I finished this book in October 2024. I recommend this book 9/10.
Why you should read this book:
In this book, former CEO of Netflix, Reed Hastings and author of Cultural Map, Erin Meyer share stories and principles about how Netflix has challenged many of the ways leaders operate. Netflix was one of the first to stop tracking vacation time and expense policies. They operate on the principle that they hire the best employees and, therefore, will pay them better than everyone else but also hand them the key to the car. You will walk away with new insights about leadership from this book.
Get your copy here.
🚀 The book in three sentences
Compare the business to a high-performing sports team, not as a family.
Be willing to challenge how things are done—be a jazz band.
Give up control; you hired smart people—think a tree, not a pyramid, when it comes to decisions.
✍️ My favorite quotes
Steve Jobs said: "You can't connect the dots looking forward; you can only connect them looking backward. So, you have to trust that the dots will somehow connect in your future. You have to trust in something—your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life."
📝 My notes and thoughts
Pxxiv. In his famous commencement speech at Stanford University, Steve Jobs said: "You can't connect the dots looking forward; you can only connect them looking backward. So, you have to trust that the dots will somehow connect in your future. You have to trust in something—your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life."
P21. In a 2014 study, the consulting firm Zenger Folkman collected data on feedback from almost one thousand people. They found that, despite the blissful benefits of praise, by a roughly three-to-one margin, people believe corrective feedback does more to improve their performance than positive feedback. The majority said they din't find positive feedback to have a significant impact on their success at all. Here are a few more telling statistics form the same survey:
57 percent of responders claim they would prefer to receive corrective feedback to positive feedback.
72 percent felt their performance would improve if they received more corrective feedback.
92 percent agreed with the comment, "Negative feedback, if delivered appropriately, improves performance."
P30. 4A Feedback Guidelines:
Giving Feedback:
Aim to assist: Feedback must be given with positive intent. Giving feedback in order to get the 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 a professional, and we're more likely to see you as a professional, and we're more likely to build strong relationships.
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 American participating." Even better would have been: "If you can find a way to solicit contribution from other nationalities in the room your presentation will be more powerful."
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.
P41. When Neil left on vacation, often he went to an isolated place. Each time he came back, he had a fantastic new idea for how to move the business forward. Once, he and his wife took ice saws to the northern Sierra Nevada mountains and spent a week sleeping in igloos. When they returned, Neil had dreamed up a new mathematical algorithm to improve the way we select the movies to offer our customers. He was living proof of why companies benefit when their employees take vacations. Time off provides mental bandwidth that allows you to think creatively and see your work in a different light. If you are working all the time, you don't have the perspective to see your problem with fresh eyes. *As a leader, you need to lead this by example.
P78. Bill Gates, whom I worked with while on the Microsoft board, purportedly went further. He is often quoted as saying: "A great lathe operator commands several times the wages of an average lathe operator, but a great writer of software code is worth ten thousands times the price of a average software writer." In the software industry, this is known principle (although still much debated).
P85. 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.
P95. Whenever I hire a new employee, I tell them to read Rites of Passage at $100,000 to $1 Million+, which, back in the eighties and nineties, was the handbook for executive recruiters. It tells you how to know your market value and how to talk to recruiters to get that data. I say to all my people, "Understand your market, understand the book, go and meet with recruiters—and I give them a list of names of the recruiters specializing in their jobs. I want all my employees to make active choices to stay. I don't want them to stay because they lack options. If you're good enough to work at Netflix, you're good enough that other options will be out there. If you feel like you have a choice, you can make a good decision. Working for Netflix should be a choice, not a trap.
P104. 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 workspaces. 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. 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 instinct is to put most information out there, others will do the same. At Netflix, we call this "sun-shinning," and we make an effort to do a lot of it.
P124. In one study conducted by Professor Lisa Rosh from Lehman College, a woman introduced herself, not by mentioning her credentials and education, but by talking about how she'd been awake the previous night caring for her sick baby. It took her months to reestablish her credibility. If this same woman was first presented as a Nobel Prize winner, the exact same words about being up all night with the baby would prove reactions of warmth and connection from the audience. When you combine the data with Reed's advice, this is the takeaway: a leader who has demonstrated competence and is liked by her team will build trust and prompt risk-taking when she widely sunshines her own mistakes. Her company benefits. The one exception is for a leader considered unproven or untrusted. In these cases, you'll want to build trust in your competency before shouting your mistakes.
P139. 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 make 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.
P140. 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.
P169. Initially, this didn't sound very profound. The metaphor of team for the company is just about as tied as the metaphor of family. But as she kept talking, I started to see what she meant. 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.
P175. Pay people severance pay instead of having them going through a Performance Improvement Plan (IDP).
P178. Fortunately, there is no reason to choose between high talent density and strong collaboration. With the Keeper Test, we can achieve both. That's because there is one critical way we are not like a professional sports team. On the Netflix team, there is no fixed number of slots. Our sport isn't being played to a rule book and we don't have limits on how many people we play with. One employee doesn't have to lose for the other to win. On the contrary, the more excellence we have on the team, the more we accomplish. The more we accomplish, the more we grow. The more we grow, the more positions we add to our roster. The more positions we add, the more space there is for high-performing talent.
P180. In white-water kayaking, they teach you to look at the clear, safe water next to the dangerous hole you want to avoid. Experts have found that if you stare at what you are desperate to avoid, you are actually more likely to paddle into it. Similarly, at Netflix, we tell all employees it is best to focus on learning, teamwork, and accomplishment. If a person gets obsessed by their risk of being let go (or an athlete becomes obsessed with the risk of being injured) they can't play light and confident, and this can bring about the very troubles they were trying to prevent.
P186. Takeaways from chapter seven:
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?"
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 Keep 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.
P204. Takeaways from chapter eight:
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 id 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 (Aim, Action, Awareness, Appreciation), and use Start, Stop. Continue the method with roughly 25 percent positive and 75 percent development. Overall, it is actionable and has no fluff.
P220. 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?
P234. Takeaways from chapter nine:
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.
A loosely coupled organization should resemble a tree rather than a pyramid. The boss is 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.
P272. Leave the conductor and the sheet music behind. Build a jazz band instead. Jazz emphasizes individual spontaneity. The musicians know the overall structure of the song but have the freedom to improvise, riffing off one another other, creating incredible music. Of course, you can't just remove the rules and processes, tell your team to be a jazz band, and expect it to be so. Without the right conditions, chaos will ensue. But now, after reading this book, you have a map. Once you begin to hear the music, keep focused. Culture isn't something you can build up and then ignore.
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