25 Lessons for Startups, Entrepreneurs & HR People from Netflix

If you are a Startup (I mean you are the person founding it) or an Entrepreneur or an HR person looking for ideas and inspiration to take your business to great heights, then you shouldn’t miss this one. This 127-slides simple power-point presentation is being called one of the most important documents ever to come out of Silicon Valley and it has been viewed more than 5 million times on the web.  I’ll summarize some of the best lessons I learned from it. Keep reading.


I just stumbled upon accidentally on the post How Netflix Reinvented HR by Patty McCord on Harvard Business Review Blog and you know what got my attention? The reason behind Netflix’s phenomenal success – which is the way it built and most importantly maintains a world-class team.

Word Class Business Requires World Class Team

This is what I learned in very hard way in my last 7 years of Business experience. When I started my journey as an Entrepreneur 7 years back at the age of 19, I approached Business from a very immature and sentimental perspective. Instead of recruiting top people who are most appropriate for my business, I recruited those who needed a source of income. I mistakenly believed that given an opportunity, anyone can rise to excellence.  But I was very wrong. Giving an opportunity to someone who doesn’t deserve or doesn’t have to ambition to excel is wastage of the opportunity. Hence I failed but learned this valuable lesson.

That’s why I found this piece of article very fascinating and worth sharing. If you are starting a Business, and reading this in your early days, I hope you’ll not repeat my mistake and model successful Businesses like Netflix to build a great team.

About Netflix

netflix-website-screenshot

 

Well incase you are not familiar with Netflix , Netflix, Inc. is an American provider of on-demand Internet streaming media available to North and South America, the Caribbean, United Kingdom, Ireland, Sweden, Denmark, Norway, Finland, the Netherlands, and flat rate DVD-by-mail in the United States, where mailed DVDs are sent via Permit Reply Mail. It was founded in 1997 by Reed Hastings. And it’s revenue for FY 2012 is US $ 3.61 Billion. During 2013 alone its stock more than tripled, it won three Emmy awards, and its U.S. subscriber base grew to nearly 29 million. So I guess you will find the lessons worth learning as it is coming from such a successful Business.

Lessons

  1. The best thing you can do for employees—a perk better than foosball or free sushi—is hire only “A” players to work alongside them. Excellent colleagues trump everything else.
  2. If you want only “A” players on your team, you have to be willing to let go of people whose skills no longer fit, no matter how valuable their contributions had once been.
  3. Hire, reward, and tolerate only fully formed adults. Adultlike behavior means talking openly about issues with your boss, your colleagues, and your subordinates. ( Don’t forget this!!! I had terrible experience of baby sitting people in my business, I’ll tell you someday. It doesn’t just waste your valuable time and money, but sucks emotional energy too).
  4. If you ask people to rely on logic and common sense instead of on formal policies, most of the time you will get better results, and at lower cost.
  5. If you’re careful to hire people who will put the company’s interests first, who understand and support the desire for a high-performance workplace, 97% of your employees will do the right thing.
  6. Your company’s expense policy can be stated in five words: “Act in Company’s best interests.”
  7. Tell the truth about performance.
  8. Managers own the job of creating great team. It doesn’t matter whether they are excellent coaches or mentors or get their paperwork done on time. Great teams accomplish great work, and recruiting the right team should be the top priority.
  9. Leaders own the job of creating the company culture.
    1. There shouldn’t be a mismatch between the values leaders are talking up and the behaviors they’re modeling and encouraging.
    2. If workers notice that their leader lacks real agenda, and if they see a leader who’s not fully prepared and who relies on charm, IQ, and improvisation, it affects how they perform, too.
    3. Even if you’ve hired people who want to perform well, you need to clearly communicate how the company makes money and what behaviors will drive its success.
    4. As leaders build a company culture, they need to be aware of subcultures that might require different management.
  10. Good talent managers think like Business people and Innovators first, and like HR people last.
  11. Your culture should focus on helping your company achieve excellence.
  12. The actual company values, as opposed to the nice-sounding values, are shown by who gets rewarded, promoted, or let go. Actual company values are the behaviors and skills that are valued in fellow employees.
  13. Netflix hire and promote people who demonstrate these 9 behaviors and skills: ( See the slide for details)
    1. Judgement
    2. Communication
    3. Impact
    4. Curiosity
    5. Innovation
    6. Courage
    7. Passion
    8. Honesty
    9. Selflessness
  14. Be a team ( like pro sports team, not kid’s recreational team), not family. Netflix leaders hire, develop and cut smartly so they have stars in every position.
  15. The keeper test Managers can use: Which of my people, if they told me they were leaving, for a similar job at a peer company, would I fight hard to keep at this company? The other people should be given a generous severance now  so that you can find stars for those slots too.
  16. Honesty always.
  17. Everyone in your company should be responsible in ensuring that you are living your values.
  18. Your people should complete each others, not compete each others.
  19. Unlimited loyalty to a shrinking firm or ineffective employee – both are useless.
  20. You shouldn’t measure people by how many hours they work or how many hours they are in office, rather evaluate by the work they get done.
  21. Be insistent on High Performance.
  22. Find the Rare Responsible persons for your team, who has the following traits:
    1. Self motivating
    2. Self aware
    3. Self disciplined
    4. Self improving
    5. Acts like a leader
    6. Doesn’t wait to be told what to do
    7. Picks up the trash lying on the floor
  23. Responsible persons thrive on freedom and are worthy of freedom.
  24. Increase employee freedom as you grow, rather than limit it, so that you can continue to attract and nourish innovative people, hence you’ll have better chance of sustained success.
  25. Flexibility is more important than efficiency in the long-term.

There are many more lessons you can find from the 127 slides and also from the Harvard Business Review article. I want you to contribute those lessons here. Please share what is your experience with running a business or leading a team.

Don’t forget to share this post with anyone and everyone you know who is starting journey of Entrepreneurship.