No Rules Rules - Reed Hastings, Erin Meyer

The world has undergone a lot of changes in the past few decades, and this ranges from interpersonal relationships to commercial relationships. Thereby, companies also had to rethink their way of working and doing business.

Netflix is not out of this, and in the book "No Rules, Rules", Reed Hastings, the company's CEO, tells how was the process, from the understanding of the needy to change until the implementation of what he calls "the culture of freedom".

This book summary will teach you the importance of walking along with the new technologies since the biggest risk you can take is not to make mistakes, but it's to not innovate.

Do you want to know how it's possible to innovate with freedom? So, keep reading this summary and delve deeper into the culture of corporate freedom.

About the book "No Rules Rules"

The book, which was written by Netflix CEO, and commented by Erin Meyer, explains everything about how was built the culture and philosophy of the enterprise and what happens in backstage of this corporation.

The work contains 352 pages and is divided into three parts, in which the author teaches how it was possible to improve his company through the exclusion of rules.

All the content is based on their professional experiences, which include their time in enterprises such as Blockbuster, Microsoft, Pure Software and Netflix itself.

About the authors Reed Hastings and Erin Meyer

Reed Hastings started as an entrepreneur in 1991 when he founded Pure Software, but the peak in his career was co-founding Netflix, with the initial intention of movie rental by the post office.

Hastings, who graduated from the University of Stanford, is still known for being a filatroper, ex-member of the California State Board of Education and a big defender of education.

Erin Meyer is a business expert, writer, professor in the INSEAD Business School in Paris, and since 2020 is considered a best-seller by The New York Times.

To whom is this work indicated?

This work is indicated to entrepreneurs, CEOs or any person in the business world, who want to know more about a corporate culture based on freedom and trust.

The book can be also good for common people interested in knowing how companies that don't have rules or regiments work.

Main ideas of the book "No Rules Rules"

• Companies based on innovation have to give freedom to their workers;
• Not having rules implies that everyone is aware of the procedures and consequences;
• Feedbacks are very important for professionals performance;
• The CEOs should be the biggest example when trying new approaches in the company;
• The corporate culture has to be adapted to the world's different cultures.

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Overview: Where it all began

Reed Hastings starts with a report about the day he visited Blockbuster to propose a business involving the purchase of Netflix for the same, all thought to meet the trend of the internet arrival.

John Antioco, Blockbuster CEO at the time, strongly refused the proposal, going bankrupt in 2010 in consequence of the arrival of the new technologies.

This situation boosted Reed to put his own ideas into practice. And more than that, it made him create a business in which people were above the processes, which was the key of his success.

Today, Netflix became a service with more than 200 million subscribers in more than 190 countries, with the culture that the rule is not having rules.

How did it all happen? It's what Reed will teach below!

First steps

Reed founded his company Pure Software in 199, in which he tried to promote employee freedom and creativity, applying rules only when something crossed the line.

The result was low adaptability to the market and the shutdown of the company in 1997.

Thus, the author sought to bring true freedom and innovation to his next enterprise, not the prevention of errors and the construction of regulations.

To get to this point, there are two initial elements to be worked:

1. Develop talent density: work only with the most prepared employees and fire others;
2. Encourage sincerity: deepen the culture of feedback.

With these two elements would be finally possible to reduce control and begin abolishing certain rules in favor of freedom with responsibility.

Overview: How to get into freedom with responsibility

Talent Density

At this point of the book "No Rules Rules" the importance of having a work environment based on excellence is taught.

When the crisis hit the company in 2011, it was necessary that Hastings fired many of his employees, but he got concerned about the co-worker's opinions about that.

However, after the resignation, Reed noticed that people were increasingly productive and creative. That was when he realized that this only happened because of the talent density, which was now greater, not because he hired more talents, but because he was left with the best ones.

This is because highly talented people thrive much more when surrounded by others of such capacity, when they are goten by the joy of talent and collaboration, on the other hand, they perform poorly when surrounded by others with average talent.

The Feedback Culture

Reed Hastings, starting an attempt to bring sincerity to the workplace, noticed that it also increased his company's talent density.

Giving and taking feedbacks help to learn faster, becoming more efficient, even though human reception of negative criticism is still low.

The secret to this is to speak in a bland and calm way, showing that the employee still belongs to that place and will not be fired for it, demonstrating that it is just a help.

4As guidelines for feedback:

1. Target to achieve: explain what will be the improvement with that note;
2. Specific action: name the way to change;
3. Thank: if you receive a criticism, thank for it openly;
4. Accept or discard: choose which changes will really benefit you.

Eliminate the regiments

Today it's not possible to measure efficiency by the amount of worked hours, but for the projects that are carried out and the quality of them.

Start bringing freedom to your employees by eliminating vacation policies, just verbally orient dates when it would be advisable not to take out or the number of people at a time. Remember to set an example by taking many vacations a year.

This practice makes the employees choose to work in a way that brings more efficiency to them, and they can rest and return more creativity and innovative when they need it.

When both policies are used to take advantage of the company, fire the employees who crossed the line, this will teach others what not to do.

Overview: Techniques to maintain the culture of freedom with responsibility

Payment to retain talents

After explaining how to insert liberty in your corporation, Reed Hastings cares about stressing out how to maintain this practice healthy.

According to the authors, to pay attention to the salary is a necessary initiative to keep the best talents working for you.

Sometimes, investing in an exceptional employee with a great salary can be less laborious and more efficient than investing in several average people with average value in the same occupation.

The work 'No Rules Rules "points out that offering bonuses is never the best solution for hiring. By offering a higher salary, with no bonus per goal, the employee feels more secure and comfortable with domestic problems and has more time to be innovative at work."

Also, try to invest time in knowing the current value of your employees in the market, to keep the payment higher than the average, in order to retain this talent in your team.

Divide the operational and creative positions, so that you can remunerate those operating with the average and creatives with values above the market.

Don't work with secrets

Some information inside a company can be highly confidentials, which when leaked can cause damage. However, a good manager must be prepared to deal with these situations.

Maintaining a totally transparent work environment is always the best solution, and for that to happen, the initiative must also be the CEO's, sharing from small to large things.

To start the culture of transparency, two things are important:

• Make all financial aspects accessible to people in the company;
• Teach employees to read and understand the information contained.

Guarantee transparency in the institution makes the workers feel like they were the owners and carry out their actions and projects with more responsibility.

In addition, employees start to perform more tasks on their own, as there is no need to stop to ask for information. Still, this trust given generates a feeling of belonging and commitment.

However, according to Reed, it is important to be prepared in case the information leaks to know how to take appropriate actions.

Enable more freedom

It's highlighted in the book "No Rules, Rules", that letting projects approval and and decisions focused on a single person limits innovation and slows down growth.

That's why, in Netflix Reed bets on making individual decisions, where the proposal does not need to go through a boss.

However, to validate your ideia by yourself, four steps are necessary:

1. Stimulate debate or share the idea: talk to people to hear different points of view;
2. Test the project: analyze feasibility and functionality;
3. Bet (or not) on the execution of the project: you are responsible for keeping or not with the idea;
4. Celebrate if it works, expose the error if it goes wrong: if it doesn't work, be ready to explain to everyone what failed.

As a boss, be prepared to see mistakes, welcome, help to understand what happened in the process and encourage the continuation of work.

Overview: Maximize the culture of freedom with responsibility

Retention Test

According to Reed Hastings, the first step to expand this freedom is to focus on talent density. For that it's necessary that you get ready to make tough decisions.

Making the employees work as a time with camaraderie, commitment and cohesion is very important.

Thus, it will be easier to apply the retention test, which consists of:

• Evaluate the performance of each employee and reflect on whether you would fight to keep them in the company;
• Self-evaluate your performance in your own position.

This chapter of the book "No Rules Rules" points out that, if during the retention test you notice that it is necessary to fire one of the employees, he must have clearly and regularly heard how he could improve before he gets fired.

Still, it is important not to stick to the company's turnover rate, as ensuring that the most prepared person occupies the correct position costs less than replacing it.

The feedback circle

Equally important to continuous feedback is having a tool that encourages and expands this culture to everyone.

Reed Hastings cites the example of the method he uses, "Feedback 360", a practice that started in writing, and invites everyone to leave a message about any team member anonymously, or not.

Today, 360 is unanimously nominal (on a voluntary basis), and in many teams it takes place in spoken meetings.

This method reinforces the culture of criticism and opens space for the creation of a dialogue about experience and improvement. It also shows that receiving feedback is not so scary and that it happens to everyone in the company.

It is essential to have a strong moderator to prevent overreactions from happening.

Leading with context or control?

Taking into account your industry and your objective, it is necessary to decide between leading with control or context.

Thus, if your project is about repairing errors, lead with control, now if it is based on innovation, invest in the context.

Leading in this way encourages original ideas, so that when explaining the scenario to them, they are free to think outside the box and get it right, or even get it wrong.

However, if this is what you are looking for, invest not only in context, but also in alignment.

Erin Meyer explains that a team that has a clear context and purpose aligned with the company's objective has no place for disagreements.

Overview: Expanding the Netflix Culture

It's not possible to transfer a specific corporate culture to all places in the world.

That's why, it is necessary to think of a way of adaptation for this model of work to be successful.

Having humility and flexibility is very important at this time, to keep yourself open to the necessary changes.

This way, if you want to apply the Retention Test, it is necessary to pay attention to the labor laws of the countries.

As well as, the feedback model needs to be remodeled to meet other cultures that are not so familiar with this practice, or are not so open to negative criticism.

In this sense, dialogue, care and adaptability are the key to a good international expansion.

What do other authors say about it?

In "Innovation and Entrepreneurship", the author Peter Ferdinand Drucker defends the theory that creativity and innovation are not acts of genius, but a study, a search and planning that requires discipline to follow systematic steps. He considers that to innovate it is necessary to have the discipline to apply the right techniques.

In the work "Disrupt You!", Jay Samit says that innovative ideas have the power to transform the world and cause disruption in the system. In order for you to trigger a disruptive profile, it is necessary that you plan your goals and be susceptible to both internal and external changes.

In "The Airbnb Story", author Leigh Gallagher cites the company's founders as examples of entrepreneurs, as they encourage each other to improve and innovate. And the attitude of the three founders reflects on the behavior of all Airbnb employees, as well as each entrepreneur for their company.

Okay, but how can I apply this to my life?

During the chapters of the book, the author talks about techniques on how to start the insertion of corporate culture without rules in your company.

It is important that you follow the steps in the order indicated in the summary, since working in this environment of freedom requires preparation and a favorable atmosphere, and skipping some of the steps can lead to the failure of this endeavor.

Did you like this summary of the book "No Rules Rules"?

We hope you've enjoyed our summary and are able to adapt to this new culture of innovation. Leave your opinion in the comments, your feedback is very important to us!

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