Exerpt 4 (a) No rules…

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Pages from Netflix: The No Rules Rule, Section One, chapter 2


In my first few years as CEO at Pure Software, I managed the technology well. But I was still pretty miserable at the people part of leadership. I was conflict-avoidant. People would become upset if I addressed them directly with a problem, so I would try to work around issues when they arose.

I trace this personality trait back to my childhood. When I was a kid, my parents were supportive, but we didn’t talk about emotions in our house. I didn’t want to upset anyone, so I avoided any difficult topics. I didn’t have many role models for constructive candor, and it took me a long time to get comfortable with it.

Without much thought, I carried this attitude over into my work. At Pure Software, for example, we had a very thoughtful senior leader called Aki, who was, I felt, taking too long developing a product. I got frustrated and upset. But instead of talking with Aki, I went outside the company and struck a deal with another set of engineers to get the project going. When Aki learned what I’d done, he was furious. He came to me and said, “You’re upset with me, but you go around my back instead of just telling me how you feel?” Aki was dead right—the way I’d handled the problem was terrible. But I didn’t know how to talk openly about my fears.

The same problem affected my personal life. By the time Pure went public in 1995, my wife and I had been married for four years and we had one young daughter. It was the pinnacle of my professional life, but I didn’t know how to be a good spouse. The next year when Pure acquired another company three thousand miles away, it got harder. I spent half of each week away, but when my wife expressed her frustration, I would defend myself, saying that everything I did was for the good of the family. When friends would ask her, “Aren’t you excited about Reed’s success?” she wanted to cry. She was distant from me, and I was resentful of her.

The problem turned around when we started going to a marriage counselor. He got each of us to talk about our resentments. I began to see our relationship through my wife’s eyes. She didn’t care about money. She’d met me, in 1986, at a party for returned Peace Corps volunteers and had fallen in love with the guy who’d just spent two years teaching in Swaziland. Now she found herself hitched to a guy obsessed with business success. What was there for her to be excited about?

Giving and receiving transparent feedback helped us so much. I saw I’d been lying to her. While I was saying things like, “Family is the most important thing to me,” I’d been missing dinners at home and working all hours of the night. I see now that my words were worse than platitudes. They had been lies. We both learned what we could do to be better partners, and our marriage came back to life. (We’ve now been married twenty-nine years and have two grown kids!)

Afterward, I tried to take this same commitment to being honest back to the office. I began encouraging everyone to say exactly what they really thought, but with positive intent—not to attack or injure anyone, but to get feelings, opinions, and feedback out onto the table, where they could be dealt with. As we began giving increasing amounts of candid feedback to one another, I saw that getting feedback had an added benefit. It pushed the performance in the office to new levels. An early example involved our chief financial officer, Barry McCarthy. Barry was the first Netflix CFO, serving from 1999 to 2010. He was a great leader with vision, integrity, and an incredible ability to help everyone deeply understand our finances. But he was also a little moody. When the head of marketing, Leslie Kilgore, mentioned Barry’s moodiness to me, I encouraged her to speak to him herself. “Tell him exactly what you’ve said to me,” I suggested, inspired by my marriage counseling experiences.

Leslie was chief marketing officer from 2000 to 2012 and is currently on our board of directors. Her external persona is no-nonsense, but she has a dry, often surprising, sense of humor. Leslie spoke to Barry the next day and did a much better job than I ever could. She found a way to calculate how much money his moodiness was costing the business. She spoke to him in his own financial language, adding a shot of her infectious humor to the communication, and Barry was moved. He went back to his team, told them about the feedback he’d received, and asked them to call him out when his mood was influencing their actions. The results were remarkable.

In the subsequent weeks and months, many on the finance team spoke to me and Patty about the positive change in Barry’s leadership. That wasn’t the only benefit. After Leslie gave constructive feedback to Barry, Barry gave constructive feedback to Patty and later to me. Seeing how well he had responded to Leslie’s feedback, Barry’s team dared to tell him, with a bit of humor, when his moodiness was slipping back in and started giving more feedback to one another. We hadn’t hired any new talent or raised anyone’s salaries, but day-by-day candor was increasing talent density in the office. I saw that openly voicing opinions and feedback, instead of whispering behind one another’s backs, reduced the backstabbing and politics and allowed us to be faster.

The more people heard what they could do better, the better everyone got at their jobs, the better we performed as a company. That’s when we coined the expression “Only say about someone what you will say to their face.” I modeled this behavior as best I could, and whenever someone came to me to complain about another employee, I would ask, “What did that person say when you spoke to him about this directly?” This is pretty radical. In most situations, both social and professional, people who consistently say what they really think are quickly isolated, even banished. But at Netflix, we embrace them. We work hard to get people to give each other constructive feedback—up, down, and across the organization—on a continual basis.

Hastings, Reed; Meyer, Erin. No Rules Rules (page 15). Ebury Publishing. Kindle-Version.

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