I make mistakes. I make mistakes all the time. We make mistakes. We make mistakes as parents and as business owners. In fact I would go as far to say that both pursuits are just a series of learning from your mistakes so you can make new and better ones. If we haven’t fucked something up in a while it normally means that we havent done anything in a while. Being a business owner, parent or human involves taking risks and statistically most of them will probably miss the mark. All of them however will better inform you on what to do next time.
You’ve got to make mistakes to innovate and highly innovative companies are more successful than companies that resist change. Over the last few weeks I’ve been learning about Netflix company culture in my new favourite business book No Rules Rules, Netflix and the Culture of Reinvention by Reed Hastings and Erin Meyer. This is one of those books that I’ve almost entirely read outloud to Matt because I’ve found the fostering of innovation within their business so inspiring.
Innovation is one of those business buzzwords that is kicked about in companies mission statements but is very rarely supported by the actions of the business. Reed wanted to change all that at Netflix because he understood that they actually needed to innovate. They needed progressive, strong and risky ideas if they wanted to move and adapt as fast as they needed to.
A few things happened. First, in the early days Netflix had to cut a bunch of staff because they couldn’t afford to keep everyone on. The staff dropped from 120 down to 80 and only the most talented people remained. Reed was worried this would cause huge problems as some co-workers were fired while others remained but the reverse happened. Productivity and morale increased because you had a bunch of people who were at the top of their game all working together. Removing the mediocre talent created a higher talent density.
Next step was to encourage and celebrate candour. People have to be able to speak their minds. When you have top talent holding back because they don’t want to upset their boss you stifle innovation. Reed encouraged EVERYONE to speak up and encouraged management in particular to thank staff for their feedback.
With all these talented people keeping each other in line Reed was able to remove controls giving his staff more freedoms and responsibility for themselves. At Netflix there is no vacation policy or travel and expense approvals. ‘Act in Netflix's best interests’ is the travel and expenses policy. If people abuse it, they’ll get fired and made an example of but otherwise, Netflix trusts their staff.
Having built up a culture of freedom and responsibility the next step was to create transparency. For employees to work in your best interest they need to know what's going on behind the scenes. P&L statements are distributed regularly and staff are taught how to read them. When there is a reshuffle coming up, Netflix talks to staff about it before any decisions are made rather than once they’ve been made. This approach treats employees like actual responsible adults who matter.
‘Whisper wins and shout mistakes’ is one of Reed's famous sayings. At Netflix they openly discuss when something goes wrong. This really resonated with me as a small business owner. Standing up in front of your team and admitting that you made a bad decision feels like an opportunity for your team to lose faith in you but if you’ve built up that candour and respect then it can strengthen the relationship. This is because people aren’t stupid. When shit goes down at work, pretending that everything is cool and trying to save face is lying to them. People can see right through it.
Personally I’ve found that I connect quicker to people to admit something ‘human’ about themselves early on. The kids are a great example. I find people who constantly talk about how amazing their children are to be hard to connect with. The moment someone admits that their kids are jerks (in the most loving way) I feel like a barrier has been removed and we can talk openly about being a parent.
In a professional capacity when people talk about how they found something hard or challenging I instantly connect with that feeling. Being vulnerable and honest can create stronger bonds quicker in the right circumstance. There was a study about telling people the truth when they aren't trusted and the opposite happens - people start to think less of you so it is important that there is a foundation of trust to begin with before you go publicly announcing all of your mistakes.
I’m obviously quite open about sharing the mistakes I make - this blog is a great outlet for that. Writing them down helps me process them and find that lesson that all mistakes leave in their wake. I’m yet to finish No Rules Rules but it's one of the first books I’ve read in a long time that explores a fundamentally different approach to company culture. It ultimately treats your team like adults that you trust, respect and want to keep around. No wonder Netflix is one of the biggest and most successful companies on the planet!
