No Rules Rules: Netflix and the Culture of Reinvention is not a history of Netflix. It’s an extended account of the corporate values that have resulted in Netflix’s success as told by its cofounder/CEO Reed Hastings and accomplished business writer & academic Erin Meyer. This well written and clearly explained book offers insight into managing a creative company using non-traditional management techniques that give employees greater freedom and responsibility. However, the techniques are likely not as widely applicable as the authors imply.
No Rules Rules follows a unique format, in which each author’s voice is clearly pointed out in their sections of each chapter, leading to a kind of dialogue between the two. This format creates balance. Each point is discussed from the insider/pragmatic perspective of Hastings and the more academic perspective of Meyer. Meyer will sometimes backup Hastings’s assertions with research outside of Netflix, or gently pushback against some of his more absolutist tendencies. Meyer appears to have had significant access to employees throughout Netflix while doing her research. However, there’s no section in which she completely disagrees with Hastings, and throughout most of the book the reader is simply getting the same point from multiple perspectives.
The book revolves around the benefits of a corporate culture that empowers individual contributors to make decisions without bureaucratic tape and draconian oversight. This is meant to increase efficiency, improve flexibility, and help employees feel more satisfied with their roles. A couple specific examples are employees deciding for themselves the appropriate amount of vacation to take each year (no vacation policy) and signing contracts without getting approval from their managers. To get to this place of what the book calls “freedom and responsibility” there are certain prerequisites defined by the authors. These include a culture of candid feedback and achieving a high “talent density.”
These corporate values have obviously served Netflix well, but they may not quite be the panacea they seem from reading the book. Unfortunately, despite Meyer’s involvement, the values are somewhat myopically presented within the confines of Netflix. Probably the most controversial point in the book is its assertion that “adequate” employees (sometimes interchangeably referred to as “good” employees) should be let go to make room for hiring “great” employees. This is presented rather uncritically, without the obvious introspection that it is easy for an industry leading organization like Netflix to have its pick of “great” employees waiting at the gates to get an opportunity to work for it when they let go of the “good” employees.
The authors only caveat is that safety or process oriented companies (think nuclear reactor or industrial manufacturing) cannot risk freedom and responsibility. Yet, there are many other creative types of companies that cannot fulfill the prerequisites outlined by No Rules Rules. For example, there are creative companies that due to the limited profits in their industry cannot pay top-dollar and cannot risk letting go of “good” employees because there will be no “great” employees waiting to take their place.
No Rules Rules is a good book for learning more about Netflix, how its corporate culture works, and how it has helped to make it successful. It’s sprinkled with enough interesting anecdotes and good writing to keep your attention. The unique format adds value and the non-traditional management techniques are interesting and surely have some merit. Yet, the book’s failure to acknowledge the unique circumstances of Netflix that make its unique culture possible, stop it from being a “great” book. It’s just a “good” book.