Interview with Erin Meyer: Insights on Netflix and Organizational Culture

In the interview, Erin Meyer discussed her collaboration with Netflix CEO Reed Hastings on “No Rules Rules,” a book exploring Netflix’s innovative organizational culture. She described the extensive research and interviews undertaken to understand and systematize Netflix’s unique culture into a model that other organizations could learn from.

Erin emphasized that successful companies like Netflix, Amazon, and Google are driven by cultures that actively address and manage the inherent tensions and dilemmas in the workplace, rather than just promoting absolute positives like integrity.

She advocated for a shift from a control-based to a culture-led approach in business, where innovation and flexibility are prioritized to quickly adapt to market changes. This approach involves reducing strict controls and allowing more employee autonomy, fostering a dynamic environment that encourages creativity and rapid problem-solving.

Join our Leading Complexity Program to learn more from Erin and how to develop a culture that breeds innovation and flexibility. Sign up here.

Transcription of the interview

Tomas: Hello everyone and welcome to this interview with Erin Meyer. Happy to have you in the program, Erin.

Erin Meyer: Nice to be here with you, Tomas. It’s awesome.

Tomas: So, Erin, you’re famous for two books: one about the Culture Map and now also on this Netflix description, “No Rules Rules.” I think we should focus on the new book because it’s really interesting. You wrote this book together with the CEO of the company, Reed Hastings. I’m curious, could you tell us a little bit about how it was to work together with him and how you came up with all the content in the book?

Erin Meyer: Yeah, so this was actually a big project. I met Reed in 2017, and he’s someone who really believes that the extremely unorthodox, let’s say strange, organizational culture that they have at Netflix is what’s driving and has driven the success of that company. So, we decided that, I mean, my first book was about national cultural differences, we decided that we would work together to write another book about organizational culture, and specifically about how to develop an organizational culture that breeds innovation and flexibility. And that I would conduct this big research project and spend a lot of time with him in order to figure out what it was that they were, you know what, the magic was that was happening in Netflix culture that was leading to their success that other companies could learn from.

So, that was yeah, it was a big project. I worked on it for about three years. I talked to Reed weekly, I saw him every six weeks for more interviews. I spent, let’s see, well I did over two hundred interviews with current and past employees, and it’s interesting because now, Tomas, when you look at that book, I think you can see it seems kind of simple right? Like, okay, there’s these three categories I have to do this and then I have to do this and then I have to do this and then it comes together. But in truth, the employees, and the executive team with Reed himself all knew, like they had lots of stories they told, lots of sayings, things that were driving their behaviors but they didn’t really understand themselves how the pieces fit together.

So that was the complex part of it for me was trying to figure out like how can I take all of this kind of these different attributes of this culture and figure out you know why and how they work together and then put them in some kind of model or system so that other organizations could learn something from them? So that took about three years in the end, but yeah it was a lot of fun, complex fun.

Tomas: I really love the book and everyone listening to this please read it, or as I did, listen to it (twice so far).

You can learn a lot from this. And the thing that I think is really interesting is that it’s actually out there, I mean, if you want to be the next Netflix, you could just read the book. If you want to be the new Google, you could be just reading their book, and Amazon has their book, and you can read and look at videos about Spotify how they are working, or about how Tesla is working, it’s all out there. But do you see anything that they have in common, do we have the recipe for success here?

Erin Meyer: Yeah, well I think with those specific companies that you’ve just mentioned, I mean each of them has a different organizational culture, but what’s similar about each of them is they’re all culture-driven organizations. And what I mean by that is that the executive team is driving the behaviors in the organization through the culture. I’ve been doing a lot of research on this, I just wrote a new HBR article about it, looking at other companies, like what’s going on in these specific companies who have managed to get the culture driving the success of the company, what are they doing that other companies are not?

What I’ve seen is, like the vast majority of companies who try to kind of articulate their organizational culture, to debate and articulate their organizational culture, they’re really focused on what I call absolute positives, which are things like, oh, we’re all about integrity, or we’re all about respect, or communication. And of course, those are great words, I mean who wouldn’t want to have integrity in their organization? But I call those absolute positives because there’s no good credible option to them, like never have I come across an organization that said here we are all about corruption, right? There’s just no good option to integrity.

So, what I’ve seen with companies like Amazon, or Google, or Netflix is that they’re really instead articulating their organizational culture by wrestling with tensions. So, they’re really thinking like what are the tough dilemmas that our talented well-meaning employees are facing on an ongoing basis and, you know, in our organization when our employees come across this dimension or this dilemma, which way do we want them to turn? And then if they can get that figured out, then they can articulate that, and then that really impacts the decision-making in the organization.

So, one example that is now starting to be known and repeated by other companies, but you brought up Amazon, is this disagree and commit, and I love that. I mean, it’s, uh, I think you can just see the tension, you can just see the dilemma right in it. So, that’s all about, of course, if I as an employee disagree with a decision that my boss is making, should I verbalize it, should I fight for what I believe in against what let’s say leadership or my team believes in and disagree, and of course, the dilemma is right there, right? Like, well, I could do it because I believe in it and I think it’s right, or I could keep quiet because I value my job and I want to make sure that I’m not keeping the company from moving forward in general.

But so, disagree and commit, it tells us, it says okay, you know what, you should disagree as strongly as you feel it up until the decision has been finalized, and then once the decision has been finalized then you should stop disagreeing and you should, you know, jump on board and commit. So, you can really see the tension right in there.

Or at Netflix, one of the things they say is we are a team, not a family. Okay, well there is the tension, the dilemma is right there. And of course on a team, on an Olympic team, we’ve got a totally different kind of ethos, it’s a lot more, let’s say, lot more fast-paced, I’m really focused on making sure I always have excellence in every spot. So, I think that’s what we can see, and yeah, I don’t, I actually don’t know why more companies are not focusing on those dilemmas or tensions, but I do think that that’s something that any company can learn from.

Tomas: Yeah, I really love in your book when you’re talking about this tension between like spending, where you first talked about, well, spend it as if it was your own money. But that doesn’t work because we all have different understandings of what that means, and maybe I’m willing to spend a lot on my computer or my dinners, or whatever it is, well maybe that is not the best for the company. So, I think that that’s the best with the book actually. So yeah, we talked about this, you said something about why are the other companies not following this, what can we do to make them follow?

I’m from Sweden, so I’m of course caring a lot about the Swedish companies, and I see a lot of old big Swedish companies that are totally not understanding the importance of having a strong culture, and talk about those dilemmas instead of just putting nice words on t-shirts. So do you have an idea what can we do to help those companies to understand the importance of having a strong culture?

Erin Meyer: Yeah, so I mean I think my kind of overarching learning from all of this was just to recognize how the vast majority of companies today are operating with this, like this industrial era hangover. And what I mean by that is of course during the industrial era we were all obsessed with error elimination, consistency, and replicability. And if you are leading a manufacturing plant today or you are working in some kind of safety-critical industry, those are still your goals, right? Consistent replicability, error elimination.

But in a growing number of companies and organizations today the biggest risk is no longer losing out on a little bit of efficiency or making some mistakes, the biggest risk is now not thinking freshly enough or being creative enough so that we become irrelevant, right? So, I think what’s happened is that the vast majority of companies, they still have this industrial era mindset and with the industrial era mindset, we have a lot of control mechanisms that are in place in order to control our employees’ behaviors. So, we have policies telling people what they can and can’t do, we have processes telling people you know who you have to get approval from to spend this money or if you want to make this decision who has to sign off on it, and we have just lots and lots of guidelines telling us how we have to work.

And in truth, if we are a controlled, process-led organization, then I don’t think you need to be a culture-led organization, you can have the controls lead the company. But if you desire to move to a more let’s say agile work environment, an environment that’s more innovative, creative, and flexible, which allows you to be also faster moving and to change more as the environment changes, then you need to find a way to let go of these control mechanisms in order to give your employees the space to run free, that leads to more creativity and to more speed. And when you let go of those control mechanisms, you have to have some other way of coordinating your employees’ behavior and driving the success of the company.

So often people I think they think oh well how would I operate without those controls, like how could I possibly have an organization where we don’t have a travel policy or we don’t tell people how they can spend money or we give all this decision-making freedom to our employees, well you can’t just let go of the controls, you have to come to, you have to replace the controls with culture, right?

So I think that that’s the question, you know, do you want to be an industrial era company where you lead with controls and process, or do you want to be more innovative and more flexible where we lead with culture? And that’s where that’s where we can learn from these companies who are more let’s say on the edge, on the cutting edge of this understanding of a company for our new age.

Tomas: Yeah, I love that. I usually say that culture is making sure that everyone understands what behavior gives you a pat on the shoulder and which behaviors give you someone slashing your hand. I mean, yeah, that helps. So, it’s much better than control. So, I really love your answers and I’m looking so much forward to your session in the Leading Complexity program. So happy to have you in the program again.

Erin Meyer: Thank you so much, Tomas. Really looking forward to it, looking forward to being with everybody.

Tomas: Oh, that will be awesome. Thank you very much for this. Take care.

Join our Leading Complexity Program to learn more from Erin and how to develop a culture that breeds innovation and flexibility. Sign up here.

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