How to make your company powerful through culture?

Ask any businessperson, and they’ll tell you: today’s market is dynamic and ever-changing, requiring businesses to constantly up their game and adapt with unprecedented speed. But they don’t all agree on how to stay afloat in these lightning-paced times.

In Powerful: Building a Culture of Freedom and Responsibility, Patty McCord presents entertainment giant Netflix’s survival techniques, which are driven by eight central management practices. And by adopting these practices, you may well give your company the edge that Netflix continues to enjoy, whether your business is just starting out or figuring out how to surge ahead of the competition.

If you’re a business manager, then you know that efficiency is key to success. And you probably have a set of procedures and policies that keep things efficient – a strict workflow that ensures relevant issues are brought to your attention as quickly as possible.

But what if you were to learn that rigid structuring and inflexible procedures, though supposedly making your business more efficient, were, in fact, making it less so?

In today’s fast-paced and ever-changing market, it’s best to make your business lean – that is, as procedure-free and structureless as possible.

The first step toward leanness is to jettison the traditional, top-down management that’s hog-tying most businesses. The goal is to be as agile as possible, and if employees must seek your approval or opinion whenever a decision needs to be made, your business will become stiff and sluggish – the opposite of what it should be.

Netflix is an excellent example of corporate nimbleness. With grace and speed, they adapted to the changing needs of viewers, transitioning from a by-mail DVD-rental company to a top-notch streaming service. This nimble adaptation would have been impossible had the company been mired in outmoded management protocols.

But perhaps your company relies on various fixed policies, such as rewards or bonuses, to incentivize employees, and you worry that removing this structure will damage their motivation.

Well, worry not. If workers feel that they’re part of a strong team and that their contributions truly matter, they’ll be more motivated than ever. And the best way to build driven teams is to give workers the freedom to solve problems and tackle projects in their own way.

Indeed, once you loosen the reins, your employees may start producing even better results, because making a real contribution to important projects is a reward in and of itself. This certainly happened at Netflix.

In 2001, the company experienced major economic difficulties and was forced to lay off a third of its workers. The remaining employees, all of whom were highly talented, were forced to take on more responsibilities and work, which proved quite beneficial. Now that each person’s work made a major difference, everyone put in much more effort – and Netflix was soon on its way to recovery.

Imagine you’re at the edge of a raging river. You want to get to the other side, but there’s only a wooden footbridge and, for all you know, the wood is rotten and will break the moment you put weight on it.

Well, if you don’t constantly communicate with employees and management, your business will be like that bridge – a potentially flimsy structure that might plunge you straight into the rapids of bankruptcy.

The only way to know what challenges your employees are currently facing, what goals your teams are pursuing or what changes the market is undergoing is to talk about it.

So, to make sure everyone is on the same page, take a tip from Netflix’s CEO and cofounder, Reed Hastings: with a PowerPoint presentation, explain how the business works to each new hire.

This method proved so successful at Netflix that the company now has a “new employee college,” a quarterly meeting during which each department head brings all company employees up to speed on what’s happening in their department.

This gives employees the chance to ask questions and thereby obtain a better understanding of how the business works – an understanding that’s important because communication shouldn’t only be top-down. Employees should have the freedom to communicate their thoughts and critiques to management as well.

Just consider how things work at Netflix’s new employee college, where employees can ask managers pretty much anything, from how new management decisions are made to exactly what’s expected of new hires.

Once, during one of these Q&A sessions, an employee raised a question about the film-distribution system, which, in the employee’s view, was inconvenient. This question raised a doubt in the manager’s mind. Though he’d adopted the system recently, he soon began to rethink it and, eventually, this reconsideration led to Netflix’s trademark distribution method – the simultaneous release of all of a series’ episodes.

What if, unbeknownst to you, your breath reeked of garlic? Or what if, without really realizing it, you habitually picked your nose when deep in thought? Would you want your coworkers to politely ignore such pungent or unsightly details? Or would you rather have the tough news delivered to your face so that you could mend your ways?

Though potentially painful, radical honesty is extremely beneficial, because it creates an atmosphere of transparency that’s conducive to continuous learning and growth – an atmosphere that politer policies will never lead to. Now, radical honesty doesn’t mean you should just say everything that flits through your mind; hard truths should be delivered with respect and evenhandedness.

This, of course, is easier said than done, especially when emotions are running high, so be sure to practice. Work out exactly what you want to say, and then deliver your lines to your partner or say them in front of the mirror. This will help you hone your tone and body language, which will make a huge difference when you deliver your critique to your coworker.

Also, don’t make your criticism personal, and be sure to offer actionable advice going forward. You’re asking for a change in behavior, not an alteration of personality. It’s often thought that debate is a sign of discord, and that debate within a business is a symptom of corporate disunity. But this isn’t the case at all. As long as people’s opinions are based in fact, debate is extremely generative and should be encouraged.

Constructive debate, far from causing corporate division, is the best way to enliven a company. It introduces new points of view and keeps workers from getting too fixed in their work habits. It should thus be heartily encouraged.

Keep in mind, however, that all opinions should be fact-based. Otherwise, the suavest rhetorician will always win the debate, no matter how slapdash her argument.

At Netflix, facts are highly prized, and they undergird all arguments and important decisions. But it wasn’t always that way. Netflix once struggled with overlong video-buffering times, and sales and marketing personnel, who had to deal with disgruntled customers, would often hound the company’s engineers, telling them to fix the problem right away. But the engineers couldn’t just fix such a technically complex issue.

It was at this point that the importance of fact-based debate dawned on managers. Sales and marketing should have been asking why it wasn’t easy to reduce buffering times, because, without the facts, all they could do was complain to and irritate the engineers.

But a word of warning: don’t mistake data for facts. Sure, data does sometimes reflect the facts, but not always. So, it’s important to consider other variables that data sets simply can’t communicate.

We’ve all heard that we should enjoy the moment because the present is all we have. And while that might be sound personal advice, in the world of business, it would be foolhardy not to look toward the future.

More specifically, you should always hire the team you know you’ll want to work with in the future too. Oddly enough, though managers are usually good at projecting how products and services will meet the demands of future customers and developing markets, they aren’t so adept at building teams that will evolve well. Rather, they look at their team’s current shortcomings and hire to fill the gaps.

This isn’t a great approach, and here’s why: if you only ever consider current performance – which can lead to overhiring, underhiring or, worse still, hiring the wrong people – your business will never reach its full potential.

This problem can be obviated, however, by asking yourself what you want your team to look like in six months.

Shut your eyes and envision the optimal team. Make a list of all the things that differentiate this team from your current one. Maybe they’ve developed some exciting new product prototypes, or have managed to make your software 99-percent bug-free.

Now ask yourself how they got there. Was it through increased collaborative efforts, or more solitary work? Was a new team leader onboarded? Are there more, or fewer, meetings? Are there more intradepartmental efforts?

Then figure out how to improve team members’ skill sets so they can achieve these results. Do they need to improve communication or become more disciplined? Are they listening to one another? Does an ace negotiator need to join the team?

By asking yourself such questions, you’ll soon have a profile of a solid team that can rise to future challenges and meet changing needs. This, in turn, will help you decide what to do, and who to hire, in the present.

Once you know what you want your team to look like in general, you can get down to the details of hiring individual team members, which is what we’ll look at next.

Check out my related post: Have you read Abundance? – Part 3

Interesting reads:


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