Patty McCord - Powerful: Building a Culture of Freedom and Responsibility

POWERFUL

Copyright 2017 by Patty McCord

All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, digital scanning, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law. For permission requests, please go to www.siliconguild.com.

Printed in the United States of America

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Distributed by Publishers Group West
Interior design by Tabitha Lahr

Library of Congress Control Number: 2017913094

ISBN (hardcover): 978-1-939714-09-1
ISBN (ebook): 978-1-939714-11-4
ISBN (international paperback): 978-1-939714-13-8

Published in the United States of America by Silicon Guild, an imprint of Missionday. Bulk purchase discounts, special editions, and customized excerpts are available direct from the publisher. For information about books for educational, business, or promotional purposes, or any other requests, please email:

Disclaimer: Although the author and publisher have made every effort to ensure that the information in this book was correct at press time, the author and publisher do not assume and hereby disclaim any liability to any party for any loss, damage, or disruption caused by errors or omissions, whether such errors or omissions result from negligence, accident, or any other cause. This book is presented solely for educational and informational purposes. The author and publisher are not offering it as legal, accounting, or other professional services advice. Neither the author nor the publisher shall be held liable or responsible to any person or entity with respect to any loss or incidental or consequential damages caused, or alleged to have been caused, directly or indirectly, by the information or advice contained herein. Every company is different and the advice and strategies contained herein may not be suitable for your situation.

Authors website: www.pattymccord.com

For my dad. The first true leader I knew.

A New Way of Working
Foster Freedom and Responsibility

The Greatest Motivation Is Contributing to Success
Treat People Like Adults

Every Single Employee Should Understand the Business
Communicate Constantly About the Challenge

Humans Hate Being Lied To and Being Spun
Practice Radical Honesty

Debate Vigorously
Cultivate Strong Opinions and Argue About Them Only on the Facts

Build the Company Now That You Want to Be Then
Relentlessly Focus on the Future

Someone Really Smart in Every Job
Have the Right Person in Every Single Position

Pay People What Theyre Worth to You
Compensation Is a Judgment Call

The Art of Good Good-byes
Make Needed Changes Fast, and Be a Great Place to Be From

In an executive meeting one day at Netflix, we suddenly realized that in nine months we would account for a third of U.S. Internet bandwidth. We had grown around 30 percent a quarter for three quarters in a row. At the time, we were still thinking that we might eventually be as big as HBO, but not for many years. Our head of product did a quick calculation of how much bandwidth wed need in a year if we maintained our current growth rate. He then said, You know, that would be a third of U.S. Internet bandwidth. We all just looked at him and blurted out in unison, WHAT? I asked him, Does anyone at the company know how to make sure we can manage that? He answered, with the honesty we always hoped for, I dont know.

In my fourteen years on the executive team at Netflix, we constantly faced such daunting growth challenges, sometimes existential ones, and in technologies and services that we were pioneering. There was no playbook; we had to make it up. From the moment I joined Netflix, when the company had barely launched, the nature of our business and our field of competitors evolved continuously and incredibly rapidly. Our business model, the technology that drove our services, and the teams of people we needed in order to execute had to do more than keep pacewe had to anticipate changes and proactively strategize and prepare for them. We had to hire stellar talent in whole new areas of expertise and fluidly reconfigure our teams. We also had to be ready at any moment to cast aside our plans, admit mistakes, and embrace a new course. The company had to perpetually reinvent itselffirst figuring out how to keep our DVD-by-mail business thriving while simultaneously throwing ourselves into learning how to stream; then moving our systems to the cloud; then beginning to create original programming.

This book is not a memoir of the building of Netflix. It is a guide to building a high-performance culture that can meet the challenges of todays rapid pace of change in business, written for team leaders at all levels. Netflix may be an especially stark example, but all companies, from start-ups to corporate behemoths, must become great adapters. They need the ability to anticipate new market demands and to pounce on remarkable opportunities and new technologies. Otherwise, the competition will simply innovate faster. Now that I am consulting with companies all over the world, from large blue chips like J. Walter Thompson to fast-growth newcomers like Warby Parker, HubSpot, and Indias Hike Messenger, as well as a number of fledgling start-ups, I see the wider landscape of challenge vividly. Its striking how similarand pressing the fundamental problems are. Everybody wants to know the same thing: how can they create some of their own Netflix mojo? More specifically, how can they create for themselves the kind of nimble, high-performance culture that has made Netflix so successful? Thats what this book is about: how you can draw on the lessons that we learned at Netflix and apply the principles and practices we developed to managing your own team or company.

Did we do everything right at Netflix? Not by a long shot. We had plenty of stumbles, some very public. And we didnt have a big aha moment about how to meet our challenges; we evolved a new way of working through incremental adaptation: trying new things, making mistakes, beginning again, and seeing good results. Ultimately, we created a distinctive culture that supports adaptability and high performance. I am not going to claim that tackling the challenges of rapid change is easy in any way or for anyone. The good news is that we found that inculcating a core set of behaviors in people, then giving them the latitude to practice those behaviorswell, actually, demanding that they practice themmakes teams astonishingly energized and proactive. Such teams are the best drivers to get you where you need to go.

Ive laced the book with stories about how we met challenges at Netflix, in part to make the book a lively read but also because they show how the methods we developed can be implemented. You will find the book somewhat unconventionalwhich, I hope youll agree, is appropriate for a book that is largely about defying convention. One of the pillars of the Netflix culture is radical honesty, something I have loved since I was a small child growing up in straight-talking Texas. If you watch any of my talks that are posted online, youll see that its my way to speak freely, and Im going to do so here. Please think of reading this book like engaging in a lively debate. You may be annoyed by some of what I say and find yourself pushing back on certain points. I hope youll also find yourself nodding emphatically in agreement with others. As I learned through many intense debates at Netflix, nothing is quite as much fun as a free-flowing intellectual sparring match, and I very much want reading this book to be fun.