we get rid of the locks. But these kinds of signals are not enough on their own. It’s up to the leader to live the message of transparency by sharing as much as possible with everybody. Big things, small things, whether good or bad—if your first instinct is to put most information out there, others will do the same. At Netflix, we call this “sunshining,” and we make an effort to do a lot of it.  
  • I don’t want my employees to feel like they’re working for Netflix; I want them to feel like they are part of Netflix.” That’s when I decided, if you’re going to work at Netflix, no one is going to hold an umbrella over your head. You’re going to get wet. Back at work we started holding “all-hands” meetings every Friday. Patty McCord would stand on a chair like a town crier to get everyone’s attention and we would head out into the parking lot, which was the only place we had enough space for everyone in the company. I would pass out copies of the P&L and we would go through the weekly metrics. How many shipments had we done? What was the average revenue? How well were we able to fill client requests for their first and second choice of movies? We also created a strategy document that was filled with information we wouldn’t want our competitors to know, and posted it on the bulletin board next to the coffee machine.

  • To instigate a culture of transparency, consider what symbolic messages you send. Get rid of closed offices, assistants who act as guards, and locked spaces. Open up the books to your employees. Teach them how to read the P&L. Share sensitive financial and strategic information with everyone in the company. When making decisions that will impact your employees’ well-being, like reorganizations or layoffs, open up to the workforce early, before things are solidified. This will cause some anxiety and distraction, but the trust you build will outweigh the disadvantages. When transparency is in tension with an individual’s privacy, follow this guideline: If the information is about something that happened at work, choose transparency and speak candidly about the incident. If the information is about an employee’s personal life, tell people it’s not your place to share and they can ask the person concerned directly if they choose. 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 throughout the organization.  
  • At most companies, the boss is there to approve or block the decisions of employees. This is a surefire way to limit innovation and slow down growth. At Netflix, we emphasize that it’s fine to disagree with your manager and to implement an idea she dislikes. We don’t want people putting aside a great idea because the manager doesn’t see how great it is. That’s why we say at Netflix: DON’T SEEK TO PLEASE YOUR BOSS. SEEK TO DO WHAT IS BEST FOR THE COMPANY.

  • Dispersed decision-making can only work with high talent density and unusual amounts of organizational transparency. Without these elements, the entire premise backfires. Once those elements are in place, you are ready to remove controls that are not just symbolic (such as vacation tracking) but also have the power to dramatically increase the speed of innovation across your business.

  • People desire and thrive on jobs that give them control over their own decisions.

  • Our mantra is that employees don’t need the boss’s approval to move forward (but they should let the boss know what’s going on). If Sheila comes to you with a proposal you think is going to fail, you need to remind yourself why Sheila is working for you and why you paid top of the market to get her. Ask yourself these four questions: Is Sheila a stunning employee? Do you believe she has good judgment? Do you think she has the ability to make a positive impact? Is she good enough to be on your team? If you answer NO to any of these questions, you should get rid of her? But if your answer is yes, step aside and let her decide for herself. When the boss steps out of the role of “decision approver,” the entire business speeds up and innovation increases. Remember all the time Paolo spent preparing to get Jerret’s approval to implement his new idea? If Jerret had nixed the initiative, Paolo would have had to kill a proposal he believed in and start exploring other paths. All the time he’d invested, not to mention a great idea, would have been wasted. Of course, not all decisions your people make will succeed. And when the boss moves aside from vetting judgment calls, it’s likely they’ll fail more often. That’s precisely why it’s so hard to let Sheila go ahead with her idea, when you think it won’t work.

  • What are we drinking at Netflix? Our employees are good, but when they enter the company they are just as concerned about minimizing failure as the woman with the roller-rink idea. We don’t have innovation Fridays, or innovation banners. And our employees are busy, just as busy as that guy from the fashion retail business. The difference is the decision-making freedom we provide. If your employees are excellent and you give them freedom to implement the bright ideas they believe in, innovation will happen. Netflix does not operate in a safety-critical market, like medicine or nuclear power. In some industries, preventing error is essential. We are in a creative market. Our big threat in the long run is not making a mistake, it’s lack of innovation. Our risk is failing to come up with creative ideas for how to entertain our customers, and therefore becoming irrelevant. If you hope for more innovation on your team, teach employees to seek ways to move the business forward, not ways to please their bosses. Coach your staff to challenge their managers exactly like Sheila did: “I know you disagree, but I’m going to follow this new idea because I think it will lead to greater gains. Let me know if you want to specifically override my decision.” At the same time, teach your leaders not to override decisions like Sheila’s, even in the face of their own skepticism and long experience of what has worked in the past. Sometimes the employee will fail, and the boss will feel like saying, “I told you so” (but, she won’t!). Sometimes the employee will succeed despite the boss’s reservations.   
  • We want all employees taking bets they believe in and trying new things, even when the boss or others think the ideas are dumb. When some of those bets don’t pay off, we just fix the problems that arise as quickly as possible and discuss what we’ve learned. In our creative business, rapid recovery is the best model.

  • When I started at Netflix, Jack explained to me that I should consider I’d been handed a stack of chips. I could place them on whatever bets I believed in. I’d need to work hard and think carefully to ensure I made the best bets I could, and he’d show me how. Some bets would fail, and some would succeed. My performance would ultimately be judged, not on whether any individual bet failed, but on my overall ability to use those chips to move the business forward. Jack made it clear that at Netflix you don’t lose your job because you make a bet that doesn’t work out. Instead you lose your job for not using your chips to make big things happen or for showing consistently poor judgment over time. Jack explained to Kari, “We don’t expect employees to get approval from their boss before they make decisions. But we do know that good decisions require a solid grasp of the context, feedback from people with different perspectives, and awareness of all the options.” If someone uses the freedom Netflix gives them to make important decisions without soliciting others’ viewpoints, Netflix considers that a demonstration of poor judgment. Then Jack introduced Kari to the Netflix Innovation Cycle, a framework she could follow in order to make the bets most likely to succeed. The principle of “don’t seek to please your boss” works best if employees follow this simple four-step model. The Netflix Innovation Cycle If you have an idea you’re passionate about, do the following: 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.   
  • The culture at Netflix had been sending the message to our people that, despite all our talk about candor, differences of opinion were not always welcome. That’s when we added a new element to our culture. We now say that it is disloyal to Netflix when you disagree with an idea and do not express that disagreement. By withholding your opinion, you are implicitly choosing to not help the company.

  • I can’t make the best decisions unless I have input from a lot of people. That’s why I and everyone else at Netflix now actively seek out different perspectives before making any major decision. We call it farming for dissent. Normally, we try to avoid establishing a lot of processes at Netflix, but this specific principle is so important that we have developed multiple systems to make sure dissent gets heard. If you are a Netflix employee with a proposal, you create a shared memo explaining the idea and inviting dozens of your colleagues for input. They will then leave comments electronically in the margin of your document, which everyone can view. Simply glancing through the comments can give you a feeling for a variety of dissenting and supporting viewpoints. For a sample, see the memo on the next page, which discusses Android Smart downloads. In some cases, an employee proposing an idea will distribute a shared spreadsheet asking people to rate the idea on a scale from –10 to +10, with their explanation and comments. This a great way to get clarity on how intense the dissent is and to begin the debate.

  • Before one big leadership meeting, I passed around a memo outlining a proposed one-dollar increase in the price of a Netflix subscription along with a new tiered-pricing model. Many dozens of managers weighed in with their ratings and comments. Here are a few of them in abridged format: Alex -4 (Making two changes at once is a bad idea), Dianna 8 (Timing is perfect just before big market launch), Jamal -1 (Certain tiering is right move. Don’t think amount is right for this year). The spreadsheet system is a super-simple way to gather assent and dissent, and when your team consists entirely of top performers, it provides extremely valuable input. It’s not a vote or a democracy. You’re not supposed to add up the numbers and find the average. But it provides all sorts of insight. I use it to collect candid feedback before making any important decision. The more you actively farm for dissent, and the more you encourage a culture of expressing disagreement openly, the better the decisions that will be made in your company. This is true for any company of any size in any industry.

  • For smaller initiatives, you don’t need to farm for dissent, but you’d still be wise to let everyone know what you’re doing and to take the temperature of your initiative. Let’s go back to your employee, Sheila, the woman who came to you with an idea you’re against. After explaining why you don’t agree, you can suggest that she socialize the idea with her peers and other leaders in the company. This means that she sets up multiple meetings, where she outlines her proposal and enters into discussions in order to stress-test her thinking and collect numerous opinions and data points before making her decision. Socializing is a type of farming for dissent with less emphasis on the dissent and more on the farming.    
  • Farm for dissent. Socialize the idea. Test it out. This sounds a lot like consensus building, but it’s not. With consensus building the group decides; at Netflix a person will reach out to relevant colleagues, but does not need to get anyone’s agreement before moving forward. Our four-step Innovation Cycle is individual decision-making with input. For each important decision there is always a clear informed captain. That person has full decision-making freedom. In Erin’s scenario, Sheila is the informed captain. It’s not for her boss or any of her colleagues to decide. She collects opinions and chooses for herself. She is then solely responsible for the outcome. In 2004, Chief Marketing Officer Leslie Kilgore introduced a practice to emphasize that the informed captain is solely responsible for the decision. At most companies all important contracts are signed by someone high up in the organization. With Leslie’s encouragement, one of her employees, Camille, had begun signing all of the media agreements for which she was the informed captain. One day our General Counsel went to Leslie and said: “You didn’t sign this huge contract with Disney! Why is Camille’s name on it?” Leslie responded: The person who is living and breathing the contract needs to be the person who owns and signs the contract, not a head of a function or a VP. That takes responsibility of the project away from the person who should be responsible. Obviously, I look at those contracts too. But Camille is proud of what she accomplished. This is her thing, not mine. She is psychologically invested, and I want to keep her that way. I’m not going to take ownership away from her by putting my name on the deal. Leslie was right, and we follow her example across Netflix today. At Netflix you don’t need management to sign off for anything. If you’re the informed captain, take ownership—sign the document yourself.  
  • If Sheila’s initiative succeeds, make it clear you’re delighted. You might pat her on the back, offer her a glass of champagne, or take the entire team out to dinner. How you celebrate is up to you. The one thing you must do is show, ideally in public, that you are pleased she went ahead despite your doubts and offer a clear “You were right! I was wrong!” to show all employees it’s okay to buck the opinion of the boss. If Sheila’s initiative fails, the way you, the boss, respond is even more critical. After a failure, everyone will be watching to see what you do. One possible course of action would be to punish, scold, or shame Sheila. In 800 BC, Greek merchants whose businesses had failed were forced to sit in the marketplace with a basket over their heads. In seventeenth-century France, bankrupt business owners were denounced in the town square and, if they didn’t want to go straight to prison, had to endure the shame of wearing a green bonnet every time they went out in public. In today’s organizations, people tend to be more discreet about failure. As the boss, you could look at Sheila sideways, sigh, and whisper, “Well, I knew this would happen.” Or you could put an arm around her shoulder, and say in a friendly voice, “Next time, take my advice.” Alternatively, you could give her a short lecture about all the things the company needs to accomplish and what a shame it is to have wasted time on a failure that was so clearly predictable. (From Sheila’s point of view, a basket on the head or a green bonnet is beginning to look quite appealing.) If you adopt any of these strategies, one thing is certain. No matter what you say in the future, everyone on the team will know that “don’t seek to please your boss” is a joke, that all your talk about chips and placing bets is a charade, and that you care more about error prevention than innovation after all. We suggest instead a three-part response: Ask what learning came from the project. Don’t make a big deal about it. Ask her to “sunshine” the failure.  
  • Often a failed project is a critical step in getting to success. Once or twice a year, at our product meetings, I ask all of our managers to complete a simple form outlining their bets from the last few years, divided into three categories: bets that went well, bets that didn’t go well, and open bets. Then we break up into smaller groups and discuss the items in each category and what we’ve learned from each bet. This exercise reminds everyone that they are expected to implement bold ideas and that, as part of the process, some risks won’t pay off. They see that making bets is not a question of individuals’ successes and failures but rather a learning process that, in total, catapults the business forward. It also helps newer people get used to admitting publicly that they screwed up on a bunch of stuff—as we all do.

  • If you make a big deal about a bet that didn’t work out, you’ll shut down all future risk-taking. People will learn that you preach but don’t practice dispersed decision-making. Chris Jaffe, who was hired as a director of product innovation in 2010, clearly remembers a time Reed did not make a big deal after Chris wasted hundreds of hours of talent and resources on a failed bet of his own: Back in 2010 you could stream TV shows to computers but there weren’t many smart TVs. If you wanted to stream a Netflix show to your television, you needed to do that through a PlayStation or a Wii. I wanted people to reach into their closets, pull out their old Wii devices and start streaming Netflix. That would bring the Internet to the living room in a way most of our customers had never experienced. I decided to use a team of my designers and engineers to improve the Netflix interface on the Wii. The current interface was super-basic. Under my supervision, my group devoted thousands of hours to developing something more complex, and, I believed, attractive to users. The team worked on it full time for over a year. We named the project “Explorer.” At completion we tested the new interface out on two hundred thousand Netflix users. The news we got made me feel sick. The new interface was driving consumers to use the Wii interface LESS! We thought it must be a bug in the system, so we checked everything and launched the test again. Same thing. The users preferred the more basic original version. I was still pretty new at Netflix. Before this project I’d had one successful innovation, and now this massive flop. We had a quarterly meeting with Reed called “Consumer Science.” The product managers would get up onstage and give an update on their product bets. What had worked? What hadn’t? What had we learned? All of my peers were there as well as all of my managers (my boss, Todd Yellin; his boss, Neil Hunt; and Reed). I didn’t know what would happen. Would Reed rail at me for having wasted thousands of hours and hundreds of thousands of dollars? Would Neil cringe? Would Todd wish he’d never hired me? We talk about sunshining our failed bets at Netflix, which means talking openly and publicly about things that go wrong. I’d seen leaders speak about their mistakes with such force and transparency that I decided to shine not just some sun on my failure, but a big fat strobe light. I got up onstage. The room was dark. I put up my first slide. In red capital letters it said: EXPLORER: A BIG BET FOR ME THAT FAILED I talked about the project, detailing every part that had and hadn’t worked and explaining that this had been one hundred percent my bet. Reed asked some questions and we talked about which parts of the project led to the flop. Then he asked what we’d learned. I told him we’d learned that complexity kills consumer engagement. That, by the way, is a lesson that the entire company now understands as a result of the Explorer project. “Okay, that’s interesting. Let’s remember that,” Reed concluded. “Well that project’s over. What’s next?” Eighteen months later, with a few successes under his belt, Chris was promoted to vice president of product innovation. Reed’s reaction is the only type of leadership response that encourages innovative thinking. When a bet fails, the manager must be careful to express interest in the takeaways but no condemnation. Everyone in that room left with two major messages in mind. First, if you take a bet and it fails, Reed will ask you what you learned. Second, if you try out something big and it doesn’t work out, nobody will scream—and you won’t lose your job.  
  • If you make a bet and it fails, it’s important to speak openly and frequently about what happened. If you’re the boss, make it clear you expect all failed bets to be detailed out in the open. Chris could have brushed the failure under the table, blamed someone else, or pointed fingers defensively. Instead he showed great courage and leadership capacity by addressing the failed bet head-on. In so doing, he helped not just himself but all of Netflix. It’s critical that your employees are continually hearing about the failed bets of others, so that they are encouraged to take bets (that of course might fail) themselves. You can’t have a culture of innovation if you don’t have this. At Netflix, we try to shine a bright light on every failed bet. We encourage employees to write open memos explaining candidly what happened, followed by a description of the lessons learned. Here’s an abridged example of one such communication. By chance, it was also written by Chris Jaffe but several years later, in 2016, about another project that didn’t pay off called “Memento.” This document is often passed around Netflix as an example of how to sunshine a failed bet in writing. Memento update - Product Management Team: Chris J Around 18 months ago, I brought a memo to the product strategy meeting outlining an idea to include supplemental title-level metadata such as actor bios and related titles into our second screen playback experience. Following a vibrant debate, I decided to pursue the project. We moved forward building the Memento experience on Android mobile. This project took more than a year. Last September we had a release build that we launched in a small test. In February, I concluded that we should not move forward and ended the project. It is important to underscore that the decision to pursue Memento and continue investing in it throughout was solely mine. This outcome and the resulting cost are my complete responsibility. Having invested in this for over a year and then decided not to launch has wasted time and resources and also brought learning. Some of my takeaways: There was real opportunity cost in pursuing this project which, as a result, slowed us down on important mobile innovation. This was a big miss from me on leadership and focus. I should have more thoughtfully considered the limited ability to gain insight from the small second screen population. I assumed that it would grow larger, but I was wrong. I should have considered more deeply the suggestion from the initial strategy meeting that Darwin would be a better test platform for this idea. This reminds me to be open to challenging my own preconceived notions. When I decided to pursue this after the product strategy meeting, I should have come back with a memo to debate the notion of launching with a flat holdback. This was misaligned with how we approach product innovation—not how we do things here. As I got into the project I should have realized its declining value and shut it down months ago. The crash rates in September should have been a clear signal to me to halt our work on it. The end always seemed near, which was an illusion. As it often is. When you sunshine your failed bets, everyone wins. You win because people learn they can trust you to tell the truth and to take responsibility for your actions. The team wins because it learns from the lessons that came out of the project. And the company wins because everyone sees clearly that failed bets are an inherent part of an innovative success wheel. We shouldn’t be afraid of our failures. We should embrace them. And sunshine mistakes even more!  
  • Most important were the lessons that not just Yasemin, but the entire Netflix Marketing team learned from her mistake. “When we hire new marketing people, we have a series of historic cases we cover with them to teach what not to do. The Turkey Black Mirror campaign is one of our favorite teaching cases and everyone talks about it.” Yasemin explains. “It demonstrates so clearly the importance of socializing and what happens when you don’t do it. But it also helped all of us in marketing to remember our goal at Netflix is to create moments of joy. So don’t run a campaign that’s a little creepy. Don’t try to spook the public into watching our shows. Instead, a good campaign should be exciting, joyful, and just plain fun.”

  • In a fast and innovative company, ownership of critical, big-ticket decisions should be dispersed across the workforce at all different levels, not allocated according to hierarchical status. In order for this to work the leader must teach her staff the Netflix principle, “Don’t seek to please your boss.” When new employees join the company, tell them they have a handful of metaphorical chips that they can make bets with. Some gambles will succeed, and some will fail. A worker’s performance will be judged on the collective outcome of his bets, not on the results from one single instance. To help your workforce make good bets, encourage them to farm for dissent, socialize the idea, and for big bets, test it out. Teach your employees that when a bet fails, they should sunshine it openly.

  • Ted was right. With our dispersed decision-making model, if you pick the very best people and they pick the very best people (and so on down the line) great things will happen. Ted calls this the “hierarchy of picking” and it’s what a workforce built on high talent density is all about. Picking sounds primarily like it’s about hiring. Ideally, an organization could just pick carefully, and these well-chosen employees would flourish forever. The reality is tougher. No matter how careful you are, sometimes you will make hiring mistakes, sometimes people won’t grow as much as you had hoped, and sometimes your company’s needs change. To achieve the highest level of talent density you have to be prepared to make tough calls. If you’re serious about talent density, you have to get in the habit of doing something a lot harder: firing a good employee when you think you can get a great one. One of the reasons this is so difficult in many companies is because business leaders are continually telling their employees, “We are a family.” But a high-talent-density work environment is not a family.

  • We wanted employees to feel committed, interconnected, and part of a greater whole. But we didn’t want people to see their jobs as a lifetime arrangement. A job should be something you do for that magical period of time when you are the best person for that job and that job is the best position for you. 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 to move on to a better role for you. But if Netflix wasn’t a family, what were we? A group of individuals looking out for ourselves? That definitely wasn’t what we were going for. After a lot of discussion Patty suggested that we think of Netflix as a professional sports team.

  • Patty was right. At Netflix, I want each manager to run her department like the best professional teams, working to create strong feelings of commitment, cohesion, and camaraderie, while continually making tough decisions to ensure the best player is manning each post. A professional sports team is a good metaphor for high talent density because athletes on professional teams: Demand excellence, counting on the manager to make sure every position is filled by the best person at any given time. Train to win, expecting to receive candid and continuous feedback about how to up their game from the coach and from one another. Know effort isn’t enough, recognizing that, if they put in a B performance despite an A for effort, they will be thanked and respectfully swapped out for another player. On a high-performing team, collaboration and trust work well because all the members are exceptionally skilled both at what they do and at working well with others. For an individual to be deemed excellent she can’t just be amazing at the game; she has to be selfless and put the team before her own ego. She has to know when to pass the ball, how to help her teammates thrive, and recognize that the only way to win is for the team to win together. This is exactly the type of culture we were going for at Netflix.

  • Of course, managers at Netflix, like good people anywhere, want to feel positive about their actions. To get them to feel good about cutting someone they like and respect requires them to desire to help the organization and to recognize that everyone at Netflix is happier and more successful when there is a star in every position. So we ask the manager: Would the company be better off if you let go of Samuel and looked for someone more effective? If they say “yes,” that’s a clear sign that it’s time to look for another player. We also encourage all managers to consider each of their employees regularly and make sure they’ve got the best person in every spot. To help managers on the judgment calls, we talk about the Keeper Test: IF A PERSON ON YOUR TEAM WERE TO QUIT TOMORROW, WOULD YOU TRY TO CHANGE THEIR MIND? OR WOULD YOU ACCEPT THEIR RESIGNATION, PERHAPS WITH A LITTLE RELIEF? IF THE LATTER, YOU SHOULD GIVE THEM A SEVERANCE PACKAGE NOW, AND LOOK FOR A STAR, SOMEONE YOU WOULD FIGHT TO KEEP. We try to apply the Keeper Test to everyone, including ourselves. Would the company be better off with someone else in my role? The goal is to remove any shame for anyone let go from Netflix. Think of an Olympic team sport like hockey. To get cut from the team is very disappointing, but the person is admired for having had the guts and skill to make the squad in the first place. When someone is let go at Netflix, we hope for the same. We all stay friends and there is no shame.

  • There are two steps we take at Netflix to minimize fear around the office. The first step is that any employee who is feeling the type of anxiety that Marta and Derek discussed is encouraged to use what we call the “Keeper Test Prompt” as soon as possible. That almost always improves the situation. During your next one-to-one with your boss ask the following question: “IF I WERE THINKING OF LEAVING, HOW HARD WOULD YOU WORK TO CHANGE MY MIND?” When you get the answer, you’ll know exactly where you stand. The second technique that we use to abate the fear of job loss is the “post-exit Q and A.” POST-EXIT Q & A There is nothing more ominous than people on your team disappearing from the roster with no word about how the decision was made or how much warning that person received. The biggest worry people have when they learn a colleague has been let go is whether that person had feedback or whether the termination came out of the blue.

  • In order to encourage your managers to be tough on performance, teach them to use the Keeper Test: “Which of my people, if they told me they were leaving for a similar job at another company, would I fight hard to keep?” Avoid stack-ranking systems, as they create internal competition and discourage collaboration. For a high-performance culture, a professional sports team is a better metaphor than a family. Coach your managers to create strong feelings of commitment, cohesion, and camaraderie on the team, while continually making tough decisions to ensure the best player is manning each post. When you realize you need to let someone go, instead of putting him on some type of PIP, which is humiliating and organizationally costly, take all that money and give it to the employee in the form of a generous severance payment. The downside to a high-performance culture is the fear employees may feel that their jobs are on the line. To reduce fear, encourage employees to use the Keeper Test Prompt with their managers: “How hard would you work to change my mind if I were thinking of leaving?” When an employee is let go, speak openly about what happened with your staff and answer their questions candidly. This will diminish their fear of being next and increase their trust in the company and its managers.  
  • Candor is like going to the dentist. Even if you encourage everyone to brush daily, some won’t do it. Those who do may still miss the uncomfortable spots. I can’t ensure the candor we encourage is happening every day.

  • We now do the 360 written feedback every year, asking each person to sign their comments. We no longer have employees rate each other on a scale of 1 to 5, since we don’t link the process to raises, promotions, or firings. The goal is to help everyone get better, not to categorize them into boxes. The other big improvement is that each person can now give feedback to as many colleagues as they choose at any level in the organization—not just direct reports, line managers, or a few teammates who have invited input. Most people at Netflix provide feedback for at least ten colleagues, but thirty or forty is common. I received comments from seventy-one people on my 2018 report. Most important, the open 360 feedback instigates valuable discussion. I systematically share the comments I receive with my direct reports, and my reports share their feedback with their teams, all the way down the line. This not only strengthens the sense of transparency but also creates “reverse accountability” whereby the team feels encouraged to call the boss out for recurrent bad behavior.

  • Ted Sarandos likes to tell this story about bungee jumping to demonstrate the value: Back in 1997, when I worked in Phoenix before Netflix, I went to a work event, the kind where you have some meetings but there are also activities encouraging the group to bond and have fun. Behind the restaurant in the parking lot, there was a bungee jumping station. For fifteen bucks you could jump off of a crane in full sight of everyone. No one was doing it, but I decided to try. Afterward the guy running the station said to me, “Why not go again? I’ll give you a second jump for free?” That made me curious. “Why would you do that?” I asked. He responded, “Because I want all your colleagues gawking at you from the restaurant to see that you’re happy to do it again. If they see it’s not so scary, they’ll be ready to try it also.” That’s exactly why you as the leader need to share your 360 evaluations with your teams, especially the really candid stuff about all the things you do poorly. It shows everyone that giving and receiving clear, actionable feedback isn’t so scary.

  • This is a regular practice for Netflix managers today. Larry Tanz, VP of content (he went to interview with Facebook after Ted told his team to take recruiters’ calls), has another story about a surprising meeting with Ted during his first few weeks at Netflix in 2014: For the past five years I’d been working for ex-Disney CEO Michael Eisner. Let’s just say those of us on Michael’s staff weren’t giving him a lot of direct negative feedback. Where I came from the boss might be candid with you but any feedback in the reverse direction was pretty much unheard of. In my second T-staff (Ted’s staff) meeting, Ted began by reminding the twelve of us that the written 360 was coming up in a few months, and that we all needed to be in the habit of giving frank feedback to one another. “Even if you don’t work together,” he said, “you need to be close enough to give candid criticism on an ongoing basis. We just finished a round of 360s with R-staff (Reed’s staff). I’ll just read to you the feedback I received.” I was confused. What was Ted doing? In my entire life I’d never had a boss tell me what his peers and superiors were saying about him. My immediate thought was that he would cherry-pick what he told us and we’d hear a sanitized version. Then he proceeded line by line to read through the feedback from Reed, David Wells, Neil Hunt, Jonathan Friedland, and all those folks. He didn’t read many positive comments, although there must have been some. Instead he detailed all of his developmental comments including the following: When you don’t respond to emails from my team, it feels hierarchical and discouraging, even though I know this is neither how you work nor how you think. Perhaps it is because we need to establish more trust, but I need you to be more generous with your time and insights, so my team can serve your organization better. Your “old married couple” disagreements with Cindy are not the best role model of exec interchange. There should be more listening and understanding on both your parts. Stop avoiding overt conflict within the team; it simply festers elsewhere and comes back bigger. The seeds of Janet’s flaming out and the drama of Robert’s role were planted well over a year ago. It would have been better to address both directly and head-on a year ago rather than have everyone suffer, and morale drop. Ted read these items just like he was reading a list of food to buy at the supermarket. I thought, “Wow, could I be brave enough to share my feedback with my own staff?” Apparently, Larry could: “Ever since that meeting I try hard to model what Ted did with us for my own team, not just at written 360 time but any time someone provides me with developmental feedback. And I’ve suggested that those leaders who work for me, do the same thing with their own teams.” Although the 360 written exercise established regular candid feedback, and many chose to discuss the feedback after the reports came out, it didn’t ensure that those open discussions were actually happening. If Chris-Ann gives written 360 feedback to Jean-Paul that his whispering in client meetings is hurting his sales, but Jean-Paul never talks to Chris-Ann or anyone else about the comment, it turns into the stuff of secrets. Reed’s next process was put in place in order to address that problem.

  • By 2010, we had firmly instituted our version of the written 360 process with a lot of success. But, given the other steps we’d taken to increase transparency throughout the company, I felt that we could go further. So I began to run some experiments to see if increasing transparency in my own executive team would help it trickle down to the rest of the organization. The first thing I tried was an activity with my direct reports. We met in the old Silicon Valley Netflix building at 100 Winchester in a little bird’s nest perch of a room called The Towering Inferno. Leslie and Neil paired up and went to one corner of the room, Ted and Patty went to another, and so on. The exercise was a little like speed-dating except it was speed-feedback. Each pair had a few minutes to give one another feedback following the “Start, Stop, Continue” method and then we rotated, creating new pairs. Afterward, we came back into a circle as a group of eight and reported back what we’d learned. The pair exercise went fine, but the group discussion was by far the most important part of the session. So the next time, we jumped right into the group discussion. I decided to do this second experiment over dinner with nothing else on the agenda, so we wouldn’t feel rushed. We met at a restaurant called the Plumed Horse in Saratoga, a quaint little village just a short drive from the office. When we pulled up, the trees were lined with lights, like fireflies in a forest. We walked in and the seemingly small restaurant opened up into a big cavern, leading to a quiet, reserved room. Ted volunteered to go first. We went around the circle and each person gave him feedback using Start, Stop, Continue. At that time Ted was one of just a few employees based in Los Angeles and he would commute up to Silicon Valley one day a week. Every Wednesday he’d race into the office and try to cram in three days’ worth of discussions into six hours. David, Patty, and Leslie all gave Ted feedback about how hectic his one day in the office was for everybody else. “When you leave on Wednesday afternoon it feels like a jet boat came through and left a massive wake behind it,” Patty explained. “It’s stressful and disruptive for the entire office.” I’d been meaning to talk to Ted about this, but now I didn’t have to. After that session he reorganized his schedule to come to Silicon Valley for longer trips and to handle more over the phone before his visits. Ted saw how his actions were disturbing everyone and talking about it openly made him find a better way. The live 360s are so useful because individuals become accountable for their behavior and actions to the team. Given how much freedom we grant employees, along with the general “don’t seek to please your boss” climate, this co-responsibility provides a safety net. The boss doesn’t tell the employee what to do. But if the employee acts irresponsibly, he will get feedback from the group. Next it was Patty’s turn. Neil told her, “During our meetings you speak so much, I can’t get a word in edgewise. Your passion sucks up all the air.” But, as we worked around the table, Leslie disagreed: “I’m surprised about Neil’s comments. I think you’re a great listener and you always make sure everyone has equal time to talk.” At the end of the evening each person presented a short synthesis of their main takeaways. Patty said, “When I’m in meetings with people who are more reserved, like Neil, I compensate for that person’s quietness by talking more. When I’m with other talkative people, like Leslie, I don’t have that problem. On my own team I have many quieter people who don’t speak at all in our meetings. I’m going to start leaving the last ten minutes of every thirty-minute meeting for others to speak. If no one speaks we’ll sit in silence.” As a talkative person myself, I wasn’t even aware that some experienced Patty as hogging the airspace. I wouldn’t have known to give her this feedback, because it doesn’t characterize the interactions I have with her. This demonstrated why it’s so important employees receive feedback, not just from their boss but also from teammates. The session helped me—and everyone in the group—to understand team tensions in new and unexpected ways. I saw that the dinner was a way for us all to better understand the interpersonal dynamics that shaped our collective effectiveness and to work together to improve our collaboration. Soon after, many on my staff conducted the same exercise with their own teams, and eventually it became a common activity throughout the company. It’s not obligatory. You may meet a Netflix employee who has never gone through a live 360. But our managers have found such value in the method that today the vast majority of our teams conduct something similar at least once a year. By now, we understand the process pretty well, and it’s actually not that difficult to run, as long as you set the context and have a strong moderator.

  • If you’d like to try the live 360 for yourself, here are a few tips: Length and location: A live 360 will take several hours. Do it over dinner (or at least include a meal) and keep the group small. We sometimes have sessions with ten or twelve people, but eight or fewer is more manageable. For a group of eight you’ll need about three hours. A group of twelve could run to five hours. Method: All feedback should be provided and received as an actionable gift following the 4A feedback guidelines outlined in chapter 2. The leader will need to explain this in advance and monitor it during the session. Positive actionable feedback (continue to…) is fine, but keep it in check. A good mix is 25 percent positive and 75 percent developmental (start doing…and stop doing…). Any nonactionable fluff (“I think you’re a great colleague” or “I love working with you”) should be discouraged and stamped out. Getting started: The first few feedback interactions will set the tone for the evening. Choose a feedback receiver who will receive tough feedback with openness and appreciation. Choose a feedback provider who will give the tough feedback, while following the 4A guidelines. Often the boss chooses to be the first to receive.  
  • Candor is like going to the dentist. Even if you encourage everyone to brush daily, some won’t do it. Those who do may still miss the uncomfortable spots. A thorough session every six to twelve months ensures clean teeth and clear feedback. Performance reviews are not the best mechanism for a candid work environment, primarily because the feedback usually goes only one way (down) and comes from only one person (the boss). A 360 written report is a good mechanism for annual feedback. But avoid anonymity and numeric ratings, don’t link results to raises or promotions, and open up comments to anyone who is ready to give them. Live 360 dinners are another effective process. Set aside several hours away from the office. Give clear instructions, follow the 4A feedback guidelines, and use the Start, Stop, Continue method with roughly 25 percent positive, 75 percent developmental—all actionable and no fluff.

  • Leadership with control is familiar to most. The boss approves and directs the initiatives, actions, and decisions of the team. Sometimes she may control employees’ decisions through direct oversight—telling them what to do, checking in frequently, and correcting any work that isn’t done as she desires. Other times she may seek to empower her employees more, avoiding direct oversight but putting control processes in place instead. Many leaders frequently use control processes to give the employee some freedom to approach a task as he chooses, while still allowing the boss an opportunity to control what gets done and when. For example, the boss might put in place a process like Management by Objectives, when she works with the employee to set Key Performance Indicators (KPIs); then she monitors the progress at regular intervals, judging the individual’s final performance based on whether he achieves the predetermined goals on time and within budget. She might also seek to control the quality of her employees’ work by putting in place error-reduction processes, such as checking work before it goes to the client or approving purchases before orders are placed. These are all processes that allow a manager to give some freedom while still exerting a good deal of control. Leading with context, on the other hand, is more difficult, but gives considerably more freedom to employees. You provide all of the information you can so that your team members make great decisions and accomplish their work without oversight or process controlling their actions. The benefit is that the person builds the decision-making muscle to make better independent decisions in the future.

  • The first question you need to answer when choosing whether to lead with context or control is, “What is the level of talent density of my staff?” If your employees are struggling, you’ll need to monitor and check their work to ensure they are making the right decisions. If you’ve got a group of high performers, they’ll most likely crave freedom and thrive if you lead with context. But deciding whether to lead with context or control isn’t just about talent density. You also have to consider your industry, and what you are trying to achieve.  
  • When considering whether to lead with context or control, the second key question to ask is whether your goal is error prevention or innovation. If your focus is on eliminating mistakes, then control is best. ExxonMobil is in a safety-critical market. Its sites need hundreds of safety procedures to minimize the risk of people getting hurt. Control mechanisms are a necessity when you’re trying to run a dangerous operation profitably with as few accidents as possible. Likewise, if you are running a hospital emergency room and give junior nurses the context to make decisions themselves with no oversight, people might die. If you are manufacturing airplanes and don’t have plenty of control processes ensuring every part is assembled perfectly, the possibility of deadly accidents increases. If you are washing windows on skyscrapers, you need regular safety inspections and daily checklists. Leading with control is great for error prevention. But if, like Target, your goal is innovation, making a mistake is not the primary risk. The big risk is becoming irrelevant because your employees aren’t coming up with great ideas to reinvent the business. Although many brick-and-mortar retailers have gone out of business as increasing numbers of people shop online, Target has made a priority of imagining fresh ways to get customers into the stores. There are many businesses that share Target’s priorities. Whether you’re in the business of inventing toys for children, selling cupcakes, designing sportswear, or running a restaurant with fusion cuisine, innovation is one of your primary goals. If you’ve got high-performing employees, leading with context is best. To encourage original thinking, don’t tell your employees what to do and make them check boxes. Give them the context to dream big, the inspiration to think differently, and the space to make mistakes along the way. In other words, lead with context.

  • Organizations are constructed a bit like computer programs. When a company is tightly coupled, big decisions get made by the big boss and pushed down to the departments, often creating interdependencies between the various areas of the business. If a problem occurs at the departmental level, it has to go back to the boss who oversees all of the departments. Meanwhile, in a loosely coupled company, an individual manager or employee is free to make decisions or solve problems, safe in the knowledge that the consequences will not ricochet through other departments. If the leaders up and down your company have traditionally led with control, a tightly coupled system may have come about naturally. If you are managing a department (or a team within a department) in a tightly coupled system and you decide you’d like to begin to lead your people with context, you may find that the tight coupling gets in your way. Since all the important decisions get made at the top, you might wish to give your employees decision-making power, but you can’t, because anything important has to be approved not just by you but by your boss and by her boss. If you are already part of a tightly coupled system, you may have to work with the top leaders in the company in order to change the entire organizational approach before trying to lead with context at a lower level. Even with high talent density, and innovation as your goal, if you don’t sort this out, leading with context may be impossible. It should be pretty clear by now that at Netflix, with our Informed Captain model, we have a loosely coupled system. Decision making is highly dispersed, and we have few centralized control processes, rules, or policies. This provides a high degree of freedom to individuals, gives each department greater flexibility, and speeds up decision making throughout the company. If you’re starting up your own company and your goal is innovation and flexibility, try to keep decision-making decentralized, with few interdependencies between functions, in order to nurture loose coupling from the outset. It will be a whole lot trickier to introduce once your organization has settled into a tightly coupled structure. All this said, tight coupling does have at least one important organizational benefit. In a tightly coupled system, strategic change is easily aligned throughout the organization. If the CEO wants all departments throughout the company to focus on sustainability and ethical sourcing, then she can control that through her centralized decision-making. With loose coupling, on the other hand, the risk of misalignment is high. Who’s to say one department won’t put low cost ahead of protecting the environment or workers in sweatshops and pull the entire organization off course? If the head of the department has a fantastic vision for contributing to the new strategy, but each team member decides for himself what projects to take on, everyone may run off in his own direction. Good luck making that departmental vision a reality anytime soon.

  • If loose coupling is to work effectively, with big decisions made at the individual level, then the boss and the employees must be in lockstep agreement on their destination. Loose coupling works only if there is a clear, shared context between the boss and the team. That alignment of context drives employees to make decisions that support the mission and strategy of the overall organization. This is why the mantra at Netflix is HIGHLY ALIGNED, LOOSELY COUPLED.

  • We use a handful of methods for setting context across the company, but my primary platforms are our E-staff (Executive Staff) and our Quarterly Business Review (QBR) meetings. A few times a year we bring together all the leaders (top 10 to 15 percent of people) of the company from around the world. It starts with a long meeting or dinner with my half dozen direct reports—people like Ted and Greg Peters and our head of HR Jessica Neal. Then I spend a day with E-Staff (all VPs and above) and then we have two days of presentations, sharing, and debates at QBR (all directors and above—about 10 percent of the entire workforce). The number one goal for these meetings is to make sure that all leaders across the company are highly aligned on what I call our North Star: the general direction we are running in. We don’t need to be aligned on how each department is going to get where they are going—that we leave to the individual areas—but we do need to make sure we are all moving in the same direction. Before and after QBR, we make available many dozens of pages of Google Docs memos to every employee, explaining all the context and content we shared at QBR. This information is read not just by QBR participants but also by people at all levels of the company, including administrative assistants, marketing coordinators, you name it. Between QBRs, I hold ongoing one-on-one meetings to get a feel for how aligned we actually are and where context is lacking. I have one thirty-minute meeting with each director once a year. That makes about 250 hours of meetings with people who are three to five levels below me in the org chart. In addition, I meet with each vice president (two to three levels below me) for one hour every quarter. This results in another 500 hours of meetings annually. When Netflix was smaller, I met with each person more frequently, but I still spend about 25 percent of my annual time on all these meetings. These one-on-one meetings help me to better understand the context in which our employees are working, and alert me to areas where our leadership is not aligned so that I can revisit key points at the next round of QBR meetings.   
  • WHEN ONE OF YOUR PEOPLE DOES SOMETHING DUMB DON’T BLAME THEM. INSTEAD ASK YOURSELF WHAT CONTEXT YOU FAILED TO SET. ARE YOU ARTICULATE AND INSPIRING ENOUGH IN EXPRESSING YOUR GOALS AND STRATEGY? HAVE YOU CLEARLY EXPLAINED ALL THE ASSUMPTIONS AND RISKS THAT WILL HELP YOUR TEAM TO MAKE GOOD DECISIONS? ARE YOU AND YOUR EMPLOYEES HIGHLY ALIGNED ON VISION AND OBJECTIVES?   
  • ALIGNMENT IS A TREE, NOT A PYRAMID.

  • Melissa Cobb, vice president of original animation, worked for Fox, Disney, VH1, and DreamWorks before she joined Netflix in September 2017. At DreamWorks she was the producer of the Oscar-nominated Kung Fu Panda trilogy. After twenty-four years in leadership positions, she uses two metaphors—the pyramid and the tree—to help the managers who join her team to understand the difference between a traditional leadership role and leading with context at Netflix. She explains it like this: Decision making at every organization I’d worked at before Netflix was structured like a pyramid. Since I worked for networks I’ve been in the business of making movies and television shows. At the bottom of our pyramids we had a bunch—maybe forty-five or fifty—of what we call creative executives. Each of these executives would have one or more shows they were responsible for. For example, while I was at Disney, we produced Man of the House starring Chevy Chase and the creative executive responsible for that show was on the set each day, approving the pages, the costumes, and all the little details. Many little details of each show would be taken care of at the bottom of the pyramid. But if something important came up, like maybe someone wanted to change a sensitive piece of dialogue at the introduction of the show, that would need to be addressed at a higher level in the pyramid. The creative exec would say, “Oh, I’m not sure what my boss will think—let me give her a call.” The exec would call her manager, one of about fifteen directors at the next pyramid level. “What do you think boss? Can we make this dialogue change?” For most issues the director would endorse the change or sometimes refuse it. But if the change was something bigger than just swapping a little dialogue, like maybe someone wanted to cut out an entire scene, then the director might say, “Well, I’m not sure what MY boss will say. I need to check with him.” The issue would then be pushed up to the next level in the pyramid where we’d have half a dozen vice presidents. The director would call up his manager and say, “What do you think, boss? Can we cut out this scene?” That VP would then approve or decline the change. Now if something even bigger happened—like one of the actors dropped out or the whole script had to be rewritten—that would need to go up to one of the few senior vice presidents at the next level. And for something really big—like the writer gets sick and a new writer needs to be approved posthaste—that might go all the way up to the CEO sitting in the tiny triangle at the top of the pyramid. The pyramid decision-making structure Melissa experienced at her previous company is easily recognizable in the majority of organizations, regardless of industry or location. Either the boss makes the decision and pushes it down the pyramid for implementation, or those at lower levels make the smaller decisions but refer the bigger issues to the higher-ups. But at Netflix, as we’ve discussed, the informed captain is the decision maker, not the boss.

  • The boss’s job is to set the context that leads the team to make the best decisions for the organization. If we follow this leadership system from the CEO all the way to the informed captain, we see that it works not so much like a pyramid but more like a tree, with the CEO sitting all the way down at the roots and the informed captain up at the top branches making decisions. Melissa provided an in-depth example of how context setting works from the roots of the tree all the way out to the highest branches. In her tree exhibit on the previous page, you can see the various levels of context being set from Reed, through Ted Sarandos, Melissa herself, Dominque Bazay (a director working for Melissa), and how all this context finally impacts the decision made by informed captain Aram Yacoubian. Let’s look now at how the context setting at each point created alignment up and down the organization. REED AT THE ROOTS—GROW GLOBAL In October 2017 Melissa attended her first QBR, where Reed presented information about the future global expansion of Netflix. She remembers it like this: I had been at Netflix for under a month. The second week of October we had my first QBR at the Langham Huntington Hotel in Pasadena. I had been trying to get a handle on how Netflix worked and everyone kept telling me that at QBR the pieces would come together. So I was listening carefully when Reed took the stage. During his fifteen-minute talk Reed explained, “In the past quarter, eighty percent of our growth came from outside of the US, and that is exactly where we should be focusing our energy. Over half our customers are now coming from other countries, and every year this number will increase. This is where the big growth lies. International growth is our priority.” Reed went on to detail which countries Netflix leaders should be focusing the most heavily on (including India, Brazil, Korea, Japan) and why (reasons to follow below). That message anchored much of Melissa’s thinking on how to develop the strategy for her own department. Reed is not Melissa’s direct boss, though. She works for Ted Sarandos. Shortly after the QBR, she had a one-on-one with Ted, where he added his own context to Reed’s message. TED SARANDOS AT THE TRUNK—RISK BIG, LEARN BIG Before their one-on-one, Ted had already spoken with Melissa about some of the major international growth opportunities. India is a huge Netflix growth market. Japan and Korea have ecosystems that are particularly rich for content development. Brazil has only a very small Netflix office but over ten million viewers. But when Ted and Melissa sat down in late October 2017, Ted spoke not about what people at Netflix knew but about all the things they didn’t know yet: Look, Melissa, we are at a turning point for Netflix. We have forty-four million members in the US. The big growth will be international and we have a lot to learn. We don’t know if Saudi Arabians watch more or less TV during Ramadan. We don’t know if Italians prefer documentaries or comedies. We don’t know if Indonesians are more likely to watch movies alone in their bedrooms or around their family televisions. If we are going to succeed, we need to become an international learning machine. Melissa was already familiar with the language of bet-taking used at Netflix and the implication that some bets will succeed and others will fail. What the gambling analogy didn’t capture was the critical aspect of learning from all that failing. This brings us to the context set by Ted: As your team purchases and creates content around the world, we need to be laser-focused on learning. We should be ready to take bigger risks in high-growth-potential countries like India or Brazil so that we learn more about those markets. Let’s have some wins. But let’s also have some big messy losses where we learn how to succeed better the next time. We should always be asking, “If we purchase this show and it bombs, what will we learn from that?” If there is something big to learn, let’s go ahead and take the bet. Reed and Ted’s context collectively helped Melissa to develop the context she set with her own Kids and Family content team at their next weekly meeting. MELISSA COBB ON A BIG BRANCH—BRING ICE CABINS AND MUD HUTS TO BANGKOK Melissa’s past employers like Disney and DreamWorks are known globally, and they deliver content watched everywhere on the planet. Yet Melissa believed that Netflix had a chance to differentiate itself, not just as a global brand, but as a truly global platform: Around the world most kids watch either content from their own country or shows and movies that originated in the US. But I felt that to be as international as Reed had outlined at QBR we could do better. I wanted the kids’ slate of shows on Netflix to be like a global village. When ten-year-old Kulap, who lives in a Bangkok high-rise, wakes up on Saturday morning and turns on Netflix, I wanted her to see not just characters from Thailand (those are already on her local television channels) or from the US (those are on the Disney cable station) but a variety of TV and movie friends from around the world. She should be able to choose from shows based in ice-covered cabins in Sweden and others set in rural Kenya. The stories shouldn’t just be about children from a wide array of countries. Disney can do that. They should have the look and feel that you only get when these shows actually come from around the world. We had a lot of debates on my team about whether this strategy would work. Would children want to watch characters that were so dramatically different than they were? We didn’t know. That’s where the context Ted set came in. As he had stressed, these were the questions we would seek to answer and we should be prepared for our bets to fail, provided they resulted in clear learning. We all came to an agreement. We would give it a try and learn along the way. During this meeting Melissa found alignment with her six direct reports. Dominique Bazay, the director whose team acquires preschool content, was one of them. DOMINIQUE BAZAY ON A MIDDLE-SIZE BRANCH— WITH ANIMATION AIM HIGH After that meeting with Melissa, Dominique thought a lot about how to make Melissa’s “global village” dream come true. To encourage Kulap to watch TV created in Sweden and Kenya, what types of shows should Netflix be offering? Dominique felt that animation was the best answer to this question. That led to the context she set with her own team: Cartoon Peppa Pig speaks Spanish like a Spaniard, Turkish like a Turk, and absolutely perfect Japanese. Animation provides an opportunity for international programming that live-action can’t. When actress Bella Ramsey’s Worst Witch is shown in a new country, the viewer has to watch it dubbed or subtitled. Kids hate subtitles and Bella looks funny speaking Portuguese or German. The voices don’t match the image and that impacts the quality of the viewing experience. But cartoon Peppa, like all animated characters, always speaks the language of the viewers. The Korean child and the Dutch child feel equally connected to Peppa. If Netflix kids’ programming was going to be the diverse platform Melissa spoke of, I believed that we needed to aim high. I discussed with my own team that for all animated shows we purchased, no matter what country they came from, the animation quality should be high enough to be considered top-notch by the most discerning nations in the world. If, for example, an animated show comes out of Chile, it shouldn’t just be high enough quality for the most discerning Chilean viewer. It should be high quality enough to be a hit in anime-obsessed Japan. It was with all of this context—from Reed, Ted, Melissa, and Dominique—that then manager of content acquisition, Aram Yacoubian, sitting in a small conference room in downtown Mumbai, considered the show he was being pitched: Mighty Little Bheem. ARAM YACOUBIAN ON A SMALL BRANCH—MIGHTY LEARNINGS FROM LITTLE BHEEM When Aram saw the original version of the adorable Indian animation series Mighty Little Bheem, he thought it would be a big hit in India: The main character is this little child in a small Indian village, whose boundless curiosity and extraordinary strength leads to all sorts of adventures. He’s like a baby Indian Popeye. His character is based on Bheem, a mythical character in the Sanskrit epic Mahabharata, known across India. It seemed obvious to me, Indians would love this show. But Aram had serious doubts about whether it was a good bet for Netflix. The first concern he had was with the animation quality. Indian shows tend to be low budget. The quality of the animation was good enough to be popular on Indian TV. But I thought about what Dominique and I had agreed on. We wanted to make sure the quality was high enough to be successful not just in the country of origin but around the world. I knew that if we were going to purchase this show, we would have to invest two or three times what is normally spent on an Indian animation to get the quality we were looking for. This led to Aram’s second concern: That was a lot of money to invest in an Indian show. To recoup the investment we’d have to get a lot of children all around the world to watch it. But very few Indian programs had ever been hugely popular outside of India—in all the history of television and streaming. This was due to low budgets but also to a belief that the storytelling was too locally specific for global audiences. There was a widely held belief that Indian series didn’t travel well. Aram’s third concern was the lack of historical data on preschool shows—even within India: Mighty Little Bheem is for young children and until now there had been practically no preschool shows made in India either for streaming or television. That’s because Indian rating agencies don’t measure preschool shows, so they can’t be monetized. Was there even an audience in India for programming aimed at such young kids? History couldn’t provide an answer. On the face of it, all this made things look pretty bad for Mighty Little Bheem. “All of history and all these business reasons were telling me not to make this show,” says Aram. But he also reflected on the context the Netflix leaders had set for him: Reed made it clear that international expansion is our future and India is a key growth market. Mighty Little Bheem is a great show from a key Netflix growth market. Ted made it clear that when it comes to countries like India, we have so much to learn that we should take big risks, as long as the learning potential is evident. With Mighty Little Bheem what we would learn from the bet was very clear. The context Ted had set was enough for me to say, “Okay, even if this show crashes and burns, I’m trying three different things, all of which are going to provide Netflix with really good information.” Melissa made it clear that we wanted children’s shows from around the world that were deeply local in topic and texture to make up our programming slate. Mighty Little Bheem was deeply Indian and had the elements to appeal to children anywhere. Dominique and I had agreed that we should prioritize animation for our big international bets and that this animation should be of high quality. Mighty Little Bheem was an animated show that could achieve the high quality we needed with a financial investment. With this context in mind Aram made his decision. He purchased Mighty Little Bheem and gave money to the local creators to upgrade the animation. The show launched mid-April 2019 and within three weeks became one of Netflix’s most watched animated series from anywhere in the world. It has now been watched by more than twenty-seven million viewers. When I interviewed him, Aram clarified the great advantage of dispersed decision-making when managers lead with context. I’m one of the best people at Netflix to decide what children’s content to purchase in India, as I know the Indian animation market and Indian family-viewing patterns like the back of my hand. But it’s only with organizational transparency, a ton of context, and high alignment between me and the leadership that I can make the best decisions to benefit our organization and Netflix viewers around the world.    Aram’s decision to purchase Mighty Little Bheem provides a clear example of how leading with context works at Netflix. Each leader from myself at the roots of the tree up through Dominique at the middle-branch level sets context informing Aram’s decision. But Aram himself, as the informed captain, decides what shows to buy.

  • In order to lead with context, you need to have high talent density, your goal needs to be innovation (not error prevention), and you need to be operating in a loosely coupled system. Once these elements are in place, instead of telling people what to do, get in lockstep alignment by providing and debating all the context that will allow them to make good decisions. When one of your people does something dumb, don’t blame that person. Instead, ask yourself what context you failed to set. Are you articulate and inspiring enough in expressing your goals and strategy? Have you clearly explained all the assumptions and risks that will help your team to make good decisions? Are you and your employees highly aligned on vision and objectives? A loosely coupled organization should resemble a tree rather than a pyramid. The boss is at the roots, holding up the trunk of senior managers who support the outer branches where decisions are made. You know you’re successfully leading with context when your people are moving the team in the desired direction by using the information they’ve received from you and those around you to make great decisions themselves.

Culture map

Working style of different countries

  • At about that time, a manager in our HR department lent me Erin’s book, The Culture Map. The book outlines a system for comparing one national culture to another on a set of behavioral scales. It looks at issues like how much employees defer to the boss in different countries, how decisions are made in different parts of the world, how we build trust differently in different cultures, and most important for us at Netflix, how candid versus diplomatic people tend to be with critical feedback around the globe. I did a bit of reading around the scales. The framework was based on an enormous amount of research and struck me as simultaneously robust and simple. I shared the book with our executive team and someone suggested that we look at the cultural “maps” for the various countries of our regional offices, compare them with one another, as per the chart above, and discuss what we felt the maps revealed. The exercise was a revelation to many of us. The framework offered a convincing explanation for a number of things we had already encountered, such as why our experience with feedback in the Netherlands had been almost diametrically opposed to our experience in Japan (dimension 2 on the graph). We decided to get our executive team together to map out our corporate culture on the same scales. Once we’d done that, we could compare the corporate culture to the national cultures we were working in. As I mentioned, before the Quarterly Business Review meeting, we run our “Estaff” meeting for all of our vice presidents and above. In the November 2015 Estaff, we divided the sixty participants into ten groups of six. We led a two-hour session where we worked at round tables to map out our corporate culture on The Culture Map scales. Each group mapped the corporate culture a little differently, but some clear patterns emerged, as you’ll see from the three examples below. Group 1: Group 2: Group 3: We then collected and studied the maps from the ten groups and aggregated them into a single Netflix corporate culture map, which looked like this: Next, using Erin’s Country Mapping tool we compared our Netflix culture map to that of each of the countries where our regional hubs were located. As we studied the maps, we realized that some of the issues we were having in our regional offices were due to cultural differences. For example, in comparison to Netflix culture, both the Netherlands and Japan fall to the consensual side of the decision-making scale (dimension 4) . That explained why many employees in our Amsterdam and Tokyo offices had been struggling with the Netflix Informed Captain model, where there is always one individual responsible for a decision. As we looked at dimension 4, which measures how much a culture defers to authority, we saw Netflix falling to the right of the Netherlands (we learned that the Netherlands is one of the more egalitarian cultures in the world) and to the left of Singapore (more hierarchical). That helped us understand why our Dutch employees had no problem overruling their bosses’ suggestions, while our Singaporean employees required more encouragement to make a decision if the boss didn’t agree. We were also struck by the trust dimension (dimension 5) where the Netflix culture was so clearly more task-oriented than almost every local culture we were moving into. The graph below zooms in on that specific dimension, so you can see the problem. We’ve added the US position for interest. At Netflix, our emphasis had always been on watching the clock. The vast majority of meetings are thirty minutes long and we generally believe that most topics, even important ones, can be settled in a half-hour time frame. We try to be friendly and helpful, but until this culture mapping exercise, we avoided spending much time on nonwork discussions. Our goal was efficiency and speed, not on spending time chatting over a cup of coffee. But as we increasingly hired employees around the world, we found that our obsession with investing every minute in the task was hurting us in myriad ways.

  • Greg is married to a Japanese woman and is a fluent Japanese speaker, which is part of the reason I asked him to move to Tokyo and open the regional office in 2015. He recalls: I’d been in Japan for about six months and despite a lot of encouragement, there was very little impromptu feedback in the office. When the 360 process came around, I had low expectations. We did the written 360s. Then we did a live 360 session, which is one of the most un-Japanese activities imaginable: giving frank feedback to a colleague and superior in front of a group. But I knew there were parts of the culture that might make this group feedback possible. Most Japanese are meticulous and dedicated preparers. If you set clear expectations, they will do everything they can to meet them. If you say, “Please prepare for this and these are the instructions we are going to follow,” they almost always excel. The results were remarkable. During the 360 process the Japanese on my team provided higher-quality feedback than my teams in the US had in previous years. The comments were frank and well-constructed. Their recommendations were actionable, and they didn’t pull punches. They received the feedback with grace and appreciation. Afterward, when I debriefed with several of them, they said, “You told us it was part of our job. You told us what to do and how to do it. We prepared and some of us even rehearsed. We wanted to make sure we met your and Netflix’s expectations.” What we learned from this experience, and later found to be true not just in Japan but in most cultures where direct negative feedback is less comfortable and less common, was that asking employees to give ad hoc feedback to peers and superiors at informal moments doesn’t usually work well. But if you run more formal events, putting feedback on the agenda, providing preparation instructions, and giving a clear structure to follow, you can get all the useful feedback out there just as effectively.

  • Given the importance of candor for Netflix, employees in indirect cultures need to get used to both giving and receiving feedback with a frankness they may not be accustomed to. This requires emphasizing and re-emphasizing the 4A feedback model.

  • It requires talking openly about the cultural differences and coaching and supporting our global teams to take direct feedback not as a slap, but as a way to get better. For example, in our São Paulo office, there is a weekly meeting to discuss the corporate culture for all employees who’d like to attend. Giving and receiving feedback is one of the most frequent topics on the agenda. But learning to foster candor around the world is not a one-way street. When collaborating with less direct cultures, we’ve learned at headquarters to be more vigilant and to try to calibrate our communication so that it feels helpful to the receiver and is not rejected simply because of form. Chris’s advice was simple and anyone who needs to give feedback to a colleague in a less direct culture should take heed. Be friendlier. Work harder to remove the blame. Be careful to frame the feedback as a suggestion, not an order. Add a relationship-based touch like a smiling emoji. These are all things we can do to make our messages feel more appropriate in the context within which we are working. The overarching lesson we’ve learned is that—no matter where you come from—when it comes to working across cultural differences, talk, talk, talk. One of the best ways to get better at providing feedback to an international counterpart is to ask questions and show curiosity about the other person’s culture. If you need to give feedback to a counterpart in another country, ask another trusted colleague from that country first, “Does my message sound aggressive?” “What’s the best approach in your culture?” The more questions we ask and the more curiosity we show, the better we all become at giving and receiving feedback around the world.   
  • As with all the dimensions of culture, when it comes to giving feedback internationally everything is relative. The Japanese find the Singaporeans unnecessarily direct. The Americans find the Singaporeans opaque and lacking transparency. The Singaporeans who join Netflix are shocked at their American colleagues’ bluntness. To many a Dutch person, the Americans at Netflix don’t feel particularly direct at all. Netflix, despite its multinational desires, continues to have a largely American-centric culture.

  • In her past five years at Netflix, Ise has learned a lot about giving feedback to international colleagues, especially Americans: Now that I better understand these cultural tendencies, I give the feedback just as frequently, but I think carefully about the person receiving the message and how to adapt to get the results I’m hoping for. With more indirect cultures I start by sprinkling the ground with a few light positive comments and words of appreciation. If the work has been overall good I state that enthusiastically up front. Then I ease into the feedback with “a few suggestions.” Then I wrap up by stating, “This is just my opinion, for whatever it is worth,” and “You can take it or leave it.” The elaborate dance is quite humorous from a Dutch person’s point of view . . . but it certainly gets the desired results! Ise’s words sum up the strategies Netflix learned for promoting candor as they opened offices around the world. When you are leading a global team, as you Skype with your employees in different cultures, your words will be magnified or minimized based on your listener’s cultural context. So you have to be aware. You have to be strategic. You have to be flexible. With a little information and a little finesse, you can modify the feedback to the person your speaking with in order to get the results that you need.

  • When giving feedback around the world, add a 5th A: The 4As are as follows: Aim to assist Actionable Appreciate Accept or decline Plus one makes 5: Adapt—your delivery and your reaction to the culture you’re working with to get the results that you need. We still have a lot to learn about integrating our corporate culture into our growing number of offices around the world.

  • At most QBRs, we have at least one discussion about corporate culture. As the majority of our future growth is outside the US, we increasingly focus these discussions on how to make our values work in a global context. What we’ve learned is that in order to integrate your corporate culture around the world, above all you have to be humble, you have to be curious, and you have to remember to listen before you speak and to learn before you teach. With this approach, you can’t help but become more effective every day in this ever-fascinating multicultural world.

  • Map out your corporate culture and compare it to the cultures of the countries you are expanding into. For a culture of F&R, candor will need extra attention. In less direct countries, implement more formal feedback mechanisms and put feedback on the agenda more frequently, because informal exchanges will happen less often. With more direct cultures, talk about the cultural differences openly so the feedback is understood as intended. Make ADAPTABILITY the fifth A of your candor model. Discuss openly what candor means in different parts of the world. Work together to discover how both sides can adapt to bring this value to life.

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