No Rules Rules
No Rules Rules: Book Review
No Rules Rules by Reed Hastings and Erin Meyer is among those rare books on efficient corporate management and a fine example of building responsibility among its employees. Such an atmosphere creates a positive environment even for the lower hierarchical employees to work with pride and control over their projects.
If you currently have your own venture or are going to begin one, then No Rules Rules is a must for you. It is a detailed analysis of the corporate life inside Netflix. How people behave and how they go about decision-making while working for Netflix. The kind of atmosphere Netflix has built encourages more creative work by reducing corporate bureaucracy among its highly skilled employees.
When you start having people work for you, you will realize that there should be an environment that inspires them to bring out the best form of their work while reducing the barriers and blockades. No Rules Rules dives in-depth and teaches you how you should go about making such kinds of standards. If you can understand the fundamentals of such corporate decision-making, you can make careful choices early in the journey so that you do not make the same mistakes that other companies make.
The transformation in corporate bureaucracy at Netflix is a mixture of the lessons learned in his past ventures and the new additions made as they grew bigger. You’ll be as surprised as me when you realize the level of transparency in their culture. The employees interviewed for the book were positive about sharing details about themselves and never hesitated to share information about any events, good or bad, about other employees or the CEO.
And this was a shocker at first, but then I realized that their corporate governance is on another level because it is hard to fathom a low hierarchical employee directly questioning the CEO on his conduct. ( Seriously, Pick up this book now.)
One aspect of this governance in No Rules Rules that felt quite weird is the famed Keeper’s Test. In this, the managers ask themselves a question frequently. Whether they would fight for the employee if they wish to leave and if the answer is no, they provide feedback to improve or ask them to leave. It doesn’t matter if the employee has been a part of Netflix for 3-months or 5-years.
But my thoughts are divided on this. Perhaps it’s too brutal for the employees, but on the other hand, maybe this is why Netflix has been able to perform at such high efficiency. No Rules Rules has been a magnificent reading, and the foundation of transparency and positive feedback has helped Netflix thrive. If you are in the creative industry, I encourage you to pick up this book and share the lessons with others.
No Rules Rules: Book Summary in 3 sentences
- Promote creative work by reducing corporate bureaucracy.
- Greater the rules and regulations in a corporate, higher the friction between the desired goal.
- Mistakes are necessary, you just need to learn from them.
Who Should Read It?
People who have their own businesses or are in the steps to start their own business should pick up this book and learn the essential guidelines to fortify their business.
Top 3 Quotes
- “Lead with context, not control,” and coaching your employees using such guidelines as, “Don’t seek to please your boss.”
- “TALENT DENSITY: TALENTED PEOPLE MAKE ONE ANOTHER MORE EFFECTIVE”
- If you want to build a ship, don’t drum up the people to gather wood, divide the work, and give orders. Instead, teach them to yearn for the vast and endless sea.
I’ve compiled notes on some of the key topics in the book which can give you a better overview of the content you’re going to find in No Rules Rules.
No Rules Rules Notes
1. A Great Workplace is Stunning Colleagues 👨🏭
- 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.
2. Say What You Really Think 🗣️
- With candor, high performers become outstanding performers. Frequent candid feedback exponentially magnifies the speed and effectiveness of your team.
- Set the stage for candor by building feedback moments into your regular meetings.
- Coach your employees by giving 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.
3. Begin removing Control 🕹️
- Remove unwanted rules that hinders the freedom of your employees.
- Remove vacation policies.
- With expense freedom, employees will be able to make quick decisions to spend money in ways that help the business.
4. Pay Top of Personal Market 🤑
- The methods used by the 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 the market. This may mean hiring one exceptional individual instead of ten or more adequate people.
- Don’t pay performance-based bonus. 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 ongoing basis. This might mean taking calls from recruiters or even going to interviews at other companies. Adjust salaries accordingly.
5. Open The Books 📖
- To instigate a culture of transparency, consider what symbolic messages you send. Get rid of closed office, assistants who acts 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.
- 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 organisation.
6. No Decision-Making Approvals Needed 👀
- In a fast and innovative company, ownership of critical, big-ticket decisions should be dispersed across the workforce at all different levels, not allocated 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.”
- To help your workforce make good bets, encourage them to farm dissent, socialise the idea, and for big bets, test it out.
- Teach your employees that when a bet fails, they should sunshine it openly.
7. The Keeper Test 📝
- 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 competitions and discourage collaboration.
- When an employee is let go, speak openly about what happened with your staff and answer their questions candidly. This will diminish their fear being next and increase their trust in the company and its managers.
8. A Circle of Feedback 😊
- 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.
- 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.
9. Lead with Context, Not Control 🪧
In order to lead with context, you need to have a 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 organisation 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.