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netflix is a premier streaming network
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that took the world by storm a decade
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ago and today it has consumers of its
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content in 190 countries netflix has
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been able to reinvent work culture that
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is one of the reasons why it has become
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so successful in this video we will show
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you how it has been able to do this
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successfully the growth netflix has
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witnessed over the years has been
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extraordinary and so has its financial
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growth when netflix first went public in
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2002 its share price was sold for 15 a
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share however in 2020 at the height of
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the pandemic it skyrocketed to 500 a
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share netflix has been able to become so
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successful because of how it has been
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able to transform the way people watch
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entertainment shows on television
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netflix's success story is well
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documented in a book co-authored by
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founder reed hastings and erin mayer in
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the book titled no rules hastings and
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mayer spell out the unorthodox style
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that has brought netflix so much success
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the way it manages its employees by
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giving them unusual levels of freedom
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and responsibility is unprecedented in
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the modern corporate workplace employees
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enjoy unlimited vacation time besides
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the fat salaries they are paid to be
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members of the netflix family how has it
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been able to do this the first thing you
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will notice when you review the
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management history of netflix is that it
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has successfully reinvented itself since
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1997 not once not twice but four times
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the company started out as a dvd rental
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service in 1997 sending dvds by mail to
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customers at the time it was competing
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with another company called blockbuster
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at some point reid hastings and his
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co-founders opted to sell netflix to
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blockbuster for 50 million dollars when
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they put the proposal forward they were
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laughed off by blockbuster executives
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why for the simple fact that blockbuster
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was making so much money off dvds its
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customers failed to return however fast
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forward to 2010 blockbuster filed for
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bankruptcy and today it is no longer in
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business the second time netflix
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reinvented itself was when it decided to
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go into streaming streaming offered
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reeds and his colleagues tremendous
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insight into what subscribers wanted to
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watch how when and where streaming also
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opened their eyes to contents that
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subscribers were most interested in and
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the ones that got them excited how are
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they able to do this by tracking their
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user history taking things a step
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further netflix used this data to
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commission original contents for its
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streaming platforms and now it is in its
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fourth invention wheel which is
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producing its own content from the first
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invention wheel up to the fourth the
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company has been able to evaluate the
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needs of its subscribers and has adapted
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its business strategy to meet these
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needs today its 7900 employees earn
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about 2.6 million dollars each per annum
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which is nine times what disney
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employees are paid as if the success
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story is not enough netflix ipo has
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increased 500 fold since its ipo in
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2002. so this means that a shareholder
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who bought netflix shares in 2002 will
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be 500 times richer today this is one
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company that has achieved so much
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despite giving its employees unlimited
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vacation benefits and no approval
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culture in other organizations this
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would have been a recipe for disaster
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but not for netflix why so simply
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because of its set of tested and trusted
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rules let us explore these rules one by
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one rule one talent density the first
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rule of netflix's management culture is
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talent density if you skim through
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netflix's culture site you will find the
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following boldly displayed our version
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of the great workplace is a dream team
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in pursuit of ambitious common goals for
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which we spend heavily it is on such a
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team that you learn the most perform
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your best work improve the fastest and
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have the most fun
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under this rule netflix treats its staff
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not as family but as a professional
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sport team in sports the best talents
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prefer to work with other top talents
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the same practice is encouraged in
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netflix for example when an employee is
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no longer performing at optimal level
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netflix will pay him or her a severance
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package worth four to six months pay and
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relieve them of the job those that
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remain are paid top salaries another way
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netflix has been able to achieve talent
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diversity is to encourage its staff to
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interview for job openings at other
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competing streaming services if the
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employer gets an offer and returns back
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to their manager to relate to them how
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much they are being offered the manager
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has two options either to let them go or
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increase their wage to match the
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external offer rule two critical
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communication the second rule that has
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helped netflix reinvent work culture is
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the welcoming of critical communication
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decision makers believe that creativity
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only thrives if everybody involved in
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the project are allowed to speak their
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mind to make this possible the bosses
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set a standard and it is up to
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subordinates to meet the standard
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pleasing the boss is not the focus but
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meeting or surpassing the standard
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employees are allowed to express their
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views as long as it is in the interest
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of netflix provided their feedback meets
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following conditions the feedback must
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be helpful to the course must be
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actionable be appreciated by the person
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for whom it was intended particularly
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the boss the target individual is free
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to discard or accept the feedback rule 3
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no rules for talented people the third
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rule that has transformed netflix into a
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success story is its no rules practice
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managers believe that if you hire
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talented people and you have them on the
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job you don't have to police them by
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instituting rules to check them rather
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employees hold themselves accountable
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for instance under their never-ending
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vacation policy bosses avoid taking
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vacation during peak seasons because
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work demands increase during this period
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since bosses do not take vacations
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during this period subordinates do not
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either also what matters at netflix is
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not the number of hours people work but
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the level of creativity however to
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ensure that employees do not exploit the
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freedom they are given to the detriment
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of the company netflix operates a very
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ruthless human resource policy employees
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who misuse the freedom they are given
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are fired immediately to make an example
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for others another thing netflix has
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done is to set up offices outside the us
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as a means of attracting foreign talent
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and more importantly to test the radical
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candor of its hr policy for instance in
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many countries it is very hard to fire
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errant employees particularly in asian
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countries where you can't tell an
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employee that he or she has done wrong
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talk less of firing them by reinventing
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work culture in countries where they
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have foreign offices netflix is
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increasing its talent pool and changing
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how people work netflix work culture is
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quite compelling to say the least
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because it has been a very successful
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one in 2013 the value of its stock
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tripled and it won three emmy awards
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furthermore its subscriber base grew to
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29 million in the us alone the approach
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to work has spurred creativity and
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employee performance while many
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employers believe in establishing strong
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control over employees in the workplace
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netflix operates a more laid-back
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lesser-fair approach do what you like as
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long as you meet your target is the way
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things are done over there at netflix
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also the fact that they are able to hire
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the best brains for each position is
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another feather to their hat moreover
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the principle that talented people do
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not have to be policed holds some truth
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talented people know what to do when and
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how so they do not have to be
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micromanaged so by hiring experienced
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and talented staff this alone reduces
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employee turnover and managers are able
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to focus on more important tasks instead
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of correcting the failures of
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subordinates last but not least is the
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ruthless firing policy of the company as
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a weapon to ensure compliance lurking in
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the shadow of the freedom given to
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employees is a firing whip and employees
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know it those who er are shown the way
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out and there is no coming back from
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that all of these practices are what has
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made netflix a highly successful company
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netflix has reinvented work culture and
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the positive results are there for all
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to see in terms of their balance sheet
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subscriber base and a rising stock price
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all this has been possible by creating a
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positive work culture where expression
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is encouraged not forbidden and after
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all that the most important thing is
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subscribe to our channel if you enjoyed
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[Music]
