Creative management, the second Netflix revolution

We don’t watch TV like we used to. Are we going to work in a different way tomorrow? After revolutionizing the audiovisual industry, Netflix is ​​now making a strong case for reshuffling the cards in management. “No Rules Rules”, written Reed hastings, the founding boss and a bit provocative of the new entertainment colossus, in his best-seller which appeared in France at the beginning of March under the title: “La Règle? No rules ”.

At home, employees do not have to deposit vacation days, have their expense reports signed, go through a purchasing department that does not exist to validate a supplier contract, obtain the agreement of their supervisor for a major decision. Information – even confidential like day-to-day business performance – circulates freely. Employees are encouraged to formulate individual critiques to allow the team to progress.

Each year, employees take the “keepers test” (“Shall we keep you or not?”): ” If someone on your team were to quit tomorrow, would you try to change their mind? Or would you accept his resignation, perhaps even with some relief? If so, then offer him severance pay now. Recommends Reed Hastings, for whom the quality of a company does not depend on the size of its battalions but on the concentration of talent. Better three times fewer executives ” paid like rock stars »That three times more lambda employees who are offered average salaries!

From symphony orchestra to jazz group

The man who bankrupted Blockbuster, the former monopoly on videotape rental in the United States, has given an old shot to all the kings of the small screen, from CBS to TF1 to the heavyweights of pay TV like HBO or Canal +, and forced Disney, Warner, Paramount and all the Hollywood emperors to reinvent themselves, will he now push CEOs and HRDs to rethink the way they hire, supervise and motivate their employees ?

” We have changed world and management methods do not take this into account. The world before was dominated by industrial companies. The priority, beyond operational efficiency, was to do everything possible to minimize the risk of error. In aeronautics or pharmacy, you need processes, rules, supervision… It is insurance against danger. Successful companies now place more and more emphasis on services, innovation, flexibility, entrepreneurship… Netflix understood before others that we were at this moment of change and that we had to change ”Says Erin Meyer, professor at Insead and co-author with Reed Hastings of“ No Rules Rules ”.

For the entrepreneur behind the red N now present in more than 200 million homes, we must move from the symphony orchestra to the jazz group. Yesterday, the enterprise was an orchestra in which an all-powerful conductor drove a handful of soloists and an army of relatively common soldiers. Today, the key to success lies in a team capable of behaving like talented and independent artists, able to work together, improvise while walking, without having the nose stuck on a score. The world belongs to those who do not know what will happen. Not to those, sitting on their pensions, for whom tomorrow looks like today.

Horizontal organization

It was also during the most serious crises experienced by Netflix that Reed Hastings forged his convictions as a manager. In 2001, when the bursting of the Internet bubble weakened the group, which was then the champion of DVD rental by… mail, the company had to lay off a third of its workforce. With this paradox: once the employees who are considered average have left, those who remain are more efficient. Reed Hastings draws a lesson from this: the key to success is “talent density”. Once your team is made up of great players, everything becomes easier. We can give them more freedom and trust them.

” To be hired at Netflix, candidates meet a dozen people. The employer assumes that you have the technical qualities required, but we want to verify that you have the state of mind that can marry the corporate culture. The stake is your personality, it is to see if you are Netflix-compatible and vice versa », Recalls Damien Bernet, who joined the group in France a year ago to take charge of legal issues and development.

” This process also prepares you for Netflix culture. Because the decision-making system is based on the same principle. In a pyramid scheme, you have a leader who decides. At Netflix, the organization is horizontal. You are not in a hierarchical relationship with principals. When we work on a project, we appoint an ‘informed captain’, in other words a project manager, it is he who will decide. And to make a decision, he surrounds himself with skills and opinions. We start from a memo, we share the information and we seek to collect different opinions. We encourage people to disagree. But in the end, the project manager makes and assumes the decision. He has the right to decide, even if he has not obtained the consent of everyone, including a superior. Then Netflix must remain a team, we line up on the decision », Is still a little surprised the former investment banker (at Rothschild) and former right-hand man of Alain Weill at NextRadio then Altice.

“Is it necessary to have an expense report validated by five people?”

At Netflix, the employee is free but empowered. He has to spend the money as if it were his own. ” The principle is to spend wisely. Obviously, there will be abuses but they will be anecdotal, so why penalize everyone? for the mistakes of a few? We end up losing agility, while the key is to go fast “Says Damien Bernet, who has had no trouble adapting.

“ It’s not that we don’t like the rules. We don’t like unnecessary rules. Is it necessary to have an expense report validated by five people? No. Make sure we check the numbers before presenting them to Wall Street, yeah Explains Jean-Christophe Berger, a Frenchman who is part of the historic Netflix channel, having joined the head office in Los Gatos (near San Francisco) in 2007 – everyone calls him JC.

” It was fourteen years ago. At the time, we had to make 1 billion in sales and there must have been about fifteen people in my team. Today, we are doing 25 times more and my team has 300 people. When I joined Netflix, it was an American company that rented DVDs in the United States. Today we are in streaming globally and we have become a content producer. We have been able to reinvent ourselves and if we have managed to do it so quickly, it is largely thanks to our culture. Others would have taken much longer », Indicates this« VP Finance »who manages the group’s accounts.

Downside

” The success of Netflix cannot be explained only by its management methods. It also needed a vision. But many other companies have had the vision and have not had this success », Adds Erin Meyer, who got to know Reed Hastings… a boss who recognizes his mistakes and does not see himself as a leader having to decide, but as a manager helping its teams to grow and decide.

Few of the employees speak out against autonomy and talent. But the medal has a flip side: those who narrowly pass the “keepers test” may feel like they are permanently in an ejection seat. ” The search for performance is both motivating and stressful. But we don’t ask ourselves every day if we’re going to be fired. First, because the starting rate at Netflix is ​​actually lower than in many companies. Then because we know that we are also there to take risks, that we have the right to make mistakes and that we can progress. In addition, we tell each other things. We don’t take anyone by surprise. Finally, in many other companies, psychological suffering results from the fact that we do not say anything or that we placard “, Relativizes Damien Bernet.

“ Historically, capitalism has developed around family businesses. We were hired for life in a company that remained under the control of a family. We were part of an extended family. But the truth is, the corporate world is more like a soccer team. We form a whole, but the objective is that the sum of the individuals makes it possible to win. It does not shock anyone that, in a team, the less performing ones end up giving way to others.. Sometimes we have to part with them even if they are friends. And we don’t have to do it cruel “, Professes Erin Meyer, who accompanied Reed Hastings in the international offensive of Netflix which began in 2016.

Global culture

Because, since then, Netflix has had to adapt without denying itself. “ Netflix culture can be exported. You have to stay true to your values, but accept to take into account the local culture. Candor or honesty is crucial for Netflix. We must not give it up. But we do not express things the same way in California, Japan, Singapore or Brazil », Notes Erin Meyer. “ Even if we have a common core of culture, we do not try to impose an American culture everywhere in the world. Besides, we are not in an American mold, our culture is global », Emphasizes Jean-Christophe Berger.

Netflix has been able to export its culture. It remains to be seen whether other companies can draw inspiration from it. ” An industrial company like Michelin, which cannot take the slightest risk in terms of safety, cannot entirely switch to such a model. But that doesn’t mean that there can’t be services that evolve in this direction. Pockets in which the emphasis is on innovation. We can go by keys, we don’t have to make a clean sweep of the past », Notes Erin Meyer.

Until then, the history of Netflix, full of twists and above all successes, is as beautiful as a series. It remains to be seen whether this very special culture will keep all of its promises over time. To be continued …