The Secret to Netflix's Success

Netflix is one of the major brands of the 2010s. Almost everything that the company touches becomes a hit. Why is the streaming service so successful? The innovative corporate culture is the most important explanation.

Netflix’s corporate culture is the stuff of legend. The now-classic document “Netflix Culture: Freedom & Responsibility” has been called “the most important document ever to come out of the Valley”. In the early days of the company, chief talent officer Patty McCord and her team wrote down the things they expected in employees.

In the years since its first draft, McCord has published the insightful book Powerful: Building a Culture of Freedom and Responsibility and has shared her vision in many interviews. There is a lot we can learn from these sources. So, which characteristics make the Netflix culture so successful?

This may be a no-brainer, but you should not forget that there are many organizations who go for the quick fix instead of searching for the top guy or top girl.

This task is made easier because a job at Netflix is a sought-after position, one that is financially compensated at the top of each employee’s market. Furthermore, the HR department is always recruiting.

Innovation is in the Netflix DNA, and every employee is involved. As the latest incarnation of the Netflix Culture manifesto puts it:

• “You create new ideas that prove useful”
• “You re-conceptualize issues to discover solutions to hard problems”
• “You challenge prevailing assumptions, and suggest better approaches”
• “You keep us nimble by minimizing complexity and finding time to simplify”
• “You thrive on change”

Employees are given a lot of freedom and responsibility. It is not their presence in the office that counts, or the long hours that they work, but the results.

According to the Netflix Culture document:

“Succeeding on a dream team is about being effective, not about working hard. Sustained ‘B’ performance, despite an ‘A’ for effort, gets a respectful severance package. Sustained ‘A’ performance, even with modest level of effort, gets rewarded. Of course, to be great, most of us have to put in considerable effort, but hard work and long hours is not how we measure or talk about a person’s contribution.”

So, something has been done in a certain way for 20 years? That is not a good reason to continue with it. As Patty McCord put it in an interview: “Most of the innovation around the culture at Netflix wasn’t to do anything radical and new but to stop doing stuff that didn’t matter anymore.”

Experimenting is crucial to innovate and to stay viable as a company. At Netflix, they are convinced by this fact, and they act on it, too. As McCord said in the same interview:

“Most of what we did was in the spirit of innovation and experimentation. [Netflix] evolved a new way of working through incremental adaptation: trying new things, making mistakes, beginning again, and seeing good results.”

Indeed, failures are allowed at Netflix, as long as employees learn from it.

So, how well-developed is your innovation culture? Would it be insightful to compare yourself to the competition? Our Innovation Readiness Benchmark is designed to do this and to identify the key improvement areas your organization needs to address in order to become a best-in-class innovator. Click here to test the innovation power of your organization!