How to Cultivate High Performance — Reed Hastings, Co-Founder of Netflix

Added: May 12, 2024

High Performance Culture at Netflix

One of the key aspects of Netflix's culture that Hastings emphasizes is the idea that the reward for adequate performance is a generous severance package. This approach is meant to encourage high performance and create a team of top performers. He believes in managing on the edge of chaos, where there is room for creativity and innovation without descending into chaos. He emphasizes the importance of having high-performance people who can navigate this balance effectively.

Focus on Performance and Teamwork

Hastings also discusses the concept of team over family in the workplace. While loyalty is important, the focus should be on performance and creating a high-performance team. This approach helps in building a culture of excellence and accountability. He believes in setting context rather than control in organizations. By providing employees with a clear understanding of the goals and objectives, they can make informed decisions and contribute to the overall success of the company.

Thorough Reference Checks for High Performers

When it comes to sourcing high performers, Hastings emphasizes the importance of doing thorough reference checks. He starts by looking for mutual connections on LinkedIn and then conducts short Zoom calls to get a better understanding of the candidate. By speaking to people who have worked with the candidate before, he can assess their performance and fit within the organization.

Embracing calculated risks for innovation

In terms of decision-making, Hastings believes in taking calculated risks and making reversible decisions. This approach allows for experimentation and innovation without the fear of failure. By managing on the edge of chaos and setting clear context, organizations can create a culture of high performance and creativity.

Work-Life Balance and Innovation

Hastings reflects on the challenges of balancing work and personal life, sharing his experience of setting boundaries and sticking to them. He discusses the concept of farming for dissent within the organization, encouraging employees to voice their opinions and challenge ideas to drive innovation and growth.

Lessons from Netflix's Blockbuster Competition

The conversation shifts to the early days of Netflix and the lessons learned from the competition with Blockbuster. Hastings shares the story of the Quickster episode, where a strategic decision to split the company into two entities backfired due to poor execution and lack of customer alignment. He highlights the importance of learning from failures and staying grounded in decision-making processes.

Leadership and Self-Discipline Through Literature

Hastings mentions his fondness for Jim Collins' book "Beyond Entrepreneurship" and the impact it had on his leadership style. He talks about the importance of self-discipline and caring for the organization over personal gain. He also recommends other books like Patrick Lencioni's "Five Dysfunctions of a Team" and Yuval Noah Harari's "Sapiens" for their insights on teamwork and the bigger picture of life.

Hastings' Keeper Test Philosophy

The conversation touches on Hastings' approach to hiring and retaining top talent, emphasizing the importance of building a high-performance team. He introduces the concept of the keeper test, where employees are evaluated based on whether the company would fight to keep them. He discusses the process of letting go of employees who do not meet the keeper test criteria and the importance of treating them with respect.

Importance of Inclusive Decision-Making

Hastings reflects on the decision-making process at Netflix and the need for input from all levels of the organization on big decisions. He acknowledges the importance of listening to dissenting voices and avoiding arrogance in strategic planning. He shares insights on finding the balance between customer satisfaction and operating income, highlighting the challenge of charging enough to sustain growth while keeping customers happy.

Powder Mountain Investment Vision

The conversation shifts to Powder Mountain, a private skiing destination that Hastings and his wife have invested in. He explains the concept of private skiing and the appeal of offering a less crowded and more exclusive experience for homeowners. He shares his vision for Powder Mountain and the opportunity to create a unique skiing experience for a select group of individuals.

Investments in Charter Schools

Hastings discusses his various investments, both financial and in terms of time and energy. He mentions his involvement in charter schools and education, emphasizing the importance of creating great learning environments and teaching opportunities. He explains that charter schools are run by nonprofits instead of government entities, providing more stability and innovation in the education system. He believes that the turnover of superintendents in traditional school districts is a major challenge and sees charter schools as a solution to this issue.

Passion for Teaching and Impactful Investments

When asked about his best investments, Hastings admits that he has not been successful in financial investments but considers his involvement in charter schools as a significant and impactful investment of his time and energy. He shares his passion for teaching and mentions that he would love to teach math to high school students again if given the opportunity.

Emphasis on Big-Hearted Culture

Hastings reflects on the culture at Powder Mountain, emphasizing the importance of being "big-hearted Champions who pick up the trash." He explains that this culture is a combination of warmth, competitiveness, and self-responsibility, which he believes is better than the culture at Netflix during his time there. He also talks about his involvement in Africa, where he is working on projects related to the economy and technology to stimulate growth and make a positive impact.

Cultivating Hope in Individuals

In response to a question about cultivating hope in individuals, Hastings suggests that understanding the perspective of the person feeling hopeless is crucial. He advises parents to help their children navigate the challenges of growing up and to instill hope for a better future. He believes that hope is a fundamental positive force that drives people to strive for better things.