The Netflix Brand of Agile

By Bennie Covington

Powerful: Building a Culture of Freedom and Responsibility by Patty Mccord offers a compelling playbook for any organization seeking to grow and innovate in today’s fast-paced business environment, where rapid-fire consumer demands and continuous cycles of product iteration are the day-to-day norm.

Powerful is an important read for company leaders wondering if or why their Waterfall company structure is failing them, and whether they can find success via Agile transformation. In Powerful, the Netflix case study speaks volumes about how an Agile culture can challenge and change any workplace — and it just might alter the way you approach your own business.

Within the course of eight short chapters, whose titles provide vignettes for broader principles (“Treat People Like Adults” is one; “Practice Radical Honesty,” another), McCord constructs a framework with which to “build a culture of freedom and responsibility” in the workplace. Encapsulated therein are four principle tenets:

Implement a consistent yet flexible structure that fits your company’s needs.

In Dr. Ranjay Guliati’s recent Harvard Business Review article, “Structure That’s Not Stifling,” he lays out the case for a simplified company structure over pages of corporate protocols and policies. Summarizing his solution to the balancing act between employee freedom and operational control, Dr. Guliati writes:

“By giving people a clear sense of the organization’s purpose, priorities, and principals — that is, a galvanizing framework — leaders can equip them to make autonomous decisions that are in the company’s best interests.”

Netflix’s free-flowing and adaptable approach to management and organizational development — which Guliati later references as something of a gold standard for corporate structuring — provides such a framework, and Powerful provides an account of what makes it so effective.

I’ve found that many executives, whose corporate bread and butter have been rigid waterfall structures and whose MBA curricula have taught that organizations subsist off of hierarchy and incentive-based protocols, often assume that Agile workplaces breed anarchy and chaos. Yet McCord demonstrates that — even for a multinational like Netflix — this is not so. Chaos, as she demonstrates, does not create an inevitable death spiral, but instead begets new opportunities for innovation. Giuliati confirms that by relying on a “framework,” companies can loosen their rulebook while still maintaining control over company values, employee culture and project outcomes.

Establish a culture from the top down.

Naturally, such a framework will never be successful without total buy-in and involvement from the organization’s leadership. And the company’s vision, driven by its leaders, provides the platform upon which any framework is built. Netflix’s vision revolved around fluidity, iteration and evolution — exemplified through its leaders’ decision to re-brand as an exclusively online entertainment powerhouse. McCord attributes the success of this transformation to the open channel of communication maintained between executives and employees. “People need to see the view from the C-suite,” she writes, “In order to feel truly connected to the problem solving that must be done at all levels and on all teams.”

Her insights ring true: the opaque bubble surrounding the executive level has burst — and all can benefit from responding to the employee demand of increased transparency within our organizations.

Give HR a seat at the table

Powerful is a triumphant testament to the power of HR to harness employee potential and shape organizational culture. McCord summarizes the matter cogently: “If you hire the talented people you need, and you provide them with the tools and information they need to get you where you need to go,” she argues, “They will want nothing more than to do stellar work for you and keep you limber.”

Although an organization’s C-suite sets its overall cultural tone, these notes fall flat without on-the-ground enforcement. That’s where HR comes in. “I left behind traditional HR,” McCord explains, “And took on a new role as the COO of culture and the chief product manager of people.”

Consider customer demand your most important decision-making factor

Perhaps McCord’s boldest argument comes in her emphasis that everything an organization says and does — from the way it defines success to how it decides whether to hire or retain employees — must be understood as a direct response to its customers’ needs.

Today’s companies and employees are asked to possess near-psychic degrees of insight regarding forthcoming market trends, and make good on every opportunity to capitalize on consumer needs. Far from bemoaning this as an insurmountable task, McCord celebrates the necessity for such an intuitive understanding of consumers’ desires.

Think of your company like a sports car. That car’s effectiveness is determined by four features: a sleek, aerodynamic structure — framework to set you up for success; fuel — motivation and support from upper level management packaged in an organization-wide vision; a driver — the HR department making critical talent decisions and feeding the culture on the ground-level; and, certainly not the least of all, direction — your destination is a deliverable that supports the customer in the most valuable way.

That’s the Powerful way, or put more broadly, the agile way.

Conclusion

For its many strengths, Powerful is not without limitations. The nature of an organization like Netflix lends itself to an especially ideal playing field for a-typical operations. Born on the right side of the Internet Age, Netflix was saturated in an industry of early Scrum adapters, who saw the value of a framework operations model for setting clear priorities and goals, approaching work iteratively to better hit deadlines and responding quickly to exceedingly rapid demand.

Additionally, its industry, name-recognition and, in its later years, notoriety for being a great place to work and a “great place to be from” (another vignette from McCord) is a unique trifecta for collecting incredible talent, which is not available in every stage of an organization’s business lifecycle. Like company trips to the Sundance Film Festival or employee debates staged in on-site movie theaters, what McCord outlines when it comes to talent recruitment and retention may initially feel discouraging to business leaders in more traditional industries or smaller companies where the current business model may feel far off from their agile goals.

McCord argues emphatically for hiring only “perfect fit” talent, to the point of continually re-evaluating current employees to see whether they’re upholding the evolving corporate vision. I don’t disagree with her; however, this approach may not be the best option for organizations less favorably positioned to recruit the best of the best. Good talent does not (and should not) come cheap.

Other major innovative companies, including IBM and AT&T, have recently proven that investing in and educating employees to help them adapt to an organization’s changing needs is neither a dated nor an ineffective option. This strategy has the added benefit of actively imparting value and adding to employee responsibility over time and is worth consideration as well for evolving culture through talent.

Powerful is — as its title suggests — a powerful tool. It’s a strategic reference guide for the agile-skeptics and the ready-to-learn alike. I would encourage anyone who reads it not to fear the idea of creating their own cultural framework from scratch. Agile frameworks, like Scrum, have been pre-designed as rule-free, adaptable structures for increasing organizational agility.

The future is agile, and the best way to stay afloat is to waste no time in creating the organization today you hope to be in the future.

Bennie Covington is the Director of Talent and Organizational Development at Scrum Alliance, the largest professional association of Agile professionals.