This post originally appeared on Forbes.
From time to time, clients ask me to help them benchmark their culture and business processes against other companies. Sometimes it’s possible to compare processes, particularly if the activities are reasonably well-matched. But cultures are extraordinarily difficult to compare on an apples-to-apples basis: “Corporate culture can be a mushy marshland of vague language and incomplete, ambiguous definitions,” says New York Times bestselling author and INSEAD professor Erin Meyer. And yet, it can be incredibly productive to study various corporate cultures to mine them for ideas and opportunities.
Meyer is the co-author, with Netflix CEO Reed Hastings, of No Rules Rules: Netflix and the Culture of Reinvention, which examines the paths that Netflix took to arrive at its “freedom-and-responsibility” stance. “Take what you want and leave the rest,” a familiar suggestion from self-help programs and coaches, is also a useful premise for companies that want to get some of the benefits of Netflix’s culture even if they can’t—or don’t want to—be Netflix. Here are six ways to adapt and adopt some of Netflix’s practices.
Find ways to increase the talent of your team. Netflix’s approach to “talent density” or the amount of talent per employee starts with paying top dollar to acquire the best in the field. But as Michael Lewis argues in Moneyball, there are also undervalued resources available in the labor market if you know how to find them. You can also support and develop crucial “B” players to get more out of the talent you already have. Your organization may not be able to afford or attract the best in the field if you’re selling something more prosaic than entertainment, or if your success is not determined by speed to market. But regardless of your business model or product line, if your talent is weak, everything else will be falter too, so focus on how to build your team’s strength and depth.
Make a commitment to frequent, candid feedback. Meyer describes the Netflix ethos this way: “High performance plus selfless candor equals extremely high performance.” This perspective works best when leaders ask for feedback and demonstrate publicly that they accept and appreciate both the feedback and the people providing it. Not everyone thrives in what can feel like a combination of a goldfish bowl and a pressure cooker. But teaching skillful ways to provide and receive feedback pays off, particularly when you’re dealing with talented people who are committed to the organization’s purpose as well as their own success.
Know that you’ll pay for your talent and employee engagement mistakes one way or another. Netflix’s slogan is “Adequate performance gets a generous severance.” If you’re buying the top talent in the market and expecting greatness, it’s logical for you to show less-than-stellar performers the gate much more quickly than in many organizations—so the financial impact of tremendous severance is clear and concrete. Many organizations spend less on their people, in both compensation and exits, but never notice the costs of unachieved innovation and ongoing missteps. Identify the value your employees provide so you know if they’re costing more than they’re worth.
Recognize that organizations and individuals prefer different amounts of freedom and risk. It’s dangerous for an organization to espouse values that are inherently in conflict, Meyer notes: for example, error prevention and innovation require different mindsets, behaviors, and structures. Similarly, high performance often involves risk taking, so the desire for efficiency or job security could actually act as a counterweight to high performance. If leaders don’t agree on what is expected and rewarded, employees will end up confused, stressed, and disengaged. Clarify your ethos if you want people to adhere to it.
Commit to your context and communicate it unceasingly. What are the fundamental tenets of your organization? Do you pride yourselves on being like a family that leaves no one behind? Are you a community that serves all its stakeholders, including employees, customers and shareholders? Or, like Netflix, does your company apply a professional sports team model in which it is normal and beneficial to trade players constantly to get the best outcomes? When your context is consistent and well understood, it’s easier to maintain. But if the “normal” rules are bent for special people, eventually the organization will tacitly expect that those rules will be bent for everyone. “An individual performance problem is not an individual performance problem,” Meyer explains. “It’s a systemic problem that impacts the entire environment. It’s no longer about you and that individual; it impacts the way that everybody behaves.”
Take small steps to modify culture successfully. Meyer recommends taking “a little step toward talent density, a little step toward candor, and then a little step for freedom. And then you do it again. And then you do it again. And then you do it again.” Shifting one part of the system applies pressure on the other aspects. The better your talent is, the more likely they are to tell the truth about what’s working and what’s not working, which means you can trust them with more responsibility. But if the changes are not in balance, you might throw the whole system out of whack. When employees aren’t competent or feedback isn’t skillful and readily given, serious mistakes can occur.
It can be very tempting for leaders to observe another company’s success and declare the business equivalent of “I’ll have what she’s having.” But successful cultures are built through participation, with plenty of free-flowing communication about what matters and how well things are going. Applying these six approaches can help you highlight what you want to accomplish and how you want your organization to be, so you can attract the right talent and make an impact in the marketplace.
Onward and upward —