Why is it that founder led companies are performing so well and dominating industries world-wide. In this article I take a short glimpse at Reed Hastings founder of Netflix and some of the things he does differently and has encoded into the Netflix culture.
Netflix CEO Reed Hastings’ leadership methods may be unconventional. But judging by the company’s massive success, it’s safe to say that they work. See for yourself what makes Hastings such a powerful leader.
What does it take to build a $148.5-billion company that disrupted the film and TV entertainment industry? Just ask Reed Hastings, as this is exactly what he pulled off with Netflix. The streaming platform beats its competitors by a mile with close to 150 million subscribers across the globe.
What’s more, the service has experienced high growths year over year since the beginning, the reason behind Netflix’s stratospheric rise in market capitalisation. Almost every time that analysts proclaimed the company stocks overvalued, the prices would go higher.
Few things about Netflix are conventional. The company’s unique culture is among the most effective and talked-about in the business world. Years of continuous improvement have resulted in an environment where everyone can thrive. As a result, the business did as well.
Of course, it all starts with the right leadership. So, what is it about Hastings’ ways that made Netflix a company known all around the world? Here are the tips for all leaders who are willing to think out of the box:
1. Make as Few Decisions as Possible
As Hastings explains, “I take pride in making as few decisions as possible, as opposed to making as many as possible.”
Sounds strange, doesn’t it? After all, isn’t being a leader all about making tough decisions? It is, but you need to be able to delegate as many decisions as possible to other members in your team so that you can focus on the key decisions.
One example would be the decision to produce the highly popular show House of Cards. Hastings discussed this with his people in a meeting that lasted only a half hour. The team prepared everything and pitched the idea to Hastings, so all it took was a green light or otherwise on his part. And lo and behold, the TV show turned out to be a big hit.
Is it all about taking the burden off the leader’s shoulders? Not at all.
Hastings’ goal is to help people believe that they can make sound decisions on their own without the need for micromanagement. He fosters a sense of achievement that lets his people see that he values their judgment. This creates a culture of high performance where people hold themselves accountable.
2. Don’t Be Afraid to Go Big
It’s relatively easy to build a company culture when you have 10 people in your team. But what if it goes up to 100, or 1000? Many entrepreneurs mistakenly believe that the culture will water down and it will become harder to unite people under one mission.
Hasting doesn’t believe any of that. In his words:
“You have to fight the idea that as you get bigger, the culture gets worse. At Netflix, we’re significantly better than we were because we have more brains thinking about the problem.”
It’s crucial for you to let go of this fear as it can only stunt your growth. There are many ways and you can do a number of things to make sure that your company culture evolves with the number of employees.
3. Build Slowly
To tack on to the previous point, it’s important that you don’t rush the process of building your business. You open your company up to costly mistakes if you try to grow too quickly. Remember that it’s a marathon and not a sprint.
Those who’ve been following Netflix since the beginning know that it took a while for the company to start putting out original content. In the beginning, it was all about delivering existing movies. The transition happened slowly, as Hastings didn’t want things to show up before their time. This did happen, though, when Netflix tried to focus on the social aspect of things. Luckily, Hastings realised that it wasn’t the right time soon enough and backed out of the idea.
4. Plan for What You’ll Become
To risk sounding obvious, a leader should focus on the long term. But this is often easier said than done. Many a time a business will try to compete with those who are currently winning without looking at the big picture.
Hastings has never had this problem, not even when Netflix was in a pitched battle with Blockbuster. “There’s a reason we didn’t call the company DVD-by-Mail.com,” he says. He understood that Blockbuster’s business model wasn’t viable in the long run, despite its past success. In looking at the big picture, he positioned Netflix for the future and bet half the farm on streaming.
Make sure to never build your business solely on the original idea. Always have a long-term plan with an eye towards the years or decades to come. You don’t have to set it in stone, of course. Things will change as time goes by. The key is to be proactive rather than going to the existing well one too many times.
5. Give Yourself a Break
For whatever reason, many modern entrepreneurs are spreading the message that you need to hustle and never stand still. They act as if hard work is the only path to success. While there’s no doubt that you need to work hard, knowing when to take a break can be even more important. You’ll be of no use to anyone if you burn yourself out.
Hastings puts this very simply: “I’ve worked very hard, but my life’s always been fun.” He famously takes a vacation whenever he feels like it and encourages his people to do the same. This freedom is essential to recharging and making sure that you’re able to tackle the tough tasks with a clear head.
6. Embrace Criticism
While a leader has to be strong-willed, you need to know when to listen to someone else’s advice. The know-it-all mentality will put you in the cage of your own mind and make you short-sighted. As Hastings explains:
“The fundamental is to be self-aware enough that you want to learn and you learn through the criticisms and suggestions of others.”
What this means is that you need to make sure to listen to the right people and never take criticisms to heart. As a general rule, it’s best to listen to those who are more experienced in or more knowledgeable at something than you. It doesn’t matter if the person is your subordinate or not of your equal in rank. This is how you can grow and become a more powerful leader.
7. Attract and Manage Talent the Right Way
Netflix is well-known for its employee management. There are no fixed schedules, vacation policies, or similar limiting factors. It doesn’t matter where and when as long as they get the job done on time, and they can come and go as they please.
This makes total sense if you look at it from the right perspective. In Hastings’ words, “We want people for whom freedom and responsibility work.? As a matter of fact, more and more companies are adopting a flexible schedule, though few adopt it to the extent of Netflix.
Think about it, who wouldn’t like this kind of freedom? It’s partly why Netflix’s candidate funnel is full of top performers who’d love to work there.
But there’s another side to this that ensures only the best stay behind. Netflix offers generous severance packages to those who leave. This encourages those who don’t jive with the company’s culture to move on. It’s a win-win as those who stay are the ones who are fully committed and willing to give their all to the company.
Think Differently
Like the many people who’ve left their mark, Hastings definitely knows how to break away from the norm. His management methods run contrary to most rules, yet Netflix’s success proves that those who follow all the rules do so at their own peril.
Of course, Hastings doesn’t just do this for the sake of standing out. While unconventional, his decisions are well thought-out and backed by strong reasoning. It took a bit of trial and error, but Hastings managed to build one of the best corporate cultures in the world.
If you aspire to do the same, you’re going to have to bend some general leadership rules. Today’s business environment calls for innovation in all aspects, so you might not want to stay rooted in one place for too long
Leave a Reply