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What is the No Rules Rules book about? What does Reed Hastings share about the unconventional and unique business practices at Netflix?
The No Rules Rules book is the guide to how Netflix operates. Author and Netflix CEO Reed Hastings discusses the often unconventional strategies that have been used to bring and maintain success for Netflix.
Keep reading for more about the No Rules Rules book by Reed Hastings.
No Rules Rules Book
When Netflix launched in 1997, the company was basically a mail-order version of Blockbuster, the video rental store that dominated the home entertainment industry at the time. Today, Netflix produces award-winning content, it has more than 167 million subscribers across 190 countries, and it’s consistently listed among the best places to work. To achieve this level of success, Netflix had to adapt and thrive in a rapidly changing industry. Identified in the No Rules Rules book, the keys to Netflix’s success have been unconventional business practices:
- Hire and keep only the best workers—at any cost.
- Promote candor through constant feedback at all levels as well as organizational transparency.
- Remove controls, such as allotted vacation time and approval processes.
These practices have created a company culture that focuses on empowering employees to innovate and take accountability, rather than conditioning them to simply follow protocol. Through this book, Netflix CEO Reed Hastings tells the story of Netflix’s evolution and his logic in cultivating this kind of culture, while co-author and business professor Erin Meyer provides context for how these unusual business practices shaped the company’s success.
Step 1: Hire and Keep Only the Best Employees
A few years after Netflix’s 1998 launch, the company was hit with the repercussions of the 2001 dot-com crash. Venture capital funds dried up and Hastings was forced to lay off a third of his 120 employees, including many who worked hard and produced adequate work. Although Hastings feared that the layoffs would decimate morale, he discovered that his remaining staff buzzed with energy and produced high-quality work. Hastings soon realized that by eliminating less-than-stellar workers, he’d raised the talent density, meaning that there was a higher level of talent per employee, and that created an environment in which top performers thrived. High-performing employees want to work at companies full of talented, collaborative workers because:
- They improve by learning from other top performers.
- They push each other to produce high-quality work, which increases individual motivation and satisfaction.
Performance—whether good or bad—is contagious, according to the No Rules Rules book. Hastings hadn’t realized that, before the layoffs, the mere presence of adequate employees had been dragging down the performance of his entire team. On a team of high performers, just one or two mediocre workers can have adverse effects:
- They reduce efficiency by forcing others to find ways of working around their less-than-stellar performance.
- They bring down the quality of group discussion.
- They take managers’ energy and attention away from top performers.
- They cause the team to produce lower-quality work, which causes some high-performing employees to quit out of frustration.
- Their presence sends a message to everyone else that company leaders condone mediocrity, which reduces motivation and performance across the board.
By contrast, a team full of highly talented people pushes everyone’s performance up.
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Here's what you'll find in our full No Rules Rules summary :
- How Netflix achieved massive success in a short period of time
- The unusual business practices that have helped Netflix sustain its success
- Why Netflix fires adequate employees
