Digital transformation, Entrepeneurship, IT is business, Office, Practical examples

How did Netflix reach the nirvana of ownership?

May 15, 2018

Netflix doesn’t have a CTO (Chief Technical Officer). Having a CTO would be a symptom of centralization of technical decisions. On Netflix they have just a CPO (Chief Product Officer), which is the chief for their products. Products and IT are the same. Netflix also is one of the most innovative teams on technology and value purpose on world. But how did they reach this point? What took them there?

 

Profiles and responsibilities

They were born this way. It was a mindset simple to keep while they were a startup in 1997. But this thought have been kept during the years even with company’s growth.

With a set of benefits to their employees, which can be translated simply on freedom for them to take the actions they think are needed, Netflix shares their actions on management and responsibility in their speeches. The main concern of a manager is to hire the best people on world. The main concern of all the employees is to take the best possible decisions, having all the company’s context available to rely on. Subscribers numbers, revenues, all the areas budgets are part of the routine information that the managers share with their teams. Managers require their team members to enroll to competitor’s hiring process at least once a year to ensure they are getting the money they deserve. There is no knowledge management also. When an employee leaves the company, their projects die with him. There are no junior, plenum or senior levels.

 

No rules

Netflix avoids rules and processes because they believe that when you tell people how to act, their creativity is restricted and it makes them to stop thinking on how to add more value to the company. It has a cost. It is common for hiring positions to take more than 6 months to be filled, because they require complex hiring process and high levels of subjectivity.

Having some benefits examples like:

  • Vacation time undefined;
  • Maternity leave time undefined;
  • Technical subjects budget unlimited;
  • Hardware and software budget unlimited;
  • No work plan definition: once you get hired nobody will tell what you have to do. You create your own project, work, finishes, tests, and goes to the next. At this point your manager can help you taking the decision if you want.

This freedom goes through only one restriction: act like Netflix interests.

This way the company, which is proud of saying that hires only the best possible people for their positions, and that has more than 4000 employees, reached a level of ownership hard to compare. Each one is responsible for their projects and has autonomy to define if it is useful to the company or not.

 

What does it generates?

It generates an incredible freedom environment for people to produce what they consider important. Once all the employees are the best in their areas, it is understood that they will have enough knowledge to take the best decisions. It generates more than 100 projects going on simultaneously from all company’s areas and being tested at every moment. IT projects can’t take more than 2 months to be finished. Each 2h one publication to production environment is made, and nothing is activated before going through A/B testing.

The great objective of ownership also is achieved because all of these conditions also have the intention to delegate power. Every Netflix employee must be capable of taking decisions without depending on endless validation processes or unnecessary opinions. Mixing freedom, responsibility and power is how Netflix reached and keeps his very high level of ownership among their employees and keeps being one of the most innovative companies since the moment it was created.

 

The model and how to learn with it

Compared to other companies on different acting areas, among the most traditional ones like industries and the most recent startups, Netflix reached his ownership through the joint of some things: almost unrestricted power, almost unrestricted freedom and seniority/maturity as a premisse.

This is a unique model that should not be pursued blindly, but used as inspiration to watch the disruptive way they found to manage their company

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