Book review | No Rules Rules is a tight, detailed account of the inner workings of Netflix

© M. Sriram
Book review | No Rules Rules is a tight, detailed account of the inner workings of Netflix

Who knew that for you and your significant other to “Netflix and Chill”, a multi-billion dollar company would have to upturn how firms are run, question basic assumptions and have a work culture the world balks at.

Video-streaming service Netflix has survived the dotcom bubble, the 2008 financial crisis, the shift from physical stores to mail-order DVDs to streaming and downloading. It has not just survived, it has thrived.

Netflix is a giant in every sense of the word—present in over 150 countries, licensing and creating content in dozens of languages and arguably pioneering the subscription revolution; making people pay for ad-free content online was unthinkable in large parts of the world even five years ago.

Now, a new book by its co-founder and co-CEO Reed Hastings, along with Erin Meyer, an author and professor who specialises in how cultural differences can impact business, details how Netflix is what it is and how its radically different approach to work has kept it relevant and innovate faster than others.

Netflix does a lot of things that are impossible to fathom in most of the world’s companies. Employees can take as much leave as they want, their salaries are increased based on market value not performance, they are encouraged to take job interviews with rivals, come back and say how much they were offered and Netflix happily matches that and entry-level executives can make million-dollar decisions without an approval or breaking a sweat.

How, and more importantly, why does Netflix do this? Hastings obsesses over high-talent density. Netflix hires the best of the best and if anyone is good, but not the best, they are simply fired with a generous severance package. This is the start and the core of the book. Every decision follows this.

Once Netflix has hired the best talent, no matter what they cost, employees are given more control and responsibility than any similar firm would give them. There is no hierarchy for approval for myriad things, there is no expense policy, no firm guideline except “Act in Netflix’s best interest”. And most employees do. They push the boundaries and innovate.

Over 10 chapters, No Rules Rules outlines the fundamentals of the Netflix work policy. This includes establishing a culture of freedom and responsibility, increasing candor, removing controls, fortifying talent density, opening up books of accounts for everyone and needing no approvals for decision-making. Employee retention and layoffs, building a culture of 360-degree feedback, leading with context, not control, and the ways to implement this template worldwide is also talked about in detail.

If you think the paragraph above is littered with corporate jargon found in every company handbook and scores of management books, you’re right. All of Netflix’s practices sound like a combination of promising, scary, risky and, at times, just weird (like actively encouraging employees to interview for outside jobs).

Meyer takes the reader’s side here at the start, being skeptical of these practices and her discovery and hypothesis testing is in some sense the reader’s journey too. It is a clever way to not make the book read like a public relations (PR) initiative, though it is obviously not a journalistic or investigative account either.

The narrative is in the first person, alternating between Hastings and Meyer. Meyer was given access to Netflix executives worldwide to learn more about these practices which bewildered her—and many readers—at first, but make more and more sense the deeper you get into Netflix’s culture. 

Hastings’ accounts jump between his first startup, Pure Software, his learnings and failings there, and the various cultural challenges Netflix has seen worldwide—from customers being creeped out over a marketing campaign for Black Mirror to an Asian employee nearly in tears because of a curt text message from an American colleague.

Hastings and Meyer go to great lengths to show why Netflix is doing what it is doing and how this helps it stay nimble and innovative. Paying everyone top-of-market salaries and allowing potentially unlimited days off is obviously not just a goodwill gesture. 

This innovation stems from its attitude of taking risks. Hastings says it is as if employees are given imaginary poker chips to bet with. And they are penalised not if a bet fails, but if they haven’t taken any big bets at all. 

What elevates the book tremendously is the examples used throughout. It separates No Rules Rules from the litany of management and leadership books and makes it a tight but detailed account of the inner workings of a technology behemoth which touches many of our lives directly and indirectly.

Employees from Japan, Singapore, Los Angeles in the United States, Brazil and other countries detail their experiences—what shocked them when they joined such as having to critique your boss or having the liberty to spend millions on quality animation even if your seniors disagree. A by-product of reading No Rules Rules is also getting some behind-the-scenes information about your favourite shows, including Stranger Things, Narcos, Black Mirror and Mighty Little Bheem.

The book is also written very clearly for corporate executives looking for their slice of wisdom. There are point-by-point learnings crystallised after every chapter, and it takes the tone of how you can make these changes in your  organisation.

There are a few caveats, however. Every company cannot adopt these practices. Netflix’s culture starts with high talent density—best of the best and paying them as such. Not all businesses have the margins Netflix has, its economies of scale, virality or the dominance almost ubiquitous with the tech industry today (none easily achieved, but very much present). 

More so, every employee in the world is not, and does not want to be a high-performer. Netflix is clear on this too, that its work culture is meant only for those who want to devote a large portion of their life to Netflix’s betterment (and in turn their own).

This is an era where mental health is finally taking some mindspace for employers and employees are beginning to talk about work-based mental health issues, harassment and depression. While Netflix does not discourage any of these issues being addressed (some of their policies do help, actually), an intense work environment where the company is your priority at all times may not help mental health. 

That said, No Rules Rules is a fresh, new way of looking at corporate culture and hierarchy, something last disrupted by Google 20 years ago (and today even they have become like everyone else for the most part). Nearly everyone can learn something from this book, whether you salivate at the thought of a six-week vacation or shudder at the thought of being the fall guy when you make an expensive bet everyone said would fail, and it does.