I read Powerful: Building a Culture of Freedom and Responsibility by Patty McCord and reviewed it as part of my ongoing series.

Quick review: Patty McCord is the former Chief Talent Officer at Netflix and co-creator of the famous Netflix culture deck. If the deck is the ‘what’ of Netflix’s high performing culture, this book serves as the ‘how’ and ‘why’. It’s a relatively quick read and offers some unique suggestions on developing and maintaining strong corporate cultures at fast growing companies. I was struck by how counter some of the suggestions were to the norms that exist in companies today. McCord shatters some of the prevailing myths about culture and career development (as an example: managers should not be career planners, helping grow employees into new roles and instead should only hire people who can do the whole job now) and presents very concrete reasons behind why the established command-and-control system of top-down decision making is broken. This is a book that challenged my beliefs on company building and had me questioning a number of approaches I had taken in various scenarios in my job. I was grateful for it. It’s possible to get a number of the lessons from listening to various podcasts and interviews with the author, and by no means is this a book you need to read cover to cover, but it is worth flipping through to see what preconceived notions you have about culture development that could use some updating.

Additional material to complement your reading:

Podcast: Patty McCord and Jerry Colonna — A More Powerful Way of Working

Presentation: Netflix Culture Deck

Book highlights:

We wanted all of our people to challenge us, and one another, vigorously.

We engaged in open, intense debate and made sure all of our managers knew we wanted them to do the same. Reed even staged debates between members of the executive team. We also communicated honestly and continuously about challenges the company was facing and how we were going to tackle them.

Most companies are clinging to the established command-and-control system of top-down decision making but trying to jazz it up by fostering “employee engagement” and by “empowering” people. Compelling but misguided ideas about “best practices” prevail: bonuses and pay tied to annual performance reviews; big HR initiatives like the recent craze for lifelong learning programs; celebrations to build camaraderie and make sure people have some fun; and, for employees who are struggling, performance improvement plans. These foster empowerment, and with that comes engagement, which leads to job satisfaction and employee happiness, and that leads to high performance, or so the thinking goes.

…it’s to remind people that they walk in the door with power and to create the conditions for them to exercise it. Do that, and you will be astonished by the great work they will do for you.

…a business leader’s job is to create great teams that do amazing work on time. That’s it. That’s the job of management.

Excellent colleagues, a clear purpose, and well-understood deliverables: that’s the powerful combination.

Trusting people to be responsible with their time was one of the early steps in giving them back their power.

I expect you’ve had the experience of talking to someone on your team about a business issue and being asked a question that makes you think, This person is clueless! Well, next time it happens, I want you to say to yourself, Wait, right, this person is clueless. He doesn’t know what I know. So I have to inform him.

How do you know when people are well enough informed? Here’s my measure. If you stop any employee, at any level of the company, in the break room or the elevator and ask what are the five most important things the company is working on for the next six months, that person should be able to tell you, rapid fire, one, two, three, four, five, ideally using the same words you’ve used in your communications to the staff and, if they’re really good, in the same order. If not, the heartbeat isn’t strong enough

But this desire to make people feel good is often as much a desire to make ourselves feel good as to do the right thing.

His initial reaction was to think, Oh yeah? Well, I’ve got a lot of things to say about you too! But before long, he realized that “when you reflect on what they’ve said, you see it from their point of view, and you learn how to improve on those things. That directness was really helpful.”

The most important thing about giving feedback is that it must be about behavior, rather than some essentializing characterization of a person…

An action version would be “I can see how hard you’re working, and I really appreciate that, but I’ve noticed that there are some things you’re spending too much time on at the expense of others that are more important.”

The more rigorously you communicate and model the transparency standard, the more pervasive a part of your culture it will become.

A study by Deloitte showed that 70 percent of employees in a wide range of sectors “admit to remaining silent about issues that might compromise performance.”

The conventional thinking is that if you allow people to be anonymous, they will be more truthful. In my experience that’s not the case. Truthful people are truthful in everything they do. And if you don’t know who is giving you feedback, how can you put their comments into the context of the work they’re doing, who their manager is, and what kind of employee they are? Perhaps the worst problem with anonymous surveys, though, is that they send the message that it’s best to be most honest when people don’t know who you

The style of delivery is important; leaders should practice giving critical feedback so that it is specific and constructive and comes across as well intentioned.

“Can you help me understand what leads you to believe that’s true?”

He said the decision making of his content team was data informed rather than data driven.

And the really brilliant twist was that each one argued the other’s side. To prep for that, they really had to get into the other person’s skin.

Beware of data masquerading as fact; data is only as good as the conclusions it allows you to draw from it. People will be drawn to data that supports their biases. Hold your data up to rigorous scientific standards.

You’ve got to hire now the team you wish to have in the future.

In discussing this, we decided to use the metaphor that the company was like a sports team, not a family. Just as great sports teams are constantly scouting for new players and culling others from their lineups, our team leaders would need to continually look for talent and reconfigure team makeup.

When I consult to company leaders and their team managers, probably the most difficult advice for them to accept is that they don’t owe their people anything more than ensuring that the company is making a great product that serves the customer well and on time. They don’t owe people the chance to take on a role they’re not prepared for and don’t have the talents for. They don’t owe them a different job created to reward them for their service. And they certainly don’t owe them holding the company back from making personnel changes needed to thrive.

Managers should not be expected to be career planners.

We also suggested that our employees interview elsewhere regularly, so that they could gauge the market of opportunities.

The belief part is crucial, because all start-ups are crazy ideas. If they were logical, somebody else would be doing them.

One reason Reed and I started using the “team not family” metaphor was that as the company kept changing, we saw that nostalgia for the good old scrappy days was a powerful force of resistance.

Be a Great Company to Be From

But what helps is knowing that they have a great résumé because they’ve worked for you.

People’s happiness in their work is not about gourmet salads or sleeping pods or foosball tables. True and abiding happiness in work comes from being deeply engaged in solving a problem with talented people you know are also deeply engaged in solving it, and from knowing that the customer loves the product or service you all have worked so hard to make.

In addition, rather than using stock options as “golden handcuffs,” we imposed no vesting period. Options would vest on a monthly basis. Those options were available to exercise for ten years, allowing for long-term increase in the stock price.

One company’s A player may be a B player for another firm, and vice versa. There is no generic formula for what makes people successful, despite a great deal of effort and all sorts of assessments to try to come up with one. Many of the people we let go from Netflix because they were not excelling at what we were doing at the time went on to excel at other jobs.

All hiring managers should understand, really deeply, what the company’s approach to hiring is and how to execute on it, down to every detail.

Interviews trumped any meeting that a hiring manager was scheduled for, and they were the only reason that attendees of our executive staff meeting could miss that meeting or leave it early. Really! Candidates are evaluating you just as you’re evaluating them; people forget that. Our goal was for every single person who came in for an interview to walk away wanting the job, even if we hated them. We wanted them to think, Wow, that was an incredible experience.

One of the reasons that I’m no fan of the annual performance review process is that not only does it take up a lot of your HR department’s time, but it is so often removed from any true connection to business results and serving customers.

I also came to realize that when you hire someone and it turns out that they can’t do the job, the problem is with the hiring process, not the individual. You simply hired the wrong person. It’s not their fault! So you shouldn’t make them feel like it is.

The key is to be realistic about how likely it is that significant improvement can be made. And be sure that improvement is the true goal, rather than making a case to let someone go. If it’s not, then the responsible thing to do is to forgo the process.

…is what this person loves to do, that they’re extraordinarily good at doing, something we need someone to be great at?

“Culture is the strategy of how you work. And if people believe it is a strategy and that it is important, they will help you think about it deeply and try things.”