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Lessons from No Rules Rules, Netflix and the Culture of Reinvention — Part 2

With talent density, candor, and freedom being introduced in Part 1; Netflix ramps it’s cultural innovation to the next level.

Introduction

In my previous post, I covered the first three chapters of No Rules Rules book, where they learned that having a high talent density at their company resulted in a more driven and performant workforce as compared to having more employees but with average talent.

From there Netflix introduced candor, to promote openness in exchange of ideas and feedback. It also then encouraged freedom and empowerment by letting their employees decide for themselves when (and how long) they should go on vacations, and how the company’s money is to be spent.

In this post, I’ll go through 3 more chapters of the book and describe how Netflix went about strengthening the cultural policies that have been set previously.

Fortifying Good Foundations

4. Pay Top of Personal Market

• Coming off from building their high talent density, the next challenge would be on how to keep those talents from churning out.

A great lathe operator commands several times the wages of an average lathe operator, but a great writer of software code is worth ten thousand times the price of an average software writer.

• A great software engineer is able to see conceptual patterns that a typical software engineer can’t. With her creativity, she would be able to break through the challenges she face sometimes via unconventional means. These are the same traits in any creative jobs.
• Jobs at Netflix are thus divided into 2 categories; operational and creative roles.
• Operational roles (ie. those that are repetitive and routine in nature) are paid with an average salary based on the market rate.
• Creative roles (ie. ones that require innovations and creativity) are worth 10X the average. While this meant not being able to hire many creative employees, the ones that do get through are paid a lot.
• This led to a lean workforce, which meant that teams move a lot faster.