No Rules Rules: Let's define the stunning employees

About this book

Netflix cofounder Reed Hastings reveals for the first time the unorthodox culture behind one of the world's most innovative, imaginative, and successful companies.

My thoughts

This book explains you should hire stunning employees, and then you can erase rules. The following sentence is particularly impressive:

As a CEO, you should not make decisions. Instead, your employees should. However, if your employees bring a plan that seems to fail, what will you do? If you reject it, your employees will lose their motivation. In this case, ask yourself four questions:

  • Is she a stunning employee?
  • Do you believe she has good judgment?
  • Do you think she has the ability to make a positive impact?
  • Is she good enough to be on your team?

If you answer NO to any of these questions, you should get rid of her. I realized that this is the reason why Netflix is a superior company. There are only a few friends around me who exceed the bar. I thought it would be interesting to start a business with excellent friends.

Additionally, I have decided that I should take rest more than before. Because the employees at Netflix take enough rest while making a big impact on the earth. They also said the holidays make them more creative. I should take more time off.

» No Rules Rules (Reed Hastings)

My highlights

Build up talent density. At most companies, policies and control processes are put in place to deal with employees who exhibit sloppy, unprofessional, or irresponsible behavior. But if you avoid or move out these people, you don’t need the rules. If you build an organization made up of high performers, you can eliminate most controls. The denser the talent, the greater the freedom you can offer.

If you have a team of five stunning employees and two adequate ones, the adequate ones will sap managers’ energy, so they have less time for the top performers, reduce the quality of group discussions, lowering the team’s overall IQ, force others to develop ways to work around them, reducing efficiency, drive staff who seek excellence to quit, and show the team you accept mediocrity, thus multiplying the problem.

You may not always remain silent. But often you do—and when you do, it’s likely to be because of one of the following reasons: You think your viewpoint won’t be supported. You don’t want to be viewed as “difficult.” You don’t want to get into an unpleasant argument. You don’t want to risk upsetting or angering your colleagues. You’re wary of being called “not a team player.”

Here are a few more telling statistics from the same survey: 57 percent of respondents claim they would prefer to receive corrective feedback to positive feedback. 72 percent felt their performance would improve if they received more corrective feedback. 92 percent agreed with the comment, “Negative feedback, if delivered appropriately, improves performance.”

Your behavior while you’re getting the feedback is a critical factor. You must show the employee that it’s safe to give feedback by responding to all criticism with gratitude and, above all, by providing “belonging cues.” As Daniel Coyle, author of The Culture Code, describes them, such cues are gestures that indicate “your feedback makes you a more important member of this tribe” or “you were candid with me and that in no way puts your job or our relationship in danger; you belong here.”

FEEDBACK GUIDELINES Giving Feedback AIM TO ASSIST: Feedback must be given with positive intent. Giving feedback in order to get frustration off your chest, intentionally hurting the other person, or furthering your political agenda is not tolerated. Clearly explain how a specific behavior change will help the individual or the company, not how it will help you. “The way you pick your teeth in meetings with external partners is irritating” is wrong feedback. Right feedback would be, “If you stop picking your teeth in external partner meetings, the partners are more likely to see you as professional, and we’re more likely to build a strong relationship.” ACTIONABLE: Your feedback must focus on what the recipient can do differently. Wrong feedback to me in Cuba would have been to stop at the comment, “Your presentation is undermining its own messages.” Right feedback was, “The way you ask the audience for input is resulting in only Americans participating.” Even better would have been: “If you can find a way to solicit contributions from other nationalities in the room your presentation will be more powerful.”

Perhaps his message was even actionable. But he still came across as a jerk because he also broke part of the first candor rule, by giving feedback to get frustration off his chest. Following other general critical-feedback guidelines—such as “Never give criticism when you’re still angry” and “Use a calm voice when giving corrective feedback”—could have helped too.

TAKEAWAYS FROM CHAPTER 2 With candor, high performers become outstanding performers. Frequent candid feedback exponentially magnifies the speed and effectiveness of your team or workforce. Set the stage for candor by building feedback moments into your regular meetings. Coach your employees to give and receive feedback effectively, following the 4A guidelines. As the leader, solicit feedback frequently and respond with belonging cues when you receive it. Get rid of jerks as you instill a culture of candor.

When Neil left on vacation, often he went to an isolated place. Each time he came back he had a fantastic new idea for how to move the business forward. Once he and his wife took ice saws to the northern Sierra Nevada mountains and spent a week sleeping in igloos. When they returned, Neil had dreamed up a new mathematical algorithm to improve the way we select the movies to offer our customers. He was living proof of why companies benefit when their employees take vacations.


If the CEO is taking only two weeks’ vacation, of course his employees feel the unlimited plan doesn’t give them much freedom.

he takes six weeks of vacation a year, and from my limited experience, I would add “at least.”


“The amazing thing was to sit with you all day long and see that you didn’t make one decision!”

“Did you have elements you wanted to discuss? It’s your decision, Paolo. Is there something I can do to help?” It was one of those light bulb moments: I got it! At Netflix, if you share all the context of your decision, you’ve done the groundwork. You don’t need approval. It’s up to you. You decide.

If Sheila comes to you with a proposal you think is going to fail, you need to remind yourself why Sheila is working for you and why you paid top of the market to get her. Ask yourself these four questions: Is Sheila a stunning employee? Do you believe she has good judgment? Do you think she has the ability to make a positive impact? Is she good enough to be on your team? If you answer NO to any of these questions, you should get rid of her

The difference is the decision-making freedom we provide. If your employees are excellent and you give them freedom to implement the bright ideas they believe in, innovation will happen.

Smith, however, was an entrepreneur, and that Yale paper became the basis for FedEx, which he founded in 1971. He was also a betting man: once, in the early days of FedEx, after a bank had refused to extend a crucial loan, he took the company’s last $5,000 to Las Vegas and won $27,000 playing blackjack to cover the company’s $24,000 fuel bill.

» No Rules Rules (Reed Hastings)