Patty McCord is changing the world

When Patty McCord joined Netflix in 1998, she set out to create a living set of “behaviors and skills” that the management team would update continuously and fastidiously. This became the famed Netflix Culture Doc that Sheryl Sandberg once called “the most important document to ever come out of Silicon Valley.” Still in effect, it drives toward a single point: a company is like a pro sports team, where good managers are good coaches, and the goal is to field stars in every position.

McCord is about to put out her new book in January 2018. Titled Powerful: Building a Culture of Freedom and Responsibility, it dives into the nitty gritty of how the team at Netflix built an iconic company from the ground up with intense focus on culture as its cornerstone.

Model honesty and people will pick the habit up

You want everyone on your team and all around the company to learn to be more open and honest with one another? For this to happen, the standard must be set and practiced from the top down.

The Netflix executive team modeled honesty in a number of ways. One was to conduct an exercise we called “Start, Stop, Continue” in our team meetings. In this drill, each person tells a colleague one thing they should start doing, one thing they should stop doing, and one thing they’re doing really well and should keep doing. They are such believers in the value of transparency that they do this exercise in their meetings, out loud in front of the group.

Recognition of how important it is to be open rippled down through the company as they would go back to their teams and report that the executive team had just done “Start, Stop, Continue” and fill them in on what had been said. That wasn’t a mandate - it didn’t make it an HR initiative. Most of the executives just did it, which exemplifies the power of modeling.

The executive team also modeled radical honesty from the top down by requiring it of all their team leaders in managing their people and coaching them on how to provide it. They insisted that they share feedback on a continual basis.

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Set standards

In addition, they asked them to explicitly set the standard with their teams that it was unacceptable to talk about people behind their backs or to come to them to complain about a colleague, unless, of course, the problem was one concerning ethical violations, such as sexual harassment, which was treated with confidentiality.

Another one of Netflix’ great team builders was Rochelle King, [now Global VP of Product Design and Insights at Spotify], who started out managing a small design team and became the manager of a large group as VP of User Experience and Product Services. She recalled that it was difficult at first for her to give such open, honest feedback, but that because it was such a strong mandate, she realized she had no choice but to get comfortable with it.

She said, “I felt as a leader that I would have to do the hard things in order to uphold the culture, things that were against my nature, such as having difficult conversations to people’s faces. I knew that was something I had to abide by, the completely uncomfortable act of going and talking to someone about a problem. When it’s so much a part of the culture, you hold yourself accountable to it. There were lots of stories of other leaders who had done it, and so you did it too.”

The more rigorously you communicate and model the transparency standard, the more pervasive a part of your culture it will become.

Provide mechanisms for feedback

Eventually, they decided to facilitate the offering of critiques not only to one’s direct reports and teammates, but to colleagues all around the company. So they created a system for sending “Stop, Start, Continue” feedback to anyone at the company once a year. They picked an annual feedback day and asked that everybody send their comments, in “Stop, Start, Continue” format to everyone they had feedback for.

This is a great example of how the practices used to create the culture evolved as they tried new things. At first, they made the system anonymous. But, true to form, the engineers rebelled. Management was saying people should be open and honest, yet the tool provided lacked transparency. They simply started to sign their names to their critiques within the message text. The executive team realized they had a good point, and they revised the system.

Let every employee be a strategic radar

Netflix practiced this same radical honesty about the challenges the business was facing. It was a very bumpy ride in the early years, and they shared with the whole company the difficulties as they encountered them, being very clear about the time frame, the metrics, and what it would take to meet goals. The executive team wanted to make sure all people understood where they were going and what they were doing, and an essential part of that was understanding — really deeply understanding — what the business was up against.

At most companies, no one owns the responsibility of communicating that information company-wide, and too often many people — whole departments, even — are left in the dark. Companies sometimes even delay making important strategy and operations changes because of the worry about how employees will react.

Too often, upper management thinks that sharing about problems confronting the business will heighten anxiety among staff, but what’s more anxiety provoking is not knowing. You can’t protect your people from hard truths anyway. And holding back the truth, or telling them half-truths, will only breed contempt. Trust is based on honest communication, and some employees become cynical when they hear half-truths.

Cynicism is toxic.

It creates a metastasizing discontent that feeds on itself, leading to smarminess and fueling backstabbing.

Admit problems and you will get better input

Employees should be told never to withhold questions or information from you or their direct superiors. As a leader, you should model this, showing, not just telling, that you want people to speak up and that you can be told bad news directly and disagreed with. Otherwise, most people will never be truly open with you.

A study by Deloitte showed that 70% of employees in a wide range of sectors “admit to remaining silent about issues that might compromise performance.”

Say you’re in a meeting and are about to make a decision. One of your direct reports at the table has been bending your ear for months about what a stupid idea he thinks it is. Yet here you are at the end of the meeting and that person hasn’t spoken up. You should call that out. Say, “You know, we’re about to make a decision that you’ve been telling me for four months you’re against, and you haven’t said a word. Have you changed your mind? Or do you feel like I’m not going to listen?”. You have to exhibit the courage you want people to have, the courage to say, “I honestly don’t think that’s a good idea at all, and here’s why.”

Of course, it’s one thing to get honest input from colleagues on your own level, or from your boss, and another to get it from your subordinates. But that is exactly what you want. Because you are absolutely not always going to be right, and the satisfaction of being right can be very dangerous.

As the greek used to say, if the gods want someone to fail, they send him seven years of success.

Never hurry, always sprint. Executive Advisor on growth strategy and productivity. Founded Strategy Sprints, a management consultancy in Vienna and Berlin. Shares successful strategies on the Strategy Show podcast and coaches innovators implementing them in the Strategy Forum. Learns from his own stupidity, mainly by testing assumptions. The insights go into his MBA and eMBA classes as well as in the Strategy Show
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