April 24, 2014

Netflix culture and the Core of Operational Excellence

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The slideshare below describes the core concepts that define the culture at Netflix.  First released in 2009, it provides insight into what co-founder and CEO Reed Hastings calls the “Freedom and Responsibility Culture”

There are several elements of the document that sound just like the ROWE movement that I discussed quite a bit on this blog last year.  Just as I found with ROWE, however, the Netflix culture manifesto fails to deliver a significant “Wow!” factor.  Why?  Because Lean and Operational Excellence provide a much deeper management philosophy that takes into account every aspect of either the ROWE or Netflix schools of thought, and then some.

Consider these 9 Core Values from the Netflix presentation:

 

  • Judgment
    • You think strategically, and can articulate what you are, and are not, trying to do.
    • You smartly separate what must be done well now, and what can be improved later.
  • Communication
    • You listen well, instead of reacting fast, so you can better understand
    • You treat people with respect independent of their status or disagreement with you
  • Impact
    • You accomplish amazing amounts of important work
    • You focus on great results rather than on process
  • Curiosity
    • You learn rapidly and eagerly
    • You seek to understand our strategy, market, customers, and suppliers
  • Innovation
    • You re-conceptualize issues to discover practical solutions to hard problems
    • You challenge prevailing assumptions when warranted, and suggest better approaches
  • Courage
    • You take smart risks
    • You question actions inconsistent with our values
  • Passion
    • You inspire others with your thirst for excellence
    • You care intensely about Netflix‘s success
    • Youcelebratewins
  • Honesty
    • You are known for candor and directness
    • You are quick to admit mistakes

All of that sounds an awful lot like some terms that are familiar to anyone with a knowledge of Lean:

  • Lead with Humility
  • Respect for Every Person
  • Experimentation
  • Seeking perfection
  • Constancy of Purpose
  • Deliver customer value
  • Achieve results 

To be certain, the slideshare below appears to demonstrate many of the common misunderstandings of what process is, or should be, and especially of what process means in the Lean context.  Nonetheless, there isn’t anything in this document that isn’t already a part of Lean philosophy, or that isn’t represented in the Shingo Model.  Even the stated distaste for process is met later in the document by a healthy awareness that good processes vs. bad processes actually enable creativity, not prevent it.

In spite of the supposed revolutionary nature of Netflix culture, however, what I am more inclined to believe is that Reed Hastings, like the creators of ROWE, has stumbled upon the same core operational Excellence fundamentals that have already been developed, practiced, and that continue to evolve in Lean.

View the presentation below and share your thoughts on whether or not this is Revolutionary, or simply the re-discovery of some universal truths that are already well incorporated into Lean thinking.

 

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  • Jamie Flinchbaugh

    No, nothing new here. But I think it’s important to recognize that paying attention to operational behaviors, the how-to of a business, is not just for old-school manufacturing firms. Technology firms like to think they just “do” and don’t need an operational process, culture, or skill. But the best have exactly that. They all aren’t “lean” and some probably fly in the face of lean, but at least they are focused on how to execute their strategy.

    On another note, I hate it when companies use Honesty or Integrity as a principle. Does that mean that you were hiring employees that needed this direction? Does that mean that alternative decisions were being made? To me, integrity is the unstated, must-have, non-negotiable. I don’t believe there is something called “business ethics”. There is just ethics.

    Jamie Flinchbaugh
    http://www.JamieFlinchbaugh.com

    • http://myflexiblepencil.com David M. Kasprzak

      Hi, Jamie.

      Thanks for your comments. I applaud Netflix for placing culture and what feels like a genuine Constancy of Purpose at the forefront of their operations. What strikes me as both amusing and sad, is how much companies that issue manifestos such as this one are applauded for being revolutionary or progressive, when all they’ve done is stumble upon the operational excellence principles that have already been well developed elsewhere. To my mind, this is an opportunity to educate audiences outside of the traditional manufacturing base on the benefits of understanding the core concepts of Lean, rather than celebrating the reinvention of the wheel.

      Regarding the need to make integrity a noteworthy attribute, I think there’s a strong element of PR at play. These presentations make their way to Slide Share and YouTube, and company Execs give interviews on them. I agree with your point and I’m willing to believe that, at least internally, integrity is the expected norm. Externally, however, such declarations have more to do with cultivating an image of the company than with defining operating norms. Come to think of it, if internal behaviors are entirely unethical, that would likely only increase the desire to make the external appearance more honest anyway.