The Netflix Culture Deck: How to Shape Corporate Culture

The Netflix Culture Deck: How to Shape Corporate Culture

After getting used to calling it Netflix, the Chinese name “Naifei” has always felt a bit awkward to me. It almost seems better to just use Netflix directly. Still, although Netflix is famous worldwide, it has never really entered the Chinese market in any formal way, so its Chinese name is not all that important. For fans of American TV, what matters far more than what the hen is called is what kind of eggs it lays.

Over the years, Netflix has produced countless high-quality American shows across a striking range of styles. There is House of Cards, a political drama so sharp that politicians can hardly bear to watch it, and BoJack Horseman, the kind of dark “toxic chicken soup” that leaves everyone covering their faces. Then there are Narcos, Black Mirror, The Crown, Orange Is the New Black, Sense8, Marco Polo… In almost every genre and every niche, Netflix has managed to produce works of real distinction.

That naturally makes people wonder: what kind of company can sustain its vitality over such a long period of time, keep innovating, and continue producing so many standout works? A slim volume like The Netflix Culture Deck obviously cannot cover everything, but it does offer a glimpse through the tube, enough to reveal one corner of the iceberg that is Netflix’s corporate culture. And even that small visible portion is enough to provoke serious thought.

If we turn the clock back more than twenty years—to be more specific, to 1997—when Netflix’s founders began renting DVDs, they could hardly have imagined the scale the company would eventually reach. But looking back at Netflix’s history, its current position seems like the inevitable result of a culture that adapted to the times and kept innovating.

In its early days, before the internet had today’s bandwidth and traffic capacity, Netflix used an online DVD rental model. At the time, DVD rental shops were common on streets all across China as well, but overseas, because of copyright restrictions, rental costs were far higher than they were domestically. Netflix spotted a business opportunity there and adopted a subscription model: users paid a recurring fee and could rent DVDs during a certain period at no additional charge. Customers selected titles and placed orders through Netflix’s website, and the DVDs were then mailed to their homes.

Even from today’s perspective, home delivery by mail combined with a recurring subscription strategy does not feel outdated as a business model. Most major video platforms still rely on subscription systems, and modern logistics have made shipping a routine part of life. For Netflix, the biggest threat was never the business model itself, but the times.

As the internet developed rapidly, DVD rental was quickly replaced by streaming video. When Netflix itself had to shift toward online streaming services, the advantages it had accumulated in its user base and business model suddenly lost much of their value. Negotiations with copyright holders also became extremely difficult. Under those circumstances, for an organization with virtually no experience in film and television production, deciding to transform itself and move into original content required enormous courage.

Judging from the results, Netflix’s transformation was a major success. In 2018, Netflix invested roughly 6 to 8 billion US dollars to produce more than 700 original works, effectively taking over the enormous market for American television drama. Behind all of that rapid growth, culture was one of Netflix’s indispensable supports.

The Netflix Culture Deck does not provide a detailed account of Netflix’s business model or company history. Instead, it introduces Netflix’s culture and principles from a human resources perspective. Compared with the empty slogans many companies use when promoting their “culture,” Netflix’s version feels executable and measurable. In that sense, it aligns closely with the ideas presented in Principles. It also provides valuable reference points for other organizations and managers.

Take a few examples from the book. In one case, after an engineer was poached by Google with an offer at double the salary, Netflix reflected on what had happened. The conclusion was that the company had undervalued the contribution of that entire department, so it doubled the salaries of everyone in the department. In any organization, such a decision would require enormous courage.

A second example: Netflix encourages employees to go out and interview elsewhere, so they can get a sense of market salary levels and better recognize their own value. This is an equally bold and confident move.

In addition, this slim booklet includes a number of questions for testing whether someone is compatible with Netflix’s culture. In practice, Netflix also uses these questions in discussions with employees, and it may encourage those who cannot integrate with the culture to leave. Because of this, the book feels more like an internal culture handbook for Netflix than a conventional publication for the general public.

Some excerpts from my reading are below:

How to hire only adults

1. Hire, reward, and tolerate only fully mature adults.
2. Let employees join teams made up of colleagues they trust and admire.
3. Build work processes that are as simple as possible, along with a strong culture of discipline.

Do not let rules and systems restrict high performance. Make sure everyone understands the business. The more time managers spend communicating clearly and thoroughly about the work that needs to be done, the challenges the company faces, and the competitive environment, the less important policies, approvals, and incentive mechanisms become.

Cultivating an executive perspective among frontline employees
First, I must deeply understand the new business model and the interests at stake within it.
Second, the urgency of making the new business model work means that I must help others in the company understand it as well.

That made me think that business works the same way. Employees need to view things from the perspective of senior management so that they can truly feel connected to the problems that must be solved at every level and in every department. Only then can the company identify problems and opportunities in every link of the chain and respond effectively.

Two-way communication is crucial. Employees must be able to raise questions, criticisms, and other opinions. Ideally, they should be able to question all managers, including the CEO.

One of the most valuable insights in business is that politely and honestly telling employees the truth is not cruel. In fact, speaking openly and directly about what they need to hear is the only way to earn their trust and understanding.

One of the biggest mistakes in using metrics is focusing on metrics that do not matter. Take HR and employee retention as an example. HR should focus on employee well-being, and one key metric for that might seem to be retention. Yet HR spends 50% of its time saying goodbye to people who are leaving.

How to participate in meetings
Think in a structured way. Anticipate the questions you will face, and prepare your views as thoroughly as possible.

One of the best ways to keep debate civilized and aligned with these principles is to bring it before a group. Executives often keep disagreements to themselves, but those disagreements may be among the most important things frontline employees need to understand and weigh.

1. Encourage open debate grounded in facts.
2. Do not rely excessively on data, but use insights from data analysis to supplement team decisions.
3. Remember that being fact-based is not the same as being true; keep reexamining and discussing viewpoints.
4. When debate reaches a deadlock, try arguing from the other side’s position in order to find weaknesses in your own.

“You go to war with the army you have, not the army you might want or wish to have at a later time.” — Donald Rumsfeld

Business leaders must regularly ask an important question: “Are we being constrained because the team we have is not the team we should have?”

An ideal team should be built from the perspective of the future: identify the problems that need to be solved, identify the timeline for solving them, identify who can successfully solve them, and determine what those people need to do. Then ask yourself what preparations are necessary and what kind of people need to be hired.

Perhaps the best advice for today’s professionals is this: stay flexible, keep learning new skills, keep considering new opportunities, and keep taking on new challenges. That is how you preserve freshness and elasticity in your work.

First, the primary responsibility for hiring strong talent and deciding whether an employee should leave their current role lies with the manager.
Second, every role should be filled by a person who is a highly precise match, not merely a decent one.
Third, if a person’s skills no longer match the needs of the role, then even if they are very talented, it is time to say goodbye.

Not every role needs an Einstein.

Real happiness at work does not come from gourmet salads, sleeping pods, or pool tables. Real and lasting workplace happiness comes from working deeply on a problem with excellent people you know, and from customers loving the product or service created through your hard work.

1. The hiring manager is the chief recruiter, and hiring high performers is their most important job.
2. Hiring great talent does not mean hiring “A players” in the abstract; it means finding the best possible fit for the role.
3. Make sure every business-critical role is filled with a top-tier person.
4. Proactively let even strong people go in order to make room for truly exceptional talent.

Do not wait until employees have to leave before giving them the pay they deserve.

We also often encourage employees to interview elsewhere, because that is the most reliable and effective way to discover how competitive Netflix’s compensation really is.

We should all be prepared to change jobs from time to time, whether inside the company or at a new one, so that we can work in ways we enjoy and do things we truly care about. At the same time, if our performance is not good enough, someone should tell us, so that we either correct it quickly or move on to a new company.

If you cannot find reliable data proving that an evaluation process contributes to important business metrics, then I strongly suggest trying to abolish it.

You need to become a lifelong learner. You need to keep acquiring new skills and new experiences, but you do not necessarily have to get them at the same company. In fact, sometimes a company hires you to do one specific thing, and once you have done it, that is the end of it. If I hire someone to renovate my garage, I do not need them to renovate my backyard after they finish.

1. If an employee is not performing well enough, tell them promptly to either improve or go to a new company.
2. Do not treat employees who are no longer a fit for the role as failures.
3. Do not make promises to employees that cannot be fulfilled; that will only make them feel betrayed.
4. Actively help departing employees find good new opportunities.