Yesterday, I listened to the first episode of the Recode by Vox podcast, Land of the Giants: The Netflix Effect. The episode focuses on Netflix's vaunted corporate culture. Many of you have probably read a great deal about the Netflix culture and the famous slide deck describing its tenets and values that circulated widely on the internet for years. This episode takes a comprehensive, balanced look at the culture, highlighting its strengths and limitations. I found one particular aspect quite interesting, given my work on decision making. Here's an excerpt from a description of the episode by Recode/Vox:
Another tenet — “farming for dissent” — came out of one of the company’s biggest failures. You might remember it as a punchline: Qwikster. The short version: In 2011, Hastings wanted to move his company from its core DVD-by-mail service to online streaming, which was growing quickly but was still a smaller part of his business. So he tried splitting Netflix into a DVD business and a streaming business named Qwikster. Which meant that if his customers wanted the same services they were already getting before, they would have to subscribe to both and end up paying 60 percent more. Netflix veterans still wince about the experience: The company was skewered on social media and by SNL. Its stock dropped 70 percent, and more than 700,000 people canceled their subscriptions.
Eventually, Hastings admitted that Qwikster’s name, the price hikes, and the way the company talked about it all had been a huge blunder. He rolled back the changes. But in Hastings’s narrative, the failure was useful for Netflix’s culture. He thinks that many of his top employees could have told him he was wrong but were too afraid or at least too in awe of their CEO’s former successes to say anything.
“Everyone knows the tale of the self-absorbed, arrogant CEO who doesn’t listen. And there’s an element of that, because we have been so successful at so many things before that,” Hastings told us earlier this year at Netflix’s offices in Los Angeles. “But the more subtle one is that I had been so successful before that most of the executives thought ... ‘But Reed has been right on so many things. I’ll bet he’s right on this one. And I’m just not seeing it.’”
After the debacle, Hastings instituted “farming for dissent,” a formal practice where employees are supposed to run their big ideas by colleagues and have them tell you candidly — on a Google Doc that’s open for everyone to see — what’s wrong with it. It’s considered integral to the company that your coworkers tell you what they really think of your idea, even if — perhaps especially if — you’re their boss.
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