Employees don’t need pre-approvals for expenses or certain strategic decisions, but they’re fired if they do something dumb. Today, withholding honest feedback is against company policy: “We now say that it is disloyal to Netflix when you disagree with an idea and do not express that disagreement,” Hastings writes.ģ.

The CEO found out later that lots of his underlings thought it was a bad idea. They went to couples’ therapy, where he learned to express resentments and be honest.Īs a result, back in the office, “I began encouraging everyone to say exactly what they really thought, but with positive intent.” Even then, the mandate for complete candor didn’t come to fruition until after Hastings’ disastrous decision in 2011 to split Netflix streaming from the newly named Qwikster DVD-mailing business - a move reversed after less than a month. When he was CEO of debugging-tool software company Pure Software in the mid-’90s, Hastings was frequently away from home, and his wife grew frustrated and distant. Netflix’s policy of frank feedback stemmed from Hastings’ marriage counseling.

But the lesson, Hastings says, was that “a team with one or two merely adequate performers brings down the performance of everyone on team.”Ģ. Instead, the “entire office felt like it was filled with people who were madly in love with their work,” he writes, calling it a “road to Damascus moment.” Netflix claims it doesn’t have quotas or hard rules about firing less-than-stellar workers. In the months after the layoffs, Hastings expected morale to drop through the floor. Hastings and his HR chief agonized over who the “keepers” were, prioritizing the most creative and collaborative people. In 2001, after the dot-com bubble burst and venture capital funding evaporated, Netflix laid off one-third of its 120-person staff. Here are five takeaways from the new book, co-written with business professor and author Erin Meyer. In the introduction to “No Rules Rules,” Hastings boils down Netflix’s competitive advantage over Blockbuster - which 20 years ago rejected his $50 million asking price for the then-fledgling DVD-by-mail startup - to three things: “a culture that valued people over process, emphasized innovation over efficiency, and had very few controls.” Those principles, he says, are the taproot from which its “no-rules rules” have sprung. See Also: Reed Hastings on New Book, Netflix’s Future and One of His Toughest ‘Keeper Tests’

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