The Tao of Netflix Culture

In Balance, Freedom and Responsibility Unlock Infinite Potential

Matthew Pirkowski

Published in

The Startup

18 min readDec 7, 2017

“Hold on to the Tao of old in order to master the things of the present.“
— Laozi, Tao Te Ching

Culture Guided. Spirit Sensed.

Amidst crisis, all was calm. A palpable urgency underscored the messages flowing into Netflix’s emergency response channel, yet no sense of panic crept in. Netflix was down, and millions of frustrated users vented their emotions in our direction. But at the eye of the Twitter storm, the mood was eerily serene. Hundreds of people — spanning dozens of teams — self-organized in minutes to diagnose and solve a problem of unknown origin impacting millions of users around the world. And within the hour, everyone’s favorite movies and shows were streaming once again.

While the impromptu symphony of organizational competence dissolved before my eyes, I took a moment to step back and ponder the sheer improbability of it all. How had everyone just known what to do? Where were the chaos, fear, and blame I’d observed amidst organization-wide crises before joining — and since leaving — Netflix? To what strain of modern miracle had I borne witness?

Though I’d experienced a sense of subtle wonderment in the moment, the subsequent handling of the issue confirmed my suspicion that something was meaningfully different at Netflix. Something powerful was at work beneath the surface. It felt as if the invisible forces guiding each employee’s behavior were somehow more powerfully aligned, more coherent, than I’d sensed within previous organizations. But despite this feeling in my gut, I hadn’t yet articulated the factors which contributed to that heightened sense of coherence. I had, however, begun to look for clues.

Responsibility for the outage rested with a recently hired engineer. While operating under a false assumption, he’d unintentionally deployed a breaking change to a critical production system. Despite the constellation of tools in place to automate and manage the prevention of such mistakes, it remains impossible to compensate for all possible human errors. Thus, being relatively new to Netflix myself, I found it strange that his team would grant him the freedom to wield such power with so little experience on the job. Needless to say, he wouldn’t be on the job much longer...

Later that day I spoke with my manager — now a good friend — who’d been at Netflix for years:

“That was pretty intense.”
“Yeah, but we resolve that type of thing pretty quickly”
“Does it happen often?”
“No, it’s rare, but always possible”
“I feel bad for the guy. Not off to the best start… You think he’ll be around much longer?”
“Huh? What do you mean?”
“Well, he broke the entire streaming service. You don’t think he’ll get fired?”
“He definitely won’t get fired. But he’ll certainly learn more about freedom and responsibility.”

It wasn’t the first, nor would it be the last time I’d hear the phrase “freedom and responsibility”. But the more I pondered the Netflix culture and its incarnation, the more I began to realize that this core philosophy held the key to answering the questions I’d unearthed — amidst an onslaught of external pressure — as my co-workers calmly demonstrated how to navigate the edge of chaos with grace.

Freedom and responsibility. It’s a common refrain amongst Netflix employees. But it goes beyond words mouthed by those who drink too much company Kool-Aid: the maxim is a self-organizing principle of the culture, an entire philosophy of management compressed into three concise words. Somehow the semantic relationship between these three words allows for their ever-adaptive expansion and application within the organization. Like a pair of magnets, freedom and responsibility can either attract or repel, relative to one another and their environment. Netflix has fused these forces into a guidance system and nurtures a culture that pays close attention to the readings. In doing so they’ve catalyzed the sustainable discovery and implementation of solutions to problems internal and external, across organizational scales, and over time. This is possible because the aphorism does not describe an inert rule; instead, it seeds a dynamic, self-refining, and self-balancing cultural process.

Reflections, Past and Future

“Countless words
count less
than the silent balance
between yin and yang”
― Laozi, Tao Te Ching

Netflix’s cultural balance of freedom and responsibility resembles another well-known framework of balanced duality: the Tao. Across millennia, while managing the development of complex societies throughout East Asia, humanity looked to “the path” of Taoism to guide its spiritual and cultural evolution. And the more I study this ancient philosophy and its applications, the less I’m able to write off as coincidence the many parallels between Netflix’s philosophy of freedom and responsibility and the Tao’s concepts of Yin and Yang. In fact I’ve come to believe they’re mirror images of one another. Both ideas encapsulate the fundamental structure of — and derive their power from — the evolutionary patterns of natural systems.

By tapping into nature’s evolutionary engine, Netflix differentiates its cultural core from most other organizations. Unlike the multitude of corporate maxims destined for ambiguity, impotence, and even irony (looking at you, Google), the guiding principle of freedom and responsibility retains its integrity, organizational value, and applicability over time. To explain this phenomenon in light of the structural relationships mentioned above, I’d like to share some ideas at the core of Taoism. And though the mapping between these philosophical tenets and organizational behavior resists concise explanation, I’ll outline a set of cultural axioms — embodied by both Netflix’s culture and Taoism — that provide fertile soil from which to grow healthy human organizations.

What are these axioms, and from where do they emerge? The principle of freedom and responsibility draws its power from three fundamental characteristics, each possessing a philosophical analog in Taoist philosophy:

Both place at their core the connection and tension between apparent opposites. With our intents and actions, we navigate this inescapable tension. For our purposes, we’ll refer to this axiom as intention in tension.
At once considering the connectedness and tension of opposites generates a fertile psychological matrix from which essential cognitive frames emerge. It’s these frames that determine the relevance of information to one’s goals — separating signal from noise. As thought travels the path between and around opposites, it traces a boundary delineating what one may safely ignore, and creation requires exclusion.
Both systems harness the power — and limit the dangers — of creative destruction. They gently nudge adherents toward a “middle path” that acknowledges both the value of extant organizational structures and facilitates their rejuvenation through painful sacrifice when necessary. Over time, this facilitates courage through wisdom.

Together these three characteristics reinforce one another, working in harmony at every layer of a culture — whether organizational or spiritual — to facilitate growth without succumbing to the pathological extremes of order or chaos. But if this all seems a bit abstract, don’t worry. From here we’ll turn to a brief overview of Taoism followed by an exploration of the axioms above. Each explanation will contain examples to help make concrete its contribution to both Taoist thought and Netflix’s unique culture.

Taoism and the Yin Yang

“Heaven and Earth — under its guidance — unite together and send down the sweet dew, which, without the directions of men, reaches equally everywhere as of its own accord.”
— Laozi, Tao Te Ching

Comprehension of the following explanations will require a passing familiarity with Taoist symbolism. For those unfamiliar, the yin-yang visually embodies the natural philosophy of the School of Yin-yang — an ancient school of thought whose ideas eventually grew into Taoism. As a whole, the symbol represents the totality of existence as such. Within its existential boundary we see that the universe is comprised of two opposing forces: yin and yang, represented respectively by the black and white fish-like shapes. Yet this opposition is not static, nor is it total: within each force resides the seed of its opposite. As time progresses and the forces encircle one another, they eventually trade identities, beginning anew the endless cycle of balance and imbalance.

Yin and yang are also polysemous — they may represent any duality one wishes, so long as the opposing forces in question conform to a general pattern. Because the polarity of this associative pattern emerged over millennia and therefore reflects subjective culture more than objective nature, concrete examples help to demonstrate its categorical contours. The Yin is often associated with nocturnal, lunar, aqueous, cold, soft, internal, receptive, and feminine qualities. In opposition, the Yang is diurnal, solar, fiery, hard, external, giving, and masculine.

To the Western mind — steeped in language of atomistic differentiation, taxonomic categorization, and the primacy of the objective world—the depiction of the universe as yin-yang can seem absurdly reductive. Though to think it reductive reveals a general misunderstanding of the symbol’s purpose, as well as one’s own bias with respect to the purpose of philosophical frameworks more generally. As we saw with freedom and responsibility, the power of the yin-yang does not lie within a single statement describing objective reality; no, its power lies in its ability to guide one’s pattern of subjective thought, given the subject’s objective environment.

Intention in Tension

All-pervading is the Great Tao!
It may be found on the left hand and on the right.
— Laozi, Tao Te Ching

It’s this same pattern of subjective thought that connects the yin-yang and Netflix’s culture of freedom and responsibility. Freedom and responsibility fit perfectly within the yin-yang’s framework of opposing forces. But why does this matter? In the case of intention in tension, freedom and responsibility create patterns of thought that regulate one’s behavior via their conceptual tension. Crucially, if each individual operates under the tension of freedom and responsibility, the organization as a whole can push a larger number of critical decisions outward, away from centralized executives, while retaining organizational coherence.

Consider a typical organization of Netflix’s size. Within it exist thousands of people, collectively making millions of decisions each day. All of these decisions must somehow cohere into a pattern that keeps customers happy, remains ahead of potential disruptors, and fends off attempts by competitors to eat into their market share. That’s no simple feat. And in search of a solution to such a complex problem, most companies draw their operational water from the cultural well of Western military history. A small group of executives identify “targets”, outline “plans of attack”, and put rigid processes in place to ensure strategies defined at the top are carried out with fidelity by the “troops on the ground”. Sound familiar? (As an aside, if you want to understand the prevalence of these tendencies within an organization, don’t ask its leaders: ask those doing the majority of productive labor.) No doubt a minimal degree of organizational hierarchy does more good than harm, but mathematics guarantees that as hierarchical organizations grow, they will increasingly fall prey to nature’s most pernicious adversary: complexity.

Complexity abounds in nature, and is itself not the problem. The problem arises when one wishes to persist or scale complex structures in the face of natural forces that prefer disorder to order. Unfortunately entropy is one such universal force. And because of entropy, the larger any structure grows, the more energy (in absolute terms) it requires to maintain the integrity of its structure and function, let alone adapt to environmental changes or plan ahead. In complex biological structures, nature solves this problem via the evolved coordination of top-down and bottom-up mechanisms for processing and transforming information into action. For example, we don’t need to tell our heart to beat, nor do we need to remind ourselves to pull our hand away from a hot pan we’ve accidentally touched. These processes can be sensed and dealt with locally, without conscious thought. That being said, the heart or hand alone can’t do calculus, and require the brain to guide higher-order behaviors which may prove useful in an increasingly complex environment.

It’s tempting to think that delegation fulfills this role within human organizations, that it’s analogous to the biological coordination above. But if we dig a bit deeper, we realize that’s not the case. Even in the calculus example, the brain has never explicitly declared writing to be the responsibility of the hand. No, the relationship emerged over time as a function of advantageously coordinated behaviors given environmental pressures. So long as one acknowledges evolution, it would seem that the same organizing principle must hold true for the relationships between all other parts of the body, at every scale, given that they were defined by precisely the same processes.

What might we say about such an organizing principle? Intention in tension seems appropriate. The functional and structural relationships between biological sub-components emerge from the tension between each part’s desire to pursue its specific needs — its freedoms — and the benefits conferred to the whole by coordinating its actions with the needs of larger groups — its responsibilities. To survive, an organism (or organization) must respond at every level of being to changing environmental pressures over time. And to the extent its parts can balance their freedoms and responsibilities, their intentions in tension, both the whole and its parts will thrive.

Creation Requires Exclusion

So it is that some things are increased by being diminished, and others are diminished by being increased.
— Laozi, Tao Te Ching

We now return, full circle, to the patterns of subjective thought with which we began the previous section. In light of our discussion concerning the emergence of cooperative biological structures, we see more clearly the forces guiding relationships between individuals, teams, and other groups within organizations. To the extent these parts of the whole pursue both their freedoms and responsibilities in the world, they must also decide how to act. But the requirement of action poses a problem: to act one must decide what matters; action mandates the prioritization of specific information and the exclusion of all else from current consideration. But what allows a person — or group of people — to discern the difference between signal and noise, to set a course of action when faced with infinite information?

Evolution solves this problem using heuristics. For simplicity’s sake, one may think of heuristics as mental shortcuts. Cognitive psychology reveals that we use these mental shortcuts constantly. Most of the time we act without thinking; instead we rely upon an unconscious track record of prior actions and outcomes given similar situations. For example, we rarely ponder the task of placing one foot in front of the other, nor do we contemplate how to pick up a glass of water to take a sip. These processes have become automatic. And like these automatic processes, much of the work we do each day also runs on autopilot. For example, how often do you consciously think before checking your email? Much of what your brain does, when you think about it, is search for new ways to not think about it.

It does so for two main reasons. First, evaluating all potentially relevant pieces of information takes an absurd amount of time. In other words, most of our overly-philosophical ancestors likely ended their careers as lion-food. Second, conscious thought and deliberation use more energy. So unless your thoughts produce value for you or your group (ideally both), you’re wasting resources. Both of these evolutionary truths apply equally to organizations within the economy. If you’re too slow, your competition will eat you. If you waste too many resources, you’ll run out of money and fail. Given the stark consequences of wasting conscious attention, it proves advantageous to develop the habit of ignoring as much information as possible, while focusing one’s conscious energy upon what matters. But what does this look like in an organization within which most decisions and actions remain explicit?

Both the Tao and Netflix’s culture of freedom and responsibility provide similar answers. The process of evaluating connected opposites in tension narrows the domain of possibilities to only those at the intersection of relevant information and pragmatic solutions. As one discusses a problem — with either oneself or a group — the framework of freedom and responsibility provides continuous constraints while also leading to new ideas. It’s amazing how few solutions allow for the maintenance of present and future freedom of action while remaining responsible to the obligations of the employee, of the team, and of the company. Furthermore, because the conversation resembles a process of unfolding discovery, it’s less likely that individuals will take offense to the exclusion of their ideas or monopolize credit for the end-result. Within the context of Taoist freedom and responsibility, conversations diverge and converge, cyclically, casting off irrelevant information and eventually settling upon robust solutions.

I like to visualize this process as planets orbiting the star of Tao, whose opposing forces of freedom and responsibility attract that which is both relevant and possible. Furthermore this gravitational attraction determines the system’s structure over time. Extending the metaphor, planets represent solved problems, brought into a stable orbit. As the system moves through the economic universe of potential problems, the vast majority will pass by, probed by the Tao’s gravity but lacking the properties required by this specific system. Some might compromise freedom, others might be irresponsible. A small portion of problems, however, are both solvable and relevant within the cultural framework; it’s these that gain the system’s attention — its attraction — until they too are solved and may settle into orbit with fellow solved problems. Occasionally cosmic interlopers play the role of black swan: disruptive asteroids and comets which explode prior solutions into a constellation of new internal problems, though they also free previously unavailable resources. In this conceptual cosmos, as in our own, we must pay attention; but survival depends just as much — or perhaps even more — upon knowing what to ignore.

Courage Through Wisdom

“A man with outward courage dares to die; a man with inner courage dares to live.”
— Laozi, Tao Te Ching

So far, we’ve shown how intention in tension encourages the emergence of healthy organizational structure and function. We’ve also seen that conscious action — otherwise known as creation — requires focused attention and the filtering of irrelevant information — less euphemistically put: exclusion. But to sustain health while responding to an ever-changing landscape, an organization must do more than develop valuable structures and take action: it must understand how to transform itself without destroying itself. And because transformation includes both creation and destruction, it must prevent this creative destruction from escaping beyond the boundaries of the desired transformation. This Promethean task is, quite literally, playing with fire; and to play with fire requires courage. But not just any courage will do. To play with fire sustainably requires the courage that flows from wisdom.

Furthermore, how might this courageous wisdom allow an organization to repeatedly navigate transformations that to outsiders appear all but magical? For example, in the year 2000 it was by no means obvious that an online lessor of DVDs would transform itself into one of the most technologically advanced companies of the 21st century. And again, in 2012 it was by no means obvious that by 2017 a video streaming service would create its own media empire and outcompete the world’s largest studios for talent. None of this was obvious, but it certainly required courage. And that courage flowed from organizational wisdom. All of which begs the question: from where does such wisdom flow?

The lazy answer is, of course, experience. Elders who would seek to extort status from mere existence push this idea, and find themselves resented by those with fewer years and more to show for each. Such charlatans are not wise, nor are they courageous, and few will follow them across the transformational tightrope once, let alone repeatedly. While helpful, experience alone does not generate wisdom. Here again, we may look to the Tao. To gain wisdom, one must first embrace the fundamental constant of transformation itself. Though this may sound easy, it’s anything but. Most — if not all — acknowledge the conceptual necessity of transformation. Obviously everyone wants to believe they’re prepared for transformation, but when the foreboding seas of meaningful change beckon, most cling fearfully to the shores of the known. Few make the painful sacrifices necessary to set sail. Conversely, wisdom also requires avoiding the opposing pathology of transformation for its own sake. This pathology often hides its uninformed disdain for all prior structure behind the mask of good will, and its forward-fixation belies an unhealthy attraction to the destructive spirits which hide behind creative facades. Therefore wisdom is born of the struggle between that which must change and that which must remain. So long as one maintains this balance in the face of adversity, wisdom grows within.

In English, “Tao” translates to the “Way”, or “Path”, a concept that maps well to the definition of wisdom above. Walking this middle path of transformation harmonizes one’s own evolution with that of their surroundings. And the longer one maintains this harmony — the further one walks in wisdom — the less one will experience fear when initiating necessary transformations or rejecting the unnecessary. In shedding this fear one discovers courage. It’s this distinct form of courage, derived from wisdom and unique to every individual and organization, that contains and harnesses the volatile engine of creative destruction.

Spirit Harnessed. Potential Unleashed.

“My words are very easy to know, and very easy to practice; but there is no one in the world who is able to know and able to practice them”
— Laozi, Tao Te Ching

As alluded to in the paradoxical quote above, it proves difficult to practice an evolving pattern of behavior while also attempting to know it explicitly. The moment one begins to codify successful patterns of past behavior into words and rules, the problems of present and future begin to slip through the cracks. Herein lies the primary weakness of most company slogans: once uttered they begin to die, eventually laid to rest as inert shells of their former selves — unable to animate action or inspire direction. Therefore, when shaping culture with language, one must surmount the challenge of encapsulating its vital essence without inadvertently killing it in its cradle.

Luckily we stand at the terminus of a rich cultural tapestry, woven across millennia. Countless generations of ancestors have torn hard-fought wisdom from the hands of the gods, and it’s our obligation — our responsibility — to carry forth that existential value. If we wish to revitalize the old and empower the new we must connect our ancient wisdom to present challenges, taking the time to look back while moving ever-faster forward. It’s no mere concept; when implemented correctly one feels the reverberations of historical wisdom in their bones. Echoing within our nature, one senses its power as fellow humans self-organize to solve complex challenges in ways previously considered impossible. When nourished it emerges, layer upon layer, upward from the tension within the individual’s mind and outward as an immaterial force, invisibly guiding the whole of humanity.

As we generate ever more information and seek the guidance of increasingly deterministic analytical tools, we amplify the risk of imbalance. We amplify this risk at our peril, as individuals, teams, companies, and cultures more generally. Hyper-analytic shortsightedness remains shortsighted, and by failing to understand the invisible cultural forces connecting us we jeopardize the potential within all we encounter. In an increasingly connected world, we must embrace strategies to help us to navigate the challenges of exploding complexity. And though many strategies will — and should — remain forward-focused, we cannot afford to forget the power of the wisdom we already possess. Discovering echoes of Taoism within Netflix’s cultural paradigm of freedom and responsibility presents one such example, but more exist. Their unlimited potential increasingly lies unharnessed beneath a crust of technologically empowered arrogance, and yearns to be unearthed by those with the courage and wisdom to look back before blindly moving forward. But with such powers unearthed and harnessed — with past wisdom and future potential in balance — I know of nothing that can stop the Human Spirit from fulfilling its awe-inspiring potential, from ascending to its divine purpose in the universe.

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If you’re curious (and still reading, for some reason), I worked at Netflix from 2013–15, before making the difficult decision to follow another path. I remain forever grateful to both my teammates and the company as a whole for the opportunity to work within and learn from such an unimaginably rare community of gifted, inspired, and capable human beings.