It seems that every large (or simply well-known) company has its unique culture, which is also considered the only correct and successful one. We are all unique, after all. However, the concept of “correctness” and “success” is highly subjective. Yet many want to showcase that they achieved success solely because of their approaches (and that others, therefore, succeeded despite theirs).
First, there was the remarkable book Creativity, Inc. by Ed Catmull about the culture at Pixar. Then came the very loud, but completely unappealing to me, Principles by Ray Dalio. Finally, I reached No Rules Rules by Netflix CEO Reed Hastings, who co-wrote this book with Erin Meyer. I frequently recommend Meyer’s The Culture Map almost every time someone asks me about the best books.
This book, like many others, was highly praised by my colleagues, receiving the highest ratings. However, I always strive to form my own opinion rather than follow the masses. I read it. And it took me quite a while to gather my thoughts and finally write my review. This is because it is one of the most controversial books I have read in the past several years.
On the one hand, I will definitely recommend it. On the other hand, I had comments like “interesting, but there are nuances” for nearly every chapter. This is because, as usual, I tried to apply all the described approaches to myself as a manager and to the companies I have worked for. And here, as they say, things became far less straightforward.
Reed Hastings also read Erin Meyer’s book, and since he was already thinking about how to share the principles embedded in his company, he decided that Erin was the best candidate to help him with this endeavor. He wrote her a letter and suggested meeting for a cup of coffee during one of his trips to Paris (as Erin taught at the French INSEAD in Fontainebleau, near Paris).
At that time, Erin was also intrigued by Netflix’s principles, which the company did not keep secret and made freely available in the form of a 127-page presentation. However, “intrigued” in this context means that she could not understand how such masculine and seemingly anti-human principles could serve as the foundation for a company, let alone a successful one.
Thus, this tandem was born, and later, the book. Reed shares his structured thoughts on the approaches established in the company. Meanwhile, Erin offers an outsider’s perspective, which she gained by conducting over 200 interviews with various employees of the company. As a result, the book is not just about the leader’s vision but also presents the principles through the lens of how Netflix employees perceive and experience them.
The essence of the company’s culture is described in just a few words—”Culture of Freedom and Responsibility.” However, what lies behind these words is explained in greater detail by the authors. In general, everything is built on the concept of “talent density” and the principles of transparency wherever possible. Talent density means that there may be fewer people, but each of them is exceptionally capable in their role. The focus is not on having more employees but on ensuring that each one contributes maximum value and helps others grow.
The authors approach the discussion of the company’s culture in a structured manner:
- There is a detailed explanation of the “talent density” approach, why it is important, and how it helps. They discuss how openness is cultivated and administrative control is weakened.
- How the company initially took its first steps in this direction.
- How it progressed further by abandoning the concept of access levels, effectively granting access to any information, including financial data, to every employee in the company.
- How they reinforced talent density by introducing the “team exit test” and maximizing two-way feedback to make it as constructive as possible.
- And it all concludes with Erin’s favorite topic—how these principles proved themselves during rapid growth when the company transitioned from being American to becoming multicultural.
Many of the declared principles resonated deeply with me. I, too, advocate for maximum openness. I do not want leaders to turn into untouchable deities, and I want to be surrounded by as many people as possible whom I trust entirely and can rely on in every situation.
Unfortunately, reality is such that if everyone were as responsible and understanding, people like me would not be needed. At least, that is what I have always believed. This is why even the initial chapters left me with mixed feelings. On the one hand, I fully support the principles with both hands. On the other, I see how Reed and his team went far beyond, deliberately disregarding many rules—essentially defying most principles that seem logical, familiar, or that we have been taught for many years.
I took an enormous number of notes for myself, thinking about how I could apply these ideas to my current work. Unfortunately, not everything I can apply to myself can be equally applied to my entire team. But the further I read, the more questions and “yes, but…” moments I encountered.
I will try not to retell the entire book but rather focus on the most interesting approaches and my questions about them.
Talent Density
I completely agree with all the points Reed makes about why having more talented colleagues is always better for the team. He approaches this from the opposite angle, explaining why it is problematic to work with less talented individuals. For myself, I have identified the following points, which I am willing to endorse wholeheartedly:
- Less talented individuals take up a significant amount of time and energy from managers, whereas it is more effective to develop the more talented ones.
- If mediocre employees work without consequences, they set an example for the rest of the team, showing that it is acceptable to underperform, and discouraging effort altogether.
- Highly proactive and passionate individuals may either burn out from dealing with such incompetence or, at best, look for ways to avoid interacting with them.
As a result, the most capable employees end up plugging the gaps left by the less competent, unable to focus on what they want and can achieve. Communication transparency declines, as do overall productivity and quality.
This is why Netflix decided to part ways with mediocre employees—not to tolerate carelessness or irresponsibility—but to search for the strongest and most talented individuals. Of course, talent alone is not enough. Much also depends on accountability and responsibility.
Responsibility and Reduced Oversight
The second significant step for the company was increasing the level of responsibility for every employee. It is assumed by default that each individual is accountable for the quality of their work. This does not mean simply completing the tasks assigned to them, but ensuring those tasks are done well. This eliminates the possibility of excuses like, “I was waiting for John,” or, “I did my part, and now it’s up to Ben to check if everything is correct.” It may sound absurd, but I have encountered many people who operate exactly this way. Netflix cuts this off at the root. You either do your job well, or, as they say, “there are plenty of others on the market who would love to work with us.”
Moreover, they went even further. If you are responsible for your work, you also need to understand how it affects your colleagues and the company as a whole. In other words, you are not simply completing a task in a vacuum—you anticipate the consequences and consider where it will lead.
As a result, a logical next step was to reduce oversight. Reed provides several examples where employees were granted maximum freedom:
- Vacations – Each employee decides for themselves when to take time off and for how long. There are literally no restrictions, except for reasonable considerations—how it will affect the company and colleagues. Additionally, leaders model the importance of taking time off. The authors note that if a manager constantly emphasizes the importance of work-life balance but works 12-hour days and weekends, no one will believe them about “balance.” (Guilty as charged—I am often the same way. However, I have at least started taking vacations and trying to disconnect on weekends.)
- Minimizing approval processes – Employees are empowered to make decisions on their own. Need equipment for work? Buy it. Need to fly a more expensive class? Go ahead. Need to treat clients to a fancy dinner? Do it. The guiding principle is always to act in the company’s best interest. As one company leader puts it: “Always act in the company’s best interest.” If you can reasonably justify an action to yourself (or if someone asks you to explain it), and it benefits the company, that is enough to greenlight your decision.
Policy of Information Transparency
To make the most well-informed decisions for the benefit of the company, it is essential to have all possible tools and information at your disposal. For this reason, Netflix at some point decided to grant access to all financial information to every single employee. While this decision has the potential to cause harm, if you have built a team with an emphasis on adequacy, responsibility, and a focus on contributing to the company and themselves, it is unlikely that anyone will act maliciously.
Even if issues occasionally arise, the cost of such incidents is considered lower than the overall advantages that come from full transparency in everything.
Employee Value
While maintaining fairly high standards for professionals, the company is willing to compensate for this by consistently offering its employees above-market salaries. They do not aim for the “market average”; they always pay more than others. As a result, people are motivated to work there for various reasons: they are surrounded by other professionals, and the pay is so good that they likely cannot find a better offer elsewhere.
The company also monitors the market to adjust salaries accordingly and even encourages employees to go to interviews. That is, it does not prohibit this practice but actively recommends it.
The book highlights research findings that have long been known: in most cases, employees who regularly change jobs earn more with each move than those who remain with a single company, receiving annual raises. In other words, if you want to grow financially, there is little incentive to remain loyal to one company.
Understanding this, Netflix began encouraging employees to attend interviews, especially with competitors. If competitors are willing to pay you more, find out the offer and share it with your manager. This signifies that your market value has increased, and thus your salary should be raised to reflect your true level. Yes, the company will spend more on you, but in doing so, it retains a valuable specialist whom competitors are eager to acquire.
It may sound heretical, but it is incredibly logical.
Open Criticism
Another critical aspect of workplace interactions is open criticism. Continuing its approach to transparency, Netflix has also adopted a principle of speaking as openly as possible. They follow a rule that I often quote verbatim: “Only say about someone what you will say to their face.”
I particularly like a quote from Reed about criticism shared with him regarding other employees: “What did that person say when you spoke to him about this directly?“
The company’s stance on criticism is built on three pillars:
- Speak the truth, but say it directly to the person’s face.
- Do not be afraid to address someone’s issues publicly.
- However, criticism should always aim to help and include concrete suggestions for improvement.
The latter can be illustrated with the following quote:
“The way you pick your teeth in meetings with external partners is irritating” is wrong feedback. Right feedback would be, “If you stop picking your teeth in external partner meetings, the partners are more likely to see you as professional, and we’re more likely to build a strong relationship.”
And criticism certainly does not mean what Erin initially thought: “Say what’s on your mind, to hell with the cost.”
Recently, I watched a video where a person from my generation was explaining something similar to the millennial generation, albeit in rather harsh terms. If we try to refine it, the message was along the lines of: “If you tell someone the truth about themselves, be prepared for a punch in the face.”
Openness in all matters and the refusal to conceal problems benefit the company. This approach also helps to eliminate underhanded office politics.
It is important to note that this applies to employees at all levels. Furthermore, during feedback sessions, leaders first request criticism directed at themselves before (if they choose) sharing their thoughts with their employees. They also practice group feedback sessions, where criticism is delivered face-to-face in front of everyone. I consider this an excellent approach, which often contradicts the standard practice of surveys that include a section stating: “These responses will remain anonymous, and the employee will not know who provided the feedback.” Personally, I prefer to know exactly who said what about me, why they said it, and how they see potential solutions. A vague comment such as, “I think Alexey is overly aggressive,” does not help anyone. However, I must admit that accepting such direct criticism requires reaching a certain level of professionalism. People are naturally inclined to react negatively to any criticism directed at them.
This is why criticism is so essential. The higher a person is in the organization, the more important it becomes to highlight their problems, as their mistakes can be significantly more damaging to the company.
It is also mentioned that avoiding criticism or remaining silent does not help avoid conflict. In fact, it amounts to concealing problems, which ultimately harms the company. However, it is important to remember that criticism should not simply take the form of, “I have voiced my opinion.” It must be constructive and aimed at resolving issues.
Dismissal Policy
I used the term “policy,” but it is more of a set of approaches rather than strictly defined rules.
At Netflix, upholding the same idea of “talent density,” the company constantly ensures that even previously hired employees do not lower the bar. To achieve this, they employ several approaches, such as:
- The Keeper Test. The company formulated it very simply: “IF A PERSON ON YOUR TEAM WERE TO QUIT TOMORROW, WOULD YOU TRY TO CHANGE THEIR MIND? OR WOULD YOU ACCEPT THEIR RESIGNATION, PERHAPS WITH A LITTLE RELIEF? IF THE LATTER, YOU SHOULD GIVE THEM A SEVERANCE PACKAGE NOW, AND LOOK FOR A STAR, SOMEONE YOU WOULD FIGHT TO KEEP”
- Simplicity in Dismissal. If it becomes clear that it is time to part ways with someone, the company does so. There are no lengthy conversations about performance, plans for improvement, or “last chance” goals, which are common in many organizations. As the authors explain, such bureaucratic measures rarely bring any benefit and only prolong the separation process, making it even more painful for those who remain.
- Honesty about reasons. When parting ways with an employee, the company does not attempt to conceal the real reasons but communicates them directly and openly. After all, the truth will come out eventually, and silence will only lead to rumors and doubts about the company’s integrity. However, they strive to handle this in a way that prepares them for the possibility that the dismissed employee will learn these reasons firsthand.
But what are the downsides if everything seems so interesting, intriguing, and logical?
And yet, there are indeed downsides. As I mentioned at the very beginning, I am ready to agree with almost everything. But when it comes to implementation, nuances always emerge, which the authors of the book actually mention in passing. These are the points I will focus on in more detail.
- The company declares that it eliminates vacation schedules, allowing each employee to choose their time off independently, guided by a few principles that essentially boil down to “benefit the company and do not harm your colleagues.” However, in the examples analyzed in the second half of the book, it becomes clear that certain restrictions are still necessary, and they are not solely about “benefiting the company.” Often, they need to be explicitly defined, for example: “Please give at least three months’ advance warning for a month out of the office, but a month’s notice is usually fine for a five-day vacation.” Yes, this is not a schedule, but it is no longer complete freedom. Although I understand that such restrictions are inevitable.
- Reed writes about how eliminating many rules and restrictions improved the company and how everyone began solving their tasks independently. However, closer to the end, he mentions that the same vacation policy does not work very well because some people end up working without taking any time off. To address this, he has to explain and demonstrate the approach he expects from managers, at every quarterly meeting. What do I see in such a statement? That the policy has been in place for a long time and seems to work well, yet explanations still need to be provided every quarter. In other words, does it not work so well on its own after all?
- The fundamental principle on which much is built states: “Act in the best interests of the company.“ But each person can interpret these interests differently. To exaggerate: hiring a prostitute at the company’s expense could undoubtedly increase the happiness of one employee, who would then work enthusiastically for the next two weeks. But is that really what we consider “in the company’s best interests”? Moreover, the phrase “I thought it was for the good” can be used to justify millions of completely unnecessary expenses. Some of these might be caught, some the employee might even justify within their understanding of the principle, and some will simply disappear into the void because “well, we trust everyone.”
- The absence of clear rules allows individuals to decide for themselves what is good for the company. One employee saves money, while another believes it is better to treat clients to an extravagant meal, arguing that it benefits the company. Without clear rules on “what is good for the company,” everyone interprets them in their own way. At some point, this can even lead to interpersonal conflicts or resentment toward the company. After all, one employee enjoys caviar at the company’s expense while another is saving money. And the company seems indifferent to individual interpretations.
- While Reed often emphasizes the importance of “talent density,” he also talks about creating a “world-class team.” However, not all companies can afford to hire highly experienced and responsible professionals. And it is not always necessary. Furthermore, not all companies have unlimited budgets for such experiments. In other words, this excellent principle and the ability to pay everyone above market rates become feasible only when you already have a solid safety net. If you are just starting a business or running it on investors’ money, you may be questioned twenty times as to why you are hiring someone at 5% above market rates or why your company has 1% more employees with the title “manager” than a competitor. In other words, to implement something like this, you first need to achieve success without all these clever recommendations.
- Regarding dismissals, Reed writes: “A job should be something you do for that magical period of time when you are the best person for that job and that job is the best position for you. Once you stop learning or stop excelling, that’s the moment for you to pass that spot onto someone who is better fitted for it and to move on to a better role for you.“ It is an interesting thought, but why present it as a dogma? What about those who genuinely want to work seriously and long-term, even forever? People who value a workplace that feels like family? Should such individuals not be hired at all, even if they are talented?
- At the same time, the company tries to ensure that dismissed employees do not feel wronged: “Think of an Olympic team sport like hockey. To get cut from the team is very disappointing, but the person is admired for having had the guts and skill to make the squad in the first place.“ They go on to say they hope the employee understands this too. But what if they do not? What if they go and harm themselves? Of course, business comes first, and it is not worth keeping useless or unproductive people. But let us not pretend this is for the benefit of the dismissed employee. At the very least, one should acknowledge that it is for the company’s benefit, even if the employee disagrees (and I am convinced that most dismissed employees, as opposed to those who leave voluntarily, will disagree with this interpretation, no matter how objective it may seem to everyone else).
- Toward the end of the book, there is a passage: “At Netflix, you might be working your hardest to do your very best, giving your all to help the company succeed, managing to deliver pretty good results, and then you walk into work one day and boom . . . you’re unemployed. Not because there was some unavoidable financial crisis or big unforeseen layoffs, but because your deliverables are not as amazing as your boss had hoped they’d be. Your performance is merely adequate.” I immediately tried to apply this to myself and realized how deeply uncomfortable it made me. There is no room for objectivity here; it is purely the subjective judgment of your manager. Knowing this from the outset, to be honest, I am not sure I would want to join such a company. It may all be correct from a business perspective, but… I am just not sure.
Let us summarize. This is probably one of the longest reviews I have written about a business book. The book is remarkable because it makes you think a lot, try it on yourself, and argue with its ideas. Yes, the devil is in the details. And yes, not everything will work out of the box, because any methodology depends on the person implementing it.
However, the book makes you seriously question seemingly established rules and approaches. You suddenly realize, “but there is another way.” And figuring out exactly what that way is requires trying it on yourself and experimenting.
I can say that I do not entirely agree with everything in the book, but thanks to it, I began changing many things—in myself and in my work—simply by looking at them from a different perspective.
So, despite all my nitpicking, I am giving it an almost perfect rating and wholeheartedly recommend the book to everyone, regardless of their experience or position.
My rating: 4.5/5
