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What everybody should learn from... POWERFUL (Patty McCord)

Every businessperson knows that today's market is dynamic and ever-changing, requiring businesses to always up to their game and adapt with unprecedented speed. But they don’t all agree on how to stay afloat in these lightning-paced times.

This book presents the entertainment giant Netflix's survival techniques, which are driven by eight central management practices. By adopting these practices, you may well give your company the edge that Netflix continues to enjoy, whether your business is just starting out or figuring out how to surge ahead of the competition.

The Greatest Motivation is Contributing to Success

As a business manager, you know that efficiency is the key to success. Furthermore, you presumably have a lot of procedures that keep things efficient – a strict work process that guarantees relevant issues are brought to your attention as quickly as possible.

But what if you realized that this strict process that theoretically makes your business more efficient, in fact, makes it less?

In the present ever-changing market, the best choice? To make your business lean, it means allowing as much flexibility as possible, making it structureless.

The first move toward leanness is to get rid of the conventional, top-down administration that is hoard tying most organizations.

The goal is to be as agile as possible, and if employees have to look for you each time they make a decision, your business will be rigid and slow.

Netflix is a perfect case of corporate agility. They adapted to the changing needs of viewers, progressing from a DVD-rental organization to a first-rate streaming service. This agile adaptation would have been impossible if the organization had been buried in outdated protocols.

Perhaps your company relies on established policies to incentivize employees, such as bonuses, and believes, that eliminating them can affect their motivation. But it's not like that, when employees feel that they're a piece of a reliable team and their commitments really matter, they'll be more motivated than ever.

Also, the ideal approach to creating driven groups is to allow employees to deal with problems and solve them in their own way.

And this is what occurred at Netflix:

In 2001, Netflix had significant financial difficulties and was forced to fire a third of its workers. The remaining employees, all of whom were highly talented, were forced to take on more responsibilities and work, which was quite positive. Each of them was decisive, and they felt it, they all worked much harder, and Netflix soon headed for recovery.

Every Single Employee Should Understand the Business

McCord asserts that the company and you, as a leader, must assist each employee to understand the nature and scope of his or her own job. You must make sure that their individual goals, their team goals, and the company's main mission is the same. So, you need to ensure that everyone is on the same page. Netflix's CEO and co-founder, Reed Hastings: with a PPT presentation, explains how the business works for each new employee.

It's important to see that all staff members understand how your firm functions, its place in its market, the obstacles it must overcome, and the nature of its competition. McCord soon realizes that top-down communication is as important as a down-top.

This strategy was proved to be so effective at Netflix that the organization created a "new employee college," a quarterly meeting during which each department head updates all company employees about what is happening in their department.

These meetings allow employees the chance to inquire and thereby obtain a better comprehension of how the business works.

Once, during one of these Q&A meetings, a worker brought up a question about the film-distribution system, which, in the employee's view, was awkward. This question raised a doubt in the manager's mind. Although he'd embraced the system recently, he soon began to reevaluate it and, in the end, this reexamination prompted Netflix's trademark distribution strategy – the simultaneous release of all of a series' episodes.

McCord emphasizes that you must listen to your employees. Ask what they think and what challenges they face. Embrace their proposals. McCord says that your people are an undiscovered asset of innovation and improvement.

Humans Hate Being Lied To and Being Spun

Even though potentially painful, radical honesty is hugely beneficial because it creates an atmosphere of transparency that is helpful for continual learning and development.

From the CEO to the newest employee, honest and direct communication is standard. McCord encourages individuals to express their real thoughts but understands that employees will embrace this kind of honesty only if executives “set the norm”.

Now, radical honesty does not mean you should simply say everything that comes through your mind; hard truths should be told with respect and objectivity.

Radical honesty also implies giving and receiving authentic “critical feedback.” Feedback must always be precise and useful. Try not to make your criticism personal and be sure to offer significant guidance advised to get ahead. You are asking for an adjustment in conduct, not a replacement of character.

Debate Vigorously

It is often thought that debate is an indication of disagreement, a side effect of corporate disunity. However, if people's opinions come from facts, a discussion is amazingly generative and should be encouraged.

McCord accepts that this strengthens the culture of the organization and leads to superior performance. Helpful discussion, far from causing corporate division, is the ideal approach to empower an organization.

Keep in mind, however, that all opinions should be fact-based, don't confuse data with facts. Sure, the data sometimes reflects the realities, but it's not as simple as that. Therefore, it is essential to consider different factors that data sets cannot communicate.

McCord recommends that leaders should inspire their employees to question other colleague’s methodology. She prompts them to ask relevant questions to develop their understanding. A healthier organization participates in regular debates.

Someone Really Smart in Every Job

Netflix had three fundamentals in its talent-management philosophy:

  1. The responsibility for hiring great people and for determining whether someone should move on.

  2. Hiring a person for every job who fits in perfectly and not training someone from inside the company.

  3. To be willing to say goodbye even to excellent people if their skills no longer match the work we need to be done.

What's the best method to bring people on and let people go? Here are some useful pointers.

Worker retention shouldn't be utilized as a metric of employment success; the only measure is how talented your colleagues are.

Organizations should continually adapt to the ever-changing demands of the market, and it follows that employees who no longer fit well with an organization's new focus must go.

Netflix also makes sure that everyone in HR commands a deep understanding of the business, even when things get technical and complex. Additionally, it ensures that everybody in HR commands a profound knowledge of the company.

It is an HR task to discover and recommend the best candidates for each job. This is why it is so important that they understand what the business involves and what makes HR a fundamental piece of the company.

Netflix gives managers the responsibility of hiring great people and deciding when someone is no longer right for his or her job. It doesn’t hesitate to let fantastic employees go.

Pay people What They’re Worth to You

Have you ever tried to resell anything? Maybe an old smartphone or laptop or car? It's not so hard to calculate an asking price. But people are a bit harder to put a price on. But here's a tip to make the calculation of an employee’s value easier.

First, don't merely consider the salary itself; instead, determine how much value an employee will create later on.

Does he or she possess a rare set of skills and experiences that will significantly increase income? Or your number two candidate can't start right away? Or is it worth spending more and depriving the competition of this brilliant talent?

When hiring, you should keep these things in mind. Basing your compensation offer on a simple salary survey is a mistake because it won't give you a complete picture.

Skills that are rare or in high demand, among other factors, should be considered.

The Art of Good Good-byes

Instead of leading an annual performance review, hold one-on-one meetings with your workers regularly.

Giving a single, annual review means that managers and employees only get one chance for real improvement per year. It's much more effective to allow people to adjust whenever needed rather than informing them in December that, back in April, they did something wrong.

Doing a single annual review implies that managers and workers have only one opportunity to improve each year. It is significantly more powerful to offer people the chance to adapt whenever needed instead of informing them in December that they did something wrong in April.

Frequent one-on-one meetings also make it easy for you to assess worker capabilities and abilities and decide if anyone isn't adjusting to organization changes. If someone no longer seems to be a good fit, you should let him/her go.

Here is a hard reality: a person does not need to be careless to be a misfit. He could be a stable worker and a great guy, but that doesn't mean he's the right one for the job.

If this is the case, you don't have to make an improvement plan. It is smarter to release the individual and discover someone else who can perform well.

McCord asserts that having someone brilliant in a job isn't enough; you need someone excellent in a role who loves that job.

McCord encourages leaders to see if their top workers know if the organization's future aligns with their interests. Your managers must help valuable employees leave if that's best for them and the organization.

McCord faced this herself when, after 14 years, she understood it was time for her to leave Netflix. The most important thing she learned in her career was that you must be consistent in telling the truth. It requires courage that develops intentionally.


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