Host Reed Hastings and erin meyer are the coauthors of this new book no rules rules, netflix and the culture of reinvention. Mr. Hastings is also the ceo of netflix and mr. Hastings what is netflix and what do you do . Guest netflix is the worlds leading Entertainment Service and we reproduce and distribute amazing Television Series and movies and around about 20 years and have been 200 million families around the world who are our renters. Host is there a connection to the 1998 company where you had 900 movie titles and 30 employees . Guest a little connection to that. We started 22 years ago delivering dvds in the United States and competing with blockbuster and that was a full decade ago really that we were competing with video stores just in the u. S. When thats 2007 when we started streaming. Roughly the same time youtube did. Host erin meyer, how did you get involved in this book project . I study cultural differences in the workplace and im a School Professor and i came across the netflix culture when i reed that many people have the netflix culture and the definite that reed put out on the internet and it was quite shocking when i reed it. It said things like adequate performance gets a generous severance and that shocked me because in my department and my Division School i teach at we were at that time focusing on psychological in the workplace to create and promote innovation so here i had company that was not focusing on psychological but focusing on getting rid of people who do not perform adequately. There were other things like the fact they had no vacation policy, no travel policy and things that got me thinking about how culture like that could work or an organization. I worked with reed and did research and thats when i saw there was Something Interesting for the world to learn from this company. Host your book the culture map is the one that connected you to, correct . Guest absolutely. I was fortunate enough to be recommended the culture map by a friend and i reed aarons first book and its an exploration of the different cultures for the corporate situation so the koreans in the french and them mexicans and the americans and it spoke to the challenges that we had internally at netflix so its a fantastic insight and so then i looked erin up and asked her to be a speaker for internal conferences that we had at netflix and then i realized she would be the perfect one as a chronicler observer and an astute observer of culture to write the book and the point of having a coauthor is, you know like many people ive reed a lot about ceo pontification books and every time i reed them and wonder what its really like. We wonder what its like in the middle of the company. We put erin in and how she has her own reputation and professor and open access to interview over 100 netflix throughout the world and let her reed about the reality. The mobility of the book comes from that attention between me doing the theory and erin talking about the reality as an employees experience it. Host erin meyer, you were pretty aghast when we hastings sent out in unfinished draft of a chapter, were you to employees . Yes, im sure reed is not happy to hear about that again. [laughter] one of reids leadership tenants is the importance of being transparent with your employees and you know, i learned in my time at the interviews that level of transparency is way beyond what you find at most companies and that is spearheaded by reed. One of the experiences i had was that i worked at length on this chapter but was nowhere near finished when i sent it to reed because to start working on it and a couple weeks later i was doing interviews at the netflix Amsterdam Office and what does the netflix employee said to me said when i was reading the chapter that you wrote and i was like what . He said oh yeah, reed some that chapter out to the managers at netflix and i was like all the managers . [laughter] i found out when they talked about transparency he means youre helping everyone see whats going on even before its finished. Host you are quoted in the book is saying i love the next six culture for his honesty and low budgets for its content. Yet, that was my first reaction before i started doing the interviews and understanding netflix. I think that is one of the reasons that reed was interested in having me get involved was that provided this tension of my reaction to this controversial principal and that his belief as to why that Corporate Culture would lead to success. I mentioned feeling shocked about the adequate performance gets a generous severance but that middle part of the deck which is about candor and what it says with some says dont say about someone what you wouldnt say to their face. Of course, you know, most of us spent time at work talking about people so i just couldnt imagine how that could play out in a Work Environment and then i got to netflix and started to see it in action. Host what are some of those advantages . I will give a personal example. One of the first things i did with reed and his team was give a presentation at one of their Leadership Conferences in [inaudible] at the time and i was doing the key night and all the Vice President s and directors in the company were there and i thought it was going well because i was working with new content but they seemed really engaged and then it was time for me to get to the modal activities and i got down from the stage and started Walking Around in one of the women who was having a discussion, an employee, was talking with great hand gestures and when she saw me she beckoned me over and said to me in front of her group she said to me in front of her group erin, i was just saying to my colleagues here that the way youre presenting this information is undermining your point because when you ask the group for questions its only the americans who raise their hands and therefore were not getting diversity. And she said i dont think we can take this to heart given the poor delivery you are giving. I was like oh my gosh, someone is giving me feedback right in front of this keynote and then i had three minutes to think about how to reorganize the structure of the discussion when i got on stage and i did it differently and i think that candor saved the presentation so thats what we see with this candor at netflix is that sometimes it hurts and feels inappropriate but it almost always helps improve performance and thats fantastic. Host Reed Hastings, what caught me about that part of the book was why were you holding a conference in cuba . [laughter] guest we were expanding globally and that was a symbol of we want to entertain people everywhere, including cuba. Host and do you have a real presence in cuba . Unfortunately, in the last four years this was five years ago that cuba conference the hopes of opening up the internet to cuba finished. We were on her way to a great presence there which we have a very strong presence in brazil and mexico and many other latin countries but not yet cuba. Host in the book no rules rules talent density is referred to often so what is that . It comes from the insight that accomplishing something hard used to have ten amazing people who work well together then 20 not so good people who dont work well together but if you could combine people who are there and very talented and could use skills then a small number can be very effective and thats talent density. Host erin meyer, isnt it first of all when you hear the word Corporate Culture what you think about. Was first about culture differences and i wasnt interested in researching Corporate Culture until i came across this country because every country nominate that i looked at the Corporate Culture is a list of aspirational dreams as to what we like this company to be like and we believe in integrity or we believe in respect and it seemed like we dont have a life in the company and with netflix and reids way of explain the culture was instead he was helping to do decisions during the day by looking at those trenches talent density and feeling secure at work and that it was only when you help people deal with these tensions that the Corporate Culture would come alive in the organization and that is what i saw with netflix that right here one of the first ever accompany wear what they say is there Corporate Culture is [inaudible] host good this culture be taken to a fourdoor agm and implemented their . Guest thats a great point. We had 200 years of factories providing Enormous Economic gains to our cultures and the factory from a topdown system you have all the workers who are never supposed to make a mistake and assemble the perfect car or perfect pharmaceutical or hopefully a perfect airplane and so, the manufacturing paradigm is very strong because its very valuable and that topdown culture is wellsuited to a factory. Then you have Creative Work and it used to be small but now its a substantial part of the economy and were over influenced by the factory paradigm. With Creative Work you want to increase variation, not decrease it like in a factory. In creed of work you want to experiment and learn and try many things and its fluid and think of it as [inaudible] you want clinical perfect repeatable stuff in a factory and in a creative environment you are more leaning on the edge of chaos to get the best idea. Again, as the Creative Center has risen havent figured out what is it like or what are the right paradigms for creed of work in the netflix culture, one example where its really incredibly employee freedom where there are no rules. That is hard to manage because youre managing on the edge of chaos you have all these common saving systems about culture and context and their very helpful but think of it as a set of paradigms wellsuited to created work and our culture is not suitable for safety critical work when manufacturing work in the beginning of new paradigms for Creative Work. Host writing a book is using a rather old medium to put your ideas down, isnt it . Guest we first publish these ideas online on slide to share have been over 20 million views of that. But we very much are in the new format but we wanted to do a book length treatment where we took the time to edit and write out the stories and re edit in a highly polished, well thought through version of the story and those who have reed the culture memo would see a much fuller explanation of why and where it works. Host erin meyer, after your indepth study of netflix where are your criticisms . Before i moved there, i may build on what reed was saying because you asked about whether theres this place for this culture in ford or more traditional Manufacturing Company and what really struck me like i was doing this research and netflix was that any area of any company that is seeking to be more innovative or more flexible or trying to figure out how to reinvent themselves more quickly can benefit from these principles that reed is using at netflix. Might be working and i was working this morning with michelin tyrus and safety critical manufacturing environment but certainly there are areas of that company that are focused mainly on innovation. I do think any organization and team leader and anyone who wants to get more innovation can learn from this creating this fertile environment that reed was talking about. You asked about criticisms and of course one of the things about doing something edgy like this is there are always some difficulties that go with that. One big thing that comes up is that of course if we only have focused on talent density than some people are nervous about whether they will lose their jobs and then theres thinking about that netflix and how to reduce that sort of worry while taking advantage of this talent density. Host you have a story in the book comparing npr being a family to netflix being a team. Thats right. Reed is better to talk about that but whereas most Companies Think about their organizations as they seek to think of their organizations as families like we have longterm security and we put up with one another even when we have bad behavior and an olympic team is more what reed is going for at netflix which is that we try to get the best in each spot at any moment and that might be changing per year or month by month. Host mr. Hastings. Guest i totally agree with what mr. Hastings with erin said. We are a family and it makes people cynical because they intuitively know that the family will stick together in a family we had meyer, a good family will stick together no matter what. Its just not the way corporations work. Host in your book no rules rules you right that employees are not allowed to let me drive his company off a cliff. What does that mean . Guest thats from an early quote with my coceo who was choosing how many dvds to buy for a certain film and i said i dont think that will be a popular film and he order less than he would have and we ran out and customers were unhappy and when i said why did you order so few he said you said it wasnt going to be popular and thats what i said hey, you have to do what you think is right to help the customers and the company and you cant be trying to please your boss, me, youre not allowed to let me drive the bus off the cliff you have to fight for the benefit of the company. In general we say dont seek to please your boss but seek to please the customers and to grow the company so we want people to actively think independently, not just to implement their bosses wishes. They shouldnt hide anything from the bosses and certainly they should tell them but they will [inaudible] how do we best grow the company and if they do you get the tremendous results that weve had over the last 20 years. Host mr. Hastings, you are founder of the company, stockholder, ceo and you say you dont have an office at netflix but at the same time there is some inherent qualities there that will make people do what you want. Guest sure. I lead by direction, example and i talk about what is important like customers and how they want to relax after a hard days work and sometimes they want to laugh and other times they want to be pushed in terms of the content they watch. You know, i try to bring the Customer Experience home to our employees and talk about culture and its not that i dont want some things but that we want everyone to also want things and then in those conflicts or disagreements a lot of good things come out of that. Host erin meyer, is it tough for a ceo, in a sense, to let go of that control . It is interesting process that reid has implemented because on one hand reed is very strong opinions like Anyone Running a company does and on the other hand he has strongly made it clear throughout the company that he wants people to be clear with him when they disagree with him or when they have a whole thing that [inaudible] all about you are disloyal to the company if you feel this agreement for what the organization is doing or your boss is doing and dont express that disagreement so you are asking reed earlier about what people dare to get in his face given the level of power and his company and its unworkable how frequently people do get back because he celebrates it whenever it happens. Host mr. Hastings, how do you define your job today and how much time do you get to just think . Guest i get a lot of time to think and nights and weekends. The traditional work hours i tend to be in meetings and talking with people and trying to understand what they are working on, talking through, you know, various situations in certain countries and getting the content makes right so i want to be higher really informed and know whats going on all throughout the company and then i dont reach in and say lets ask this person instead of that person and if i detect too many men i would say its probably not limited to one area and i would try to abstract that a little bit and go to the principles of it which is theres a broad range of storytelling and we should have a broad range of storytelling and get to the underlying rather than fixing the tactic. Im always trying to be a teacher essentially an abstract what i see but to do that i need to be highly involved and know what is going on about the company so that is the recipe essentially. Im always trying to fill the organizational muscle rather than skip a particular problem. Host question for both of you. As the geographical area of Silicon Valley important in dispensable to what you do . Guest it is one of many indispensable areas and the culture and i, a no come out of the Silicon Valley culture but at this point its a fraction well less than half of our employees are so and its super important to what we do but two thirds of our spending is on content we have a majority of employees in hollywood so we are an Entertainment Company that of course like all companies that are tech powered in some ways disney is coming at it from the other side which has been Super Entertainment and they have pixar and animation and now they have disney plus so all the Entertainment Companies are tech infused. Host erin meyer. I will add to that. When i started working with netflix they were just getting ready for this enormous National Expansion which is quite interesting for me studying National Culture defenses and they were 2016 moving all over the world to one of the things we write about in this book that i was very interested in researching was how this provocative and surprising Corporate Culture that was leading to this ignore ms. Innovation flexibility could be implemented in countries around the world like in japan, singapore and brazil. We really talk in the book about how to take your Corporate Culture which