It’s easy to forget that before it became the streaming giant it is today with hits like Making a Murderer, House of Cards, and Orange Is the New Black, Netflix was a DVD-by-mail business. It’s hard to imagine now that the world’s largest subscription streaming video service keeping television networks on their toes was once a retail business disrupting Blockbuster.
Part of how the company has transformed so rapidly has a lot to do with its revered work culture. There’s a 124-page document that’s now been shared over 13 million times on Slideshare, and was called “the most important document ever to come out of the Valley” by Sheryl Sandberg.
The woman behind “Netflix Culture: Freedom & Responsibility” was the company’s chief talent officer at the time, Patty McCord.
“We [Netflix’s cofounder Reed Hastings and McCord] had been at another company together, and we didn’t like how that company was when we left,” said McCord, who now works as a consultant and advises companies on leadership and culture. “It was like every other company.”
So, the two decided to start a different kind of company. Instead of listing the company’s core values like every other company was doing, McCord decide to write down the things the company valued, what mattered to them, what they expected in their people. For instance, if the company wanted courageous employees, they also wanted employees to know what “courage” looked like and what it didn’t look like.
The result is a document that demands self-sufficient employees who feel a responsibility to the company. There’s no vacation policy, a nonexistent travel policy, and no annual employee reviews. McCord says the culture is meant to only attract “fully formed adults.”
“If you look at an innovator’s mind, the innovator never says, ‘I know what we should do. We should look around and see what everyone else is doing and do it a smidge better,’” said McCord. “We just took risks with the people stuff, just like we took risks with the business.”
How did she do it? Not surprisingly, there was no formal process put in place in order to get to Netflix’s no-formal-process culture. While creating the company’s culture, McCord just made sure to shut everything out for years and refused to read about what other companies were doing with their culture. Every two to three years, she would attend a human resources conference, get frustrated by the conversation, and go back to isolating herself within Netflix’s walls.
“What I found in my peer group [when I went to these HR meetings] is that people would whine about not having a seat at the table, that their CEO doesn’t respect them, about how you get recognition you deserve. That stuff makes me mad,” said McCord. “How do you get a seat at the table? You earn it. How do you get recognition? You do something that’s worth recognizing.”
She continued: “I had had it with the baby attitude. No, you don’t get to whine about your T-shirt, you’re 40 years old. And you have a mortgage and family and car. And I’m supposed to tell you the policy on how much money is wise to spend in your department? That’s just stupid.”
After Netflix’s culture was put online, McCord says it completely changed the conversation during interviews. Instead of saying, “Tell me about your life,” the conversation now revolved around, “How do you do productive work?”
In short, to figure out what would work for them, McCord shut out everyone else. She took risks to test out people and how they worked. She decided that if it turned out to be “the stupidest thing” they ever did, they would just change it and do something else. In reality, the culture is just a PowerPoint presentation, explained McCord, meaning it can be changed any time.
Update: It should be noted that McCord ultimately lost her job at Netflix, thanks to her own system.