Netflix is one of the biggest business success stories of the past two decades, growing from a fledgling DVD rental service to a streaming giant with over 220 million subscribers worldwide. Much of this meteoric growth has been attributed to Netflix’s innovative company culture, which was largely shaped by Patty McCord, the longtime Chief Talent Officer.
McCord shares her playbook for building a standout company culture in her book, “Powerful: Building a Culture of Freedom and Responsibility.” In this comprehensive book review, we’ll explore key lessons from McCord on talent, leadership, innovation, and more to drive success.
About Patty McCord, The Architect Behind Netflix’s World-Famous Culture
McCord served as Chief Talent Officer at Netflix for over a decade, spanning 1998 to 2012. She worked closely with CEO Reed Hastings to establish the company’s groundbreaking approach to talent and culture. Their pioneering work got global recognition through the famous Netflix Culture Deck.
The qualities that McCord looks for while building teams include curiosity, innovation, courage, passion, and flexibility. She isn’t afraid to hire rule-breakers who challenge conventional norms. At Netflix, McCord encouraged people to “speak truth to power” and cultivated radical honesty across the business.
Since leaving Netflix, McCord has remained a highly sought-after advisor for global organisations on leadership and culture. She has numerous accolades under her belt, including being ranked as one of the “Top 5 Recruiters in the World.”.
“I was the head coach for attracting, developing, motivating, and retaining a team of creative, confident, and self-disciplined innovators.” Patty McCord
Now, let’s explore McCord’s key lessons for entrepreneurs, executives, managers, HR professionals, and employees through her book Powerful:
Powerful Insights on Hiring and Talent
McCord has extensive experience identifying, recruiting, and managing top talent. Here are stellar insights on maximising your talent pipeline from Netflix’s super scout:
Hire great people who raise the bar.
What is the first step in building a standout team? “Always be recruiting,” advises McCord. Never settle for mediocre hires simply to fill roles. Be selective and only opt for candidates better than your existing talent bar.
A high talent density creates a “virtuous cycle—great colleagues inspire and challenge one another to step up. This breeds a winning culture that is more concerned with achievements than job titles. Salary and perks alone don’t attract the best. Purpose, problems to solve, and what great peers do.
“The best want to work with and compete with other people.”
Let confident recruiters identify great talent.
McCord emphasises having in-house specialised “bird dogs” rather than depending solely on external recruiters. Netflix used generalist HR business partners working closely with hiring managers for screening and evaluations. But specialised internal recruiters actually identified and sourced potential candidates.
These in-house talent scouts intimately understood Netflix’s unique needs and culture. They could have detailed conversations with prospects about the required skills. Allow your best internal recruiters to focus solely on what they do best—talent pipelining. This delivers far better results than generalists trying to wear multiple hats.
Hire for Skill, Will, and Values Fit
The ideal candidate, stresses McCord, demonstrates not only relevant strengths, capabilities, and potential (skill) but also sufficient motivation and drive (will). Beyond checking boxes on skills and background, evaluate a prospect’s ability to adapt, learn, and overcome obstacles.
Value-based hiring is key too. Assess whether your personal values align with your organisational culture and philosophy. At Netflix, McCord evaluated aspects like judgement skills under stress, responding to ambiguity, collaboration ability, etc., along with technical competencies.
Test Prospects for Culture Add
Rather than standard interviews, McCord suggests designing experiences that test for culture fit and reveal talent deficiencies early. Netflix auditions prospects with real-world case scenarios and assignments from their actual work. Observing prospects directly helps assess strengths and limitations accurately versus hearsay.
This reduces bad hires who seem glittery on paper but fail on the field. Take your time to evaluate not only skills but also adaptability, transformative behaviours, and collaborative ability, which are critical for culture. Allow try-outs spanning days or weeks, suggests McCord.
“Standardised interviews are like trying to catch rainbows.”
Speed Up Hiring Before Top Prospects Get Poached
When both recruiter and hiring manager identify extraordinary talent, move rapidly rather than getting mired in drawn-out gating and approvals. Lengthy hiring processes lose top prospects to faster poachers. Build recruiter networks that allow the sharing of vetted, “pre-approved” talent between teams.
Avoid talent review meetings focused on consensus building rather than speed. Empower experts closest to the role to make the actual hiring decisions without red tape. Facilitated and streamlined hiring that taps existing connections beats doctrine-driven processes.
Cultivating a standout company culture
McCord emphasises that culture stems from sustained actions rather than one-off events or flashy perks. “Culture is not the kind of thing that you get by installing a foosball table or free snacks,” she asserts. Her insights help demystify culture.
Clearly define your culture in writing.
Don’t let culture be implicit or vague. Precisely document cultural norms so that everyone understands expectations around performance, attitude, and behavior. Put this into a culture code that serves as an unambiguous guide. New hires and veterans alike can reference this bible on Netflix.
McCord lists some sample values from her previous work:
- Judgement: Make wise decisions despite ambiguity.
- Innovation: improve, experiment, and create
- Courage: Challenge issues respectfully.
- Passion: inspire joy for what we do.
- Curiosity: learn rapidly and expand our thinking.
- Authenticity: Be real, not politically correct.
- Inclusion: Seek diverse perspectives.
- Selflessness: Think collectively, not ego.
Such specifics help employees self-assess fit and help leaders address mismatches early.
Communicate culture continuously.
Don’t just communicate cultural values at orientation programmes and then forget them. Reinforce behaviour standards regularly through both explicit and implicit means like town halls, newsletters, peer-to-peer nudges, etc. Build a common language around your cultural code.
Leaders themselves need to role-model the target culture loudly through symbolic gestures that grab attention. For example, McCord openly praised an employee who respectfully challenged an idea of hers in a meeting, since this demonstrated the candour that Netflix wanted to promote.
Reward and recognise cultural carriers.
What is appreciated gets repeated. When employees demonstrate critical cultural behaviours, highlight and celebrate them publicly. At Netflix, awards were given to those solving major problems through collective action or showing extraordinary courage in driving accountability.
McCord also advises providing flexible rewards aligned with personal passions, e.g., sending an employee to a photography camp rather than everyone to Hawaii. Customised recognition and growth opportunities that map to individual purpose and talents drive a progressive culture.
“Our version of compensation was making sure we had a really strong culture that was clear about freedom and responsibility, and then we rewarded people well financially.”
Weed Out Misalignments Ruthlessly
A high-performance culture needs no laggards. McCord prescribes zero tolerance once it’s clear someone doesn’t fit, contrary to traditional progressive discipline doctrines. One “brilliant jerk” tolerated for execution skills can corrode culture widely.
Separating mismatches early avoids repeated clashes down the line. However, empathy, patience, and exit facilitation help the transition. Also track patterns behind bad partings to spot processes requiring change versus blaming individuals. Prevent toxicity by continually sensing cultural health.
Empowering Teams and Leadership
McCord urges organisations to shift from controlling hierarchies to empowered teams of aligned leaders. What does this look like in practice? Here are key suggestions:
Build aligned leadership teams.
Rather than centralising authority, distribute responsibility across aligned leaders who make collective decisions for the whole business. Avoid siloed departments and divisions competing internally. Break down barriers between functions like content, marketing, product, etc., and have leaders co-solve problems.
Leaders themselves need to personify the cultural behaviours expected from employees. At Netflix, McCord coached executives to role model transparency, integrity, inventiveness, and confrontation through their daily actions rather than just demands. There were no special rules at the top; leaders upheld the same high standards.
Empower teams through context, not control.
Micromanaging output strangles morale and innovation, whereas context uplifts employee ownership. To empower teams, communicate challenges, goals, constraints, and priorities transparently so they can creatively solve problems without prescription. Replace detailed status reporting with big-picture context sharing.
When leaders share the transparent “why” behind business needs, teams feel trusted to find their “how.” Guide with inspirational goals and guardrails, not step-by-step tactics. Netflix managers coached employees instead of closely monitoring them. The focus was on accomplishments over activity.
Foster performance-focused freedom.
While loosening control, maintain high performance standards. Netflix balanced flexible work arrangements with tough KPIs on output quality and business impact. As McCord explains, “We expected consistent high performance and the freedom to figure out how to achieve it.”
She nudged both overperformers and underperformers through radical candour about where they stood. Real-time critiques and coaching on strengths as well as skill gaps enabled self-correction aligned to Netflix’s dynamic demands. Managers themselves needed to justify adding value, not merely act as oversight.
Promoting Innovation the Netflix Way
Netflix credits much of its game-changing digital transformation and global scaling feats to its pioneering culture of innovation. What fuels this? McCord reveals key secrets below on releasing the innovation potential of teams:
Spark Creativity Through Better Questions
Better solutions arise from better questions. “Build a team focused on problem identification,” says McCord. Train employees on framing issues thoughtfully and with nuance before jumping to ideas. Ask why multiple times to unpeel root causes rather than superficial symptoms.
Teach inquisitiveness and listening over advocacy. Leaders too must model curiosity that welcomes fresh lenses from all levels rather than just imposing top-down views. Position teams as insight-seeking scientists rather than compliant doers. Bring outside experts and unconventional voices to widen the discourse.
Experiment with Endless Analysis
The bias for action and testing at Netflix flies against traditionally cautious cultures. As McCord says, “No analysis of a new idea should take longer than actually trying it out.” This fail-fast mindset kills inaction from over-modelling, predictions, and payback calculations.
Emphasise smart experimentation: start small, limit the blast radius, and learn rapidly. “Think small enough to fail,” then build on the positives. Large ambition paralyses, whereas bite-sized experiments create momentum. The key is running lots of experiments, not lengthy deliberations. The analysis comes after evidence, not before.
Learn More from Failures Than Successes
Studying what went well rarely yields breakthroughs, whereas investigating failures drives generative learning. Netflix openly conducted post-mortems without blame for high-profile mishaps like the Qwikster debacle. This helped unearth faulty assumptions before making bigger gambles.
Guide teams on deriving insights from setbacks through honest conversation without embarrassment or penalties. Shift focus from finger-pointing to future fixes. The faster teams examine failures, the faster their learning better equips them for the risks ahead. Turn breakdowns into breakthroughs.
Staying nimble and adaptable
Innovation and agility matter more to business resilience today than size and control. McCord’s wisdom helps organisations stay dynamic without losing operational discipline.
Review rules and processes obsessively.
Regularly re-evaluate policies, guidelines, metrics, and procedures against current needs rather than clinging to vestiges of the past. Ask, “Would we still invent this system if we were starting today?” Customer-impacting standards get priority fixes.
Annual reviews of systems are too slow for modern markets. Establish quarterly or even monthly “regulatory scrubbing” cycles to dismantle outdated bureaucracy while retaining must-haves. Assign process simplification responsibility to teams as an explicit goal to prevent black holes.
Limit business controls to only a critical few.
Distinguish vital process controls from less crucial ones. Help teams discern core discipline from damaging bureaucracy, e.g., financial governance vs. output monitoring. Identify leading indicators predictive of operational risks and restrict mandatory policies to these limited vital signs rather than overwhelming scorecards.
Ease opacity through tool-based audit trails rather than manual approvals for proof of work. Exchange pre-clearances with post-action verifications, e.g., check for code test coverage rather than enforcing peer reviews. The mantra should be “freedom given, trust earned.” This frees up capacity for innovation.
Emphasise outcome excellence over activity metrics.
Rather than micro-managing input activities, focus governance on output quality and downstream impact. Netflix cares about the depth of content immersion over hours viewed. Product leaders emphasise platform functionality that delights subscribers over output velocity or uptime metrics alone.
Quality and speed can coexist with clear problem statements and communal troubleshooting. Metrics should trace back to customer-centric goals versus internal habits. Great work springs from inspired teams, not industrial dominance. Output passions trump procedural compliance.
Key Takeaways from McCord’s Powerful
McCord packs dozens of penetrating insights into unleashing personal, team, and company-wide power in her book Powerful: Building a Culture of Freedom and Responsibility.
- Let your best talent managers identify and recruit even better-fitting additions to your team through values and culture-based testing.
- Exchange gated approvals with post-action confirmation through smart system controls while enabling work autonomy.
- Celebrate employees who personify your cultural code through peer praise, rewards, and growth opportunities personalised to their passions.
- Help executives trade status symbols for servant leadership by spreading decision ownership and modelling transparency themselves.
- Fix the quality and frequency of questions, not just solutions; make inquiry and listening foundational habits.
- Unlearn blind adherence to hierarchy, process, and conformity to enable fulfilling careers centred around collaborative impact.
While every company needs operational controls, the right culture makes excellence a default. Purpose, mastery, and autonomy drive this culture, not perks. Organisations can unleash greatness by balancing care for people and care for results, as McCord did at pioneering Netflix.