Inside the Values: Netflix.

Posted: 9 November 2021

By Luke Upton

Most companies now have a publicly published set of values that is used to identify to customers, partners, investors, and current and prospective staff their identity and those principles which guide how they do business. Each company is different, some are emblazoned across their homepage, others hidden away as modest and hard to find PDFs but they are fascinating documents, giving not just a perspective into the business, but also the industry they are in and the customers they serve. 

Origins.

Today in the first of a series of analysis of company values, we look at those belonging to entertainment giant Netflix

Launched in 1997, initially as a rental by mail business which took advantage of two emerging technologies: the internet and DVDs. Sending a DVD through the post was easier than a video cassette and a website could be used to order them instead of a paper catalogue or phone line. The company expanded quickly, launching streaming services in 2005 and going international in 2010. Netflix’s first original content series, House of Cards, was released in 2013 and their own films and shows have become a cornerstone of their portfolio. 

The Covid-19 pandemic, by closing cinemas, theatres and cancelling sporting events, gave a further boost to a platform perfect for those forced to stay at home, and Netflix now has 203 million subscribers around the world, generating USD $24.99 billion in 2020. In July 2021, it was revealed that the California based company was moving into the computer gaming industry, with a view to offer play through their system and ultimately the creation of their own games. 

Netflix has grown quickly, and has just taken a somewhat innovative approach to how they manage staff, in 2009 the Netflix Culture Deck was published. This 125-slide presentation was created by Patty McCord, then Netflix’s Chief Talent Officer, in collaboration with Reed Hastings, Co-Founder and CEO and is seen by many as the cornerstone of the modern company values document. 

It focuses on the company culture for current and potential employees, and focuses on five main takeaways: 

  • Hire, reward and tolerate only fully formed adults.
  • Tell the truth about performance.
  • Managers own the job of creating great teams.
  • Leaders own the job of creating the company culture.
  • Good talent managers think like businesspeople and innovators first; HR people last.

Where are we now? 

Fast forward to 2021, at the top of their Culture  page, they state; “Our core philosophy is people over process. More specifically, we have great people working together as a dream team.” 

Before identifying what makes Netflix special: 

  • Encourage independent decision-making by employees. 
  • Share information openly, broadly, and deliberately.
  • Are extraordinarily candid with each other. 
  • Keep only our highly effective people.
  • Avoid rules.

As we can see, the values whilst somewhat more nuanced, remain largely consistent with a focus on people and process, rather than core technology or business models. The phrase ‘extraordinarily candid’ is eye-catching, whilst the emphasis on honesty is well considered, it does seem to downplay the potential cost of transparency and directness on employees. Indeed, a Wall Street Journal article on Netflix’s culture was entitled, At Netflix, Radical Transparency and Blunt Firings Unsettle the Ranks.

And what’s next?

Two widely reported examples of this approach in action are “sunshining,” which encourages employees to share a mistake they have made with colleagues and the “keeper test” where, as part of their ongoing review process, managers must ask themselves whether they would fight to retain an employee or not if they announced they were leaving the company. 

The final bullet point is also noteworthy – the ‘avoid rules’, which is indicative of a confident company that has continued to evolve its business model throughout its existence, first in reshaping how we consume entertainment and now in not just further developing its offering but also fighting off competitors who now deliver in a similar way.

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