I have just finished reading Marc Randolph’s book “That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea”. As happens with many of the books I read, I was left wondering how what I read applies to the world of digital transformation. To that, you might respond “they’re one of the defining tech companies of the last decade, surely they have a lot to contribute to the world of digital transformation?”. But the aspect that stood out the most to me has absolutely nothing to do with technology at all, like many of my articles, it was culture.
The Netflix culture is based on the simple premise that people do their best work when they are empowered to act freely. You can consume textbook after textbook on the policy and procedure ‘best practices' that cultivate the right culture for your people be it about annual leave, expenses, travel, recruitment, performance reviews etc. Netflix’s approach was to do away with it all completely and instead push the responsibility over to the individual. The only remit being “act in the best interest of Netflix”. The motivation for this is very simple. The best practice policy for you is the one that gets the most out of you and on matters that are deeply personal, a one-size-fits-all model is never going to work for everyone. In fact, it’s unlikely to work for most people. We all work in different ways and the policy that gets the most out of me isn’t guaranteed to get the most out of you. We, therefore, need to be empowered to come up with our own policy that gets the most out of ourselves.
As an example, a debate that has recently kicked off is about how companies should manage working from home going forwards, should they insist on bringing everyone back into the office full time? Should they mandate a small number of days people have to be in the office? Should working from home prevail? Or following Netflix’s model, should employees be given the option to choose entirely flexibly? Again, you might work best by being in the office full-time, I might want a mix of both, shouldn’t we be empowered to choose what works best for ourselves?
Why is this so important?
The reason why this matters is because this level of freedom allows us to access levels of creativity and ingenuity that simply aren’t possible in a restrictive environment. If we walk back through history and consider where and when the greatest inventions and innovations took place, no one answers “I was sat behind my desk in the office just after lunch on a Monday afternoon”.
The Value of Honesty
Perhaps the value people are most sceptical of in the Netflix culture is their value of “radical honesty”. It is this radical honesty that led Marc Randolph himself to decide to step away from Netflix; he knew he wasn’t the right person to take Netflix forward into the future and so he gladly stepped away. But this is central to that aspect of responsibility. We often call it ‘being very British’ when we talk about the way us Brits struggle to give brutal, honest feedback; it’s considered rude and offensive. However, honest feedback shouldn’t be misconstrued as negative feedback. A culture of positive and negative feedback is essential for reinforcing good habits and keeping us on the straight and narrow when we deviate from them.
The mantra that Marc Randolph used to reinforce this message was "loosely coupled, but tightly aligned". People are given the freedom to do their work in the way that works best for them but they’re going to be held responsible if they deviate because people are going to hold them accountable. Randolph is very into his mountaineering and he uses this analogy to describe what he means. The Netflix culture is all about telling people where to go but giving them the space to figure out how to get there themselves. If you’ve got a group of walkers some with heavy packs, others with light packs and a few with raft packs it makes sense to allow the people with heavy packs to take the long but easy route, the ones with light packs to take the quick and steep route so they can scope out the best spot to pitch up for the evening and the raft packs to take the river. This is what he simply calls treating people like adults - people want to be given a mission they believe in, a problem to solve and space to do it around people they respect. Forcing them all down the same path is going to lead to a tired, frustrated and disjointed group, is that really the best way of getting the most out of your people?
So how does this all relate to our digital transformations?
In my experience, the most successful digital transformations are those that are empowered to innovate as creatively as possible. Repeating what Marc Randolph said, they are given a broad mission and a target to aim for, but how they get there is entirely up to them.
Unfortunately, what I see on a day-to-day basis is a stark contrast to this. Individuals are told what technology to implement with little justification of why that technology has been selected over a host of others. Then they are told to replicate a whole list of manual processes that already exist into this new technological tool, completely stifling creativity. And all of this is done in the name of digital transformation because you are doing what you did before but in a new shiny tool. But is that truly transformation?
Instead, what if these people were given a broader remit? What if they were set the objective of becoming the leading organisation for customer service within their industry within the next 2 years?
They have their objective, they have their timeline. How they go about it is up to them.
This time they choose their own technology that is known to directly solve a large number of the highest priority problems currently facing customer service. This is a casing point of freedom and responsibility. They are given the freedom to solve the problems they think are worth solving the most using the means they believe to be most effective. But they are spending hundreds of thousands on a new technology, it better produce results - that’s a lot of responsibility.
But it is this combination of freedom and responsibility which is critical for success moving forwards. Your customer service team have picked this technology and they are now working with a burning desire to prove that their selection doesn’t just meet your immediate criteria but goes above and beyond by solving problems you didn’t even know you had. That’s innovation.
At the end of the day, the benefits of operating in this way are obvious for all to see but it would be very naive of me to think that every business could suddenly start employing this approach at the click of your fingers. Realistically, Netflix’s approach is very radical and in most cases it is definitely too radical. But ultimately, what it relies on is people’s willingness to shift their mindset. Rather than simply defaulting to standard ‘best practice’ policies and procedures maybe next time you might be more willing to break the mould and try giving a little more power back to your people. Even if it’s just for one project here or there at first to see what sort of results it produces. I have no doubt they will come up with new creative solutions that you never even thought of as a consequence. And, that, is true transformation.