This was when I learned in a much deeper way about the drivers of high-performance innovation. For the first time in my career, as a member of the executive team, I was directly engaged in developing the product itself. It wasn’t a highly technical, complex software product, as at Pure. We were an entertainment company, and I was a huge movie fan. I was also, as I would say often to tweak the engineers, normal. I was the customer. I became fascinated with how we were developing the product. We were huge fans of A/B testing, rigorous experimentation, and open debate about what was right for the product. In product development, if something doesn’t work, you get rid of it. I realized we could apply that same principle to managing people.
I understood that part of the reason large teams are crippled in their ability to innovate and move fast is that because it’s hard work to manage them, companies build infrastructure to make sure people are doing the right things. But the teams I saw that accomplished great stuff just knew what they most needed to accomplish; they didn’t need elaborate procedures, and certainly not incentives. Most technologists will tell you that a small team of brilliant engineers will do better work than a large team of hardworking ones. I started thinking: Why would that be true just for engineers? Is it because they are so special and smart? At that time, much as I love engineers, I was pretty tired of their being treated as the special, smart people. To my mind, people across the full spectrum of functions would love nothing more than to be free to tackle projects in the way they think will produce the best results in the shortest possible time. So often, though, they are thwarted by management second-guessing them or by inefficient systems. I wondered: what if people in marketing and finance and my own group, human resources, were allowed to unleash their full powers? They would operate like high-performance engineering teams. In retrospect, that was the moment I left behind traditional HR and took on a new role as the COO of culture and the chief product manager of people.
I began to scrutinize our organizational structure and design. At that point, we had created departments, and Reed and I had agreed that as much as we could, we wanted to keep their management flat because that gave us so much speed. After we’d had to let many middle managers go in our big layoff, we had noticed that everyone moved much faster without all those layers of opinions and approvals. Now we decided that maybe people could move even faster and get more done if we started doing away with policies and procedures. We analyzed every single truism and best practice, just as we analyzed the product. Often when Reed would propose a cut, it sounded so crazy I needed to sleep on it. But as we kept trying things, we kept getting good results. Take our no-vacation-policy policy, which has received a great deal of press. We told people to take the time they thought was appropriate, just discussing what they needed with their managers. And do you know what happened? People took a week or two in the summer and time for the holidays and some days here and there to watch their kids’ ball games, just as before. Trusting people to be responsible with their time was one of the early steps in giving them back their power.
I discovered I loved throwing away convention. One of my favorite days was when I stood up in front of the company and said, “I’m going to get rid of our expense policy and I’m going to get rid of the travel policy, and I want you to just use good judgment about how you spend the company’s money. If it turns out to be a disaster, like the lawyers tell us it will, we’ll go back to the old system.” Again we found that people didn’t abuse the freedom. We saw that we could treat people like adults and that they loved it.
I started to challenge the conventions around hiring people too. With the company growing like mad and the nature of the business changing so fast—we could see streaming rapidly approaching—we knew we had to build an organization that would always have a really strong talent pipeline. At the time, when I hired a manager, they typically wanted to work with their favorite headhunter, and I knew I had to change that. We needed to be more strategic. I could have tried to get the five best headhunters in Silicon Valley to work for me exclusively. But I decided to throw out the traditional recruiting practice and create a headhunting firm within the company. Instead of hiring people who had worked in other companies internally, I started hiring people who’d worked for headhunting firms to build that capability inside. Because we had that competency, I could tell a manager, “It’s okay if you lose a couple of people, because we can get great new people for you fast.”
We also challenged the conventional practices for crafting both company-wide and team strategy. We had been creating an annual road map and doing annual budgeting, but those processes took so much time, and the effort wasn’t worthwhile because we were wrong all the time. I mean, really, we were making it up. Whatever our projections were, we knew they would be wrong in six months, if not three. So we just stopped doing annual planning. All the time we saved gave us more time to do quarterly planning, and then we went to rolling three-quarter budgets, because that was as far out as we thought we could ostensibly predict.
We experimented with every way we could think of to liberate teams from unnecessary rules and approvals. As we kept methodically analyzing what was working and how we could keep freeing people to be more creative, productive, and happy, we came to refer to our new way of working as the freedom and responsibility culture. We worked for years to develop it—and the evolution continues today. I’ll describe the additional components in the chapters to come. They were all built upon the realization that the most important job of management is to focus really intently on the building of great teams. If you hire the talented people you need, and you provide them with the tools and information they need to get you where you need to go, they will want nothing more than to do stellar work for you and keep you limber.
The most recent testament to the power of this approach is the speed with which Netflix has expanded its original programming while also achieving popular and critical success. Ted Sarandos, head of content since the earliest days, told me that freeing high performers from constraints has been vital to building up the original-content business so rapidly. The team has doubled their creation of new content every year, and when we talked, they were producing thirty scripted series and had twelve feature films, fifty-five documentary projects, fifty-one stand-up comedy shows, and forty-five children’s shows in production. On top of that, they had just gone global, expanding to thirteen countries at once. What’s so amazing is not only the speed with which the team has created so much content but also the diversity of types of content. Ted’s group has been able to cater to all sorts of tastes, with offerings ranging from highbrow series like The Crown to the wildly crowd-pleasing but hardly critically acclaimed Fuller House. The team has even entered the fray of unscripted series, such as with Ultimate Beastmaster, a competition show with contestants from six different countries, each speaking their own language.
Ted says that his core approach has been asking his team to focus on finding the best creative talent with the skills to execute, and then giving those creators the freedom to realize their vision. That has been the greatest differentiator between Netflix and the Hollywood studios, he says, allowing his team to compete so effectively for top creative talent and to launch such breakthrough shows. Creators love that his team doesn’t micromanage the production process, barraging them with notes. Ted’s group also doesn’t use the traditional pilot system, instead green-lighting creators to produce a full season of episodes. They put their confidence in people who’ve proven they can produce, and hand in hand with the freedom those people are given is the understanding that it’s they who are accountable for the quality of shows. They have risen to the occasion. By contrast, the traditional Hollywood way has been creation by committee, with accountability spread too thin.
Ted told me that being steeped in the Netflix culture also allowed him to feel comfortable freeing his team from constraints they might have imposed on themselves. For example, they broke their own model for bringing in new shows with only their third original series. Because they weren’t using pilot testing, they had decided to bring in only series that already had very well-developed scripts and the acting talent lined up. But then Jenji Kohan, the