The Learning Leader Show With Ryan Hawk - 414: Erin Meyer - How To Build A High Performance Culture (No Rules Rules)

Episode Date: April 11, 2021

Text LEARNERS to 44222 to learn more... Full show notes at www.LearningLeader.com Twitter/IG: @RyanHawk12  https://twitter.com/RyanHawk12 Erin Meyer is a professor at INSEAD, one of the leading international business schools. Erin conducted an in-depth study with Reed Hastings, Co-Founder and CEO of Netflix, investigating the underlying principles necessary for building a corporate culture that is inventive, fast, and flexible. The results of that research were published in their book No Rules Rules. In 2019, Erin was listed by the Thinkers50, for the second time, as one of the fifty most impactful business writers in the world and in 2018 she was selected by HR magazine as one of the top 30 most influential HR thinkers of the year.  Notes: "Corporate culture can be a mushy marshland of vague language and incomplete, ambiguous definitions. What's worse, company values — as articulated — rarely match the way people behave in reality." The Netflix culture deck. 127 slides originally intended for internal use but one that Reed Hastings (CEO) shared online in 2009. Sheryl Sandberg called it "the most important document ever to come out of Silicon Valley." Erin said "I loved the deck for its honesty. And loathed it for its content." "If you want your culture to come alive, you need to avoid speaking in absolutes." Instead, use either or… Security or High Performance? Candor or Comfort? Why did the Netflix culture deck go viral? "This is a company that tells the truth. It said what it believed. That is rare." On May 31, 2015 you got a cold email from Reed Hastings (CEO of Netflix)… Reed told her that he read her book, The Culture Map, loved it, and was having his leadership team at Netflix read it. Erin's biggest surprise during her time researching Netflix and writing with Reed? "That management paradigms are hangovers from the industrial era. Previously, the #1 goal was error elimination. That isn't the #1 goal at Netflix. It's innovation." Reed Hastings had a company before Netflix called Pure Software. He put in a lot of rules and processes. He realized that "if you dummy proof the system only dummies want to work there." Too many processes can kill flexibility and innovation. This is "applicable to any environment where innovation is more important than error prevention." "Most rules are put in place to deal with low performers." "Instead, create an environment with 'talent density.' Only high performers..." Performance is Contagious: Professor Will Felps, of the University of New South Wales in Australia, conducted a study demonstrating contagious behavior in the work environment. He created several teams of 4 college students and asked each to complete a management task in 45 minutes. The teams who did the best work would receive a financial reward of $100. (Bezos: "People are pretty good at learning high standards simply through exposure," writes Bezos. "High standards are contagious. Bring a new person onto a high standards team, and they'll quickly adapt. The opposite is also true) The two different types of jobs: Operational - Ice cream scoopers Creative - Rely on your brain Pay Top of Market for talent - Matt Thunell (Manager of Original Content) said about Netflix, "We live in a walled-garden of excellence, where everyone is a high performer. You go into these meetings and it's like the talent and brain power in the room could generate the office electricity. People are challenging one another, building up arguments. That's why we get so much done at such incredible speed here. It's because of the crazy high talent density." With that said, Netflix doesn't believe in "Pay-Per-Performance" bonuses. When you first began to collaborate with Reed to write this book, Erin asked him how he would find the time to collaborate. He said, "Oh, I can give this pretty much whatever time you think it will need." That surprised Erin... In Reed's mind, the leaders should create a system so that they don't have to be busy, packed with back to back to back meetings... Candor -- Giving and receiving feedback Top performers regularly help other top performers get better by giving feedback At Netflix, they do live 360 feedback dinners -- Go around the table giving feedback for each person. The 4 A method of feedback: Aim to assist Actionable - It must be clear what could be done Receive the feedback with gratitude Accept it or decline it... It's not always right. Be grateful for it regardless Sustain Excellence: Humility Curiosity to Learn - Never stop learning, never feel like you've mastered it Life/Career Advice: Get the talent right Create Candor Eat the cake -- Remove rules and processes If you create an open vacation policy (meaning that vacation days are not tracked), it is imperative that the senior leaders lead from the front and go on a lot of vacations. The rest of the team will follow... If you never go on vacation, then your team will feel like they have to do the same.

Humility. And that's what was so fascinating about working with these leaders at Netflix, is that, you know, these just people with like, I mean, really amazing amounts of accomplishment and power, but just this huge amount of humility and curiosity to learn. And when it really comes to these tough principles, we never stop learning, right? We never get to a point that we've mastered it. And I think that's what we can see from, from real principles. leaders is that recognition that we always have so much to learn. Do you have team members asking you the same questions over and over again and you wish there was one place they could go to find all the information they need to do their work? Well, there is.

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Sweetprocess.com slash learning leader. Welcome to the learning leader show presented by Rixie and Meyer. I am your host, Ryan Hawk. Thank you so much for being here. Text learners to 4422 to become part of Mindful Monday. You along with tens of thousands of other learning leaders from all over the world will receive a carefully curated email from me every Monday morning at 9 o'clock Eastern the latest ideas, articles, books, podcasts, videos to help you start your week with excellence. You'll also receive details about how my book, welcome to management will help you become a more effective leader. Text learners to 4-4-2-2-2. Now on to tonight's featured leader. It's a great one. Aaron Meyer, author of the Culture Map. Also, co-author of No Rules Rules, Netflix and the culture of

Reinvention, which she wrote with the CEO of Netflix, Reed Hastings. She's also a professor at Entiet, one of the world's leading international business schools. A few of the topics we discuss her biggest surprise after interviewing more than 200 employees at Netflix. And what writing the book with CEO Reed Hastings was really like. And then how to give and receive feedback more effectively. And then how to create a culture of high performance. A lot goes into it. Ladies and gentlemen, it's a great one with Aaron Meyer.

All right, Aaron Meyer. Good to have you here, joining us from Paris. I appreciate you being here on The Learning Leaders Show. Welcome. Nice to be here with you, Ryan. I want to talk first about culture, because you have a great quote about culture that you've written about in your most recent book. You said corporate culture can be a mushy marshland of vague language and incomplete, ambiguous definitions.

What's worse, company values, as articulated, rarely match the way people behave in reality. And so I want to expand on this quote from you, Aaron, when it comes to creating company values and actually living them and what you found in your research over the years of studying great corporate cultures. Yeah, well, so my first love was national cultural differences. And my first book, The Culture Map is all about that. And I have to tell you for over a decade, I was not interested in corporate culture at all because of what you just read. I always felt that companies were always talking about their corporate culture. They always wanted to send me their slide deck. But then what I looked at, it was kind of boring. It didn't really have much to do with what was really going on. And then, And then I, you know, I started working with Netflix, and we'll talk more about that. But my greatest learning about corporate culture in this research that I did with Netflix is that if you really want your organizational culture to come alive in a company, like what you articulate to take root, that you need to avoid talking in absolute positives. Like, I mean, what would be the, the, the, a good opposite to say, to say we value intention?

I mean, there is no good opposite, right? We like to lie here. Exactly. And no company would say they value disrespect. So when you say you value respect, you're kind of just wasting your breath. And what I found instead, and I've actually become very interested in finding these like rare companies that really talk in dilemmas. So they look at the tough dilemmas that their employees are facing on a daily basis.

And they tell them which way to turn. like do we value security or do we value high performance? Because those two things are in tension with one another. Or do we value candor or do we value being comfortable? And it's when you really look at those kind of tough dilemmas that the employees are facing on a daily basis and say, you know what, when you come across this dilemma, turn right or turn left, that's when it really starts to kind of impact the way your employees are behaving. inform the actual culture of the organization. So I remember when I first read the Netflix culture deck.

I think it's 127 slides, originally intended only for internal use. And Reed Hastings as CEO shared it online about 12 years ago, 2009. And Cheryl Sandberg said that it was, quote, the most important document ever to come out of Silicon Valley. high praise. And you said that you love the deck for its honesty and loathed the deck for its content. Please say more about that. Yeah, well, I was pretty shocked the first time that I saw the Netflix culture deck. I mean, there's one slide in it that says adequate performance gets a generous severance. And that shocked me because we had been spending so much time at Encead, the business school that I

teach at, been spending so much time looking at the idea of psychological safety, right? But it's on everyone's lips these days, right? How do we create an environment where people feel safe? And here was a company that wasn't talking about psychological safety. They were saying either you perform at a high level or you get kicked out on the sidewalk, right? And there were other things in that deck like at Netflix, our vacation policy is take some, right? Or at Netflix, our expense policy is act in Netflix's best interest. And I didn't have anything against those things. I just couldn't imagine how in a real company with thousands of employees,

those things could actually work. Yeah, so I was a little shocked and also puzzled when I saw that deck. What is it about that you thought? Because it like caught fire. I mean, I remember being emailed and spread from so many people. Have you seen this? Have you seen this? Look at this. Watch this. Let's. And then it got shared at my company. I remember saying, we should be like this. And then there was a hundred and some slides.

And I thought, this is, okay, this might be hard to do. Like, what was it about it that you thought caught fire? Because there's a lot of decks out there that say things. And this one, though, seem to spread like wildfire and went viral before things kind of went viral, especially a PowerPoint deck. Yeah. Well, this is a company that tells the truth. And I think that that's so remarkable when it comes to corporate culture, a company that actually says, not, oh, we really value high performance, and we're going to make sure that you all feel secure and comfortable, which are what most companies do. They want one kind of culture, but they also want to tell the truth about the negatives that come along with any choice, right? And here was a company that dared to actually

say what they believed in and to say it boldly. And, you know, that's what everyone got so excited about. And it excited me too, so much that I wanted to actually finally study a corporate culture. Well, speaking of that on May 31st, 2015, you, I believe it was a cold email from Reed Hastings. Reed Hastings is the CEO of Netflix. What did what did his email say? Oh, yeah. Well, that was actually quite funny because my first book, The Culture Map, had come out not too long.

before and I had a small publisher. It was kind of like, say, a slow starter. So not at the beginning, not a lot of people were reading it. And I remember, you know, I don't know, Ryan, if you check your emails from bed, but I wake up in the morning. The first thing I do is look at my emails. We're supposed to say we don't do that, Aaron, you know, we don't look at our phone for hours. Yeah, I know. I do too. Okay. So I woke up. I picked up my phone. I looked at my emails and one of the email said Peace Corps. That was the subject and I opened it up and the message said, hi, Aaron. I was in the Peace Corps like you were in Africa near where you were. I read your book and I loved it. I'm the CEO of Netflix and I'm having everybody at my company read your book.

And I remember I sat up straight in bed and my husband said, what's wrong? And I said, oh, I just got a surprising email. But yeah, that's how I started working with Netflix. Wow. I mean, what, how did you feel when? Because in 2015, Netflix was Netflix. They were, it was past the early stages. They're, they're big time at that point. And the CEO, Reed was becoming quite famous in the world, I think, for, for what he had been able to do. And what he had done. How did you feel in that moment? Oh, well, I was, you know, actually for a moment. I even wondered if it was actually him, right?

Sure, sure. But they were, that was a very important moment in their history because in 2015, they were still mostly a local company and they were getting ready for this massive expansion. I don't know if you remember, but they moved into 130 countries all in one day in January, 20, 2016. So, I mean, it made sense. They were really wanting to analyze their corporate culture

and compare it to the national cultures that they were moving into. and to think about what they needed to adjust about their corporate culture to be successful. So that's what I did with them. I worked with them on that journey. You know, isn't it cool, Aaron, though, that when you focus a lot of work, effort, and energy on a topic that you're really curious about, in your case, with your first book and dealing with cultures and a culture map and the way different cultures exist. I love the story you tell in that book about you're with somebody.

in a boardroom, you're waiting for him to speak, and he's from a different country, and in their country, they wait. And the fact that you follow your curiosity with great passion and rigor, and you publish a good book that hadn't necessarily caught fire yet. However, it became the greatest networking tool in the world for you because now the CEO of Netflix reads it, says our entire company is going to read it. Oh, and by the way, that led to then a further relationship where you, you two would write a book together. Like I think the one thing I want to sidecar and go into for a second here, Aaron, is why leaders, why people, it should follow their passion when it comes to their curiosity with rigor because you never know who might read it. You never know who might

who it might attract to you and it could change your life. And so having the guts to publish something publicly could change your life. And I think this is a great example of that. Yeah. Well, I've been really, really fortunate in that I only have one thing that I really am passionate about. And I'm lucky enough to have been able to do that with my life. And it's true, you know, I look back at those moments. I guess many people do, but I look back at those few kind of like inflection points. And I think, wow, you know, how did that happen? Right. But I do think if you really, focus on doing what you love. You maybe don't know where the next stone to step on is, but the step will arrive, or at least that's what I found. Did you ever, like, when you were

writing the culture map, I know we're going out of order for a second, but I think it's important. Did you, like, what were your hopes would happen once you published that book? You said as a smaller publisher, so you, maybe you didn't have giant expectations. Like, what were your hopes, though, after you published that book? Well, I never imagined that this book would turn into what it has. I never imagined that we would be having an impact around the world on a daily basis the way it does. I just wanted to write something that would be meaningful to those few people who would pick it up and read it. And I wanted to use every ounce of energy and understanding that I had in me to do the best work that I could. You know, that's all we can do, right?

from a writer's perspective, did you grow up wanting to be a writer or wanting to publish a book? Where does that come from? No. So I'm a professor at, you know, at Enceaat at a business school outside of Paris. I never intended to be a writer. I'm turning 50 this summer. I had never written anything until I was 40. So no, I didn't have that idea.

I always wanted to be a professor, a teacher, a speaker. That's my love as being being in front of large. groups. And at one point, I just realized that I really had something to say that hadn't been written down and that I could only reach so many people by teaching my classes. And I just seemed like here was a way that I could, I could, you know, maybe get the word out there a little bit more. Where did the, desire and the love for teaching come from? Well, because I was a teacher in the Peace Corps when I was 23 years old. And you like that. So, so when I was 23, I went to Botswana, which also led to my relationship with Reed, apparently. And I was never know. You never know. Apparently, right?

I was teaching classes of 75 Peace Corps voluntary, sorry, of 75 junior high school students every day. And I didn't have any training. And I think you know, I mean, junior high school students have a lot of energy and they're impatient. So I had to really figure out how to be as a as captivating as possible. And, you know, I use those skills every day now, but just in a little bit of a different context. How does that differ from what you do now? It's the same thing. Is it? Wait, by the way. I speak to thousands of adults. I was speaking to 60 junior high school students, but I would say all in all, their attention span is about the same length. Tactically, how's it been over the past year? Oh, you know what? I have to say that I have, I'm very thankful to have been able to find a medium

that seems to actually work, work very well. Like Zoom or you're doing them online or how do you do it? Yeah, every day. I'm in, I'm on Zoom. I teach my, my long classes on Zoom. I teach, I give keynotes on Zoom. And of course, it's not this quite the same as being in the same room as people. but I have to say from a personal note, I mean, I am a mom and I used to travel nonstop. So it is wonderful to have found, you know, accidentally that there is actually a way to to reach millions, to reach thousands of people and still not travel nonstop, right? As an American, what made you want to move to overseas?

And now it's been 20, 20 plus years living in Paris or outside of Paris. what's made you want to go and what made you want to stay? Well, my husband is French. So you're there. That's basically it. I met him in Minnesota when I was a young woman and he was like the only French person there. And we moved back to France together, yeah, 21 years ago.

Wow. And how is it? Yeah, great, fine. Just like, just like Minnesota. Yep. Paris, Minneapolis, same thing. Seems a little different. Seems different.

But I spent time in the Paris airport. but I've not got a chance to venture into the city yet. I hope we can do that soon, but it might be a bit, I think, before we're there. So I want to get back to some of the topics that I've taken notes on when it comes to no rules, rules, Netflix and the culture of reinvention, the book you wrote with Reed Hastings. So we've heard this Steve Jobs quote about connecting the dots. And this is a big theme within this book. can you share how leaders can connect dots, whether it's looking backwards or looking forwards

and why that matters to think of that metaphor when it comes to leadership? Yeah, because as we talk about what this whole story that came from Reed, Hastings, at Netflix, it's going to sound like it was all done with a lot of intention. And of course, when we look back at it, it seems like, wow, this guy was just like amazing visionary and he had this wildly perfect idea about how to build a business that was totally different than what everybody else was doing. But that wasn't actually the case. Of course, it was more like a little thing happened, which made him realize something, which made him try something out. And then again and again and again. So that's also how I was doing my research.

I conducted 200 interviews at Netflix. I spent about 75 hours with Reed. And I was hearing all of these like totally wild, crazy and controversial things that are happening at this company. And I was trying to figure out, you know, what are the dots? And how do we put those dots into a methodology that people can actually follow and understand? And I guess all businesses in one way or another do develop like that. What was like, I'm curious about your thoughts going into this project as well as maybe one or two of the biggest surprises that were not necessarily aligned with your expectations going into it. Yeah, well, I think my, I mean, my biggest learning from all of this is that most of us,

like most of what we teach at business school or have been teaching at business school, I hope we can say it that way. And most of the management paradigms that are kind of running the business world are really hangovers from the industrial era. And what I mean by that is that during the industrial era, of course, we were all obsessed with error prevention, consistency, and replicability. And of course, if you are running an automotive plant, I mean, those are the things you should be obsessed with. And in today's world, still, if you are working in a manufacturing environment, those probably are your priorities.

But in a growing number of organizations and teams, departments today, the number one goal is no longer error elimination. right? The number one goal is fresh thinking, innovation. How can we create an environment where we are more flexible so that when something like COVID hits us, we're able to change direction quickly, right? And that requires an entirely different way of thinking. And that's why many of these principles that we're going to talk about seem quite shocking because they're so against everything that we learned during those 300 years of the industrial era. And what is it about Reed that you think helped him figure out and connect these dots as he went? Because, yeah, I agree with you.

And you look back, we can kind of create this perfect story about how we saw the future and we predicted the future. When in real life, it's usually a lot more messy. it's usually a lot of iteration, trying stuff out, stuff failing, iterating on that, surrounding yourself with great people is critical, which we're going to talk about in a second. But what was it about Reed that you think has made him go from someone who knew to mail DVDs to your house, which sounds like, it's okay, you know, this could work to what we have now, that Netflix essentially rules the world of entertainment. like what was it about him or what is it about him that you think has helped make this happen?

Yeah, it's because he had another company first where he did it totally differently. He did it like the industrial era. So his first company was this organization called Pure Software. And that was, you know, like most entrepreneurial companies at the beginning, it was just a group of, a small group of people who were running, let's say, kind of like fast and loose. Right. So they didn't have any rules or process that were driving the way that they behave. They were just using their brains to make the best decisions that they could at every moment.

But then the company started to grow, right? And as it grew, complexity increased. And as it increased, some people did stupid things and some people took advantage of the freedom. And Reed responded by putting in place, like most companies do, right? a lot of a lot of process and rules to well his idea was if we could eliminate error just think how good we could be right so employee handbooks telling people how they could travel methods trying to make things super efficient right and what he realized during that process was that as he said says if you dummy proof the system only dummies want to work there and what he

found was that his like really kind of most mavericky creative thinkers, they left the organization as those processes were put in place because those people wanted to work in an environment that they could run three, right, that was a little bit kind of like messier, right? And the people who were really good at following process, they got promoted into senior positions. But they weren't the most at innovative or flexible. So the company stopped innovating. And then when the environment shifted from C++ to Java, at that moment, they were not flexible enough to change with it. And he had to sell the company. So with his next company, which was Netflix, he had these really like overriding lessons. And the first one was employee freedom breeds innovation. And the second was

organizational process kills flexibility. And those are really like kind of the grains, the roots that were planted that then grew the level of innovation and flexibility that we see in Netflix today. Do you think this mantra or mentality could work in a world out? Because like Netflix has to be creative more so than probably most companies because they're actually now, writing original content, making their own shows, movies, not just licensing them or buying them from those others, but doing it themselves. They have to have highly creative people who have an eye for what's going to hit. I know the story about Stranger Things is a really good one that I want to talk about

in a second about how that whole whole show came together because one of the first, I believe, that actually Netflix made from start to finish. but like think about a company outside of the world of entertainment or out of content creation how does what reid hastings believe how could that play into any other normal company i say normal but you know what i mean any other company outside of the world of of creating content or or being a media slash entertainment company yeah well the methods that that are we outline in the book and that you and i are going to talk about right i mean those methods are applicable to any environment where innovation is more important than error prevention,

right? And that's the question. I mean, it doesn't have to be like a whole company. It could just be a department, right? But for any of our listeners who are in a management role where they're thinking, oh, gosh, we have to be more creative. We have to be more innovative. How can we innovate faster, right? Then, of course, the next question is, okay, well, of course, I want to reduce error, is it more important for me in my department to eliminate error or is it more important to increase innovation? Because those two things are in tension with one another, right? I mean, innovation is all about kind of trying things out, thinking in creative ways, whereas error prevention is about stamping out anything that goes a little bit wrong, right? So then we can,

I mean, I'll give you an example. I work with Michelin, Michelin Tires here in France. And most of that company, their goal is error prevention. That's an industrial era company, we could say, right? Safety critical. So we better hope that they are focused on error prevention if we're driving on their tires. And in those parts of that company, I mean, these methods that we're going to talk about, I don't think, I mean, read used to joke that we should put a sticker on the front of the book that said, if you are in a safety critical environment, do not read this book. But there are are other parts of that same company where they really need to be more innovative. They need to think of, you know, all sorts of crazy new products, crazy new ways to innovate for the future. And those

specific departments certainly can benefits from these methods. So you don't have to be, you don't have to be a TV company to want to be creative. You know, a lot of us have learned. You know, we have to be more creative faster, right? So I want to talk about a high performance culture and the fact that performance is contagious. And you cite some research done by Professor Will Phelps from Australia. He conducted a study demonstrating contagious behavior in the work environment where he created several teams of four college students and asked each to complete a management task in 45 minutes. And these are the teams who did the best work would receive a financial reward. and this is also in line with a lot of work I've read by Jeff Bezos, where he has said people are pretty good at learning high standards simply through exposure.

High standards are contagious, bringing a new person onto a high standards team and they'll quickly adapt. The opposite is also true. Can you talk about, this is a big part of the book that you cover that I love, can you talk about more a culture of high performance and why? that's so contagious. Yeah, right. So first let me explain why that's so important because so Reed had this idea, employee freedom breeds innovation. But of course, he had the worry.

As the company grows, if I don't put in place rules and process, then the company is likely to descend into mayhem. And I think that a lot of managers get stuck there. Like, okay, well, that sounds beautiful, Aaron, employee freedom breeds innovation, but how am I actually going to deal with that, right? So then it kind of, you know, thinking about it, he was like, well, you know, in most organizations, most of the rules and process that we put in place really are put there to deal with the less than amazing performers, the top performers. They don't really need to be controlled, right? So what if I was going to try to create an environment that was made up only of top performers? You know, then I could probably give them a lot more freedom, right?

So that's why this whole idea that they have at Netflix, what they call talent density, became so important because a talent dense team you can give a lot of freedom to, and that then creates a lot of innovation. And if you said, okay, so let's talk about that. I love that whole idea of contagiousness because I think, that a lot of managers think that an individual performance problem is an individual problem, right? Like, okay, like, Ryan, if you're on my team and you're like just kind of like not a great performer, right? Just a medium one. But you're a nice guy and you're hardworking, right? Then I might

think, well, you know, I'll just keep Ryan on the team even though I really want high performing team because he's only one guy and the other people are really amazing. Right. But what all this research has shown is that actually you are likely, Ryan, I'm sorry to tell you, your adequate performance is likely to just suck down the performance. Why aren't we used to me? Can we use somebody else? You don't want me to use you as an example. Go ahead. Go ahead. You're the only other one in my room. I know. I know. Okay. In any case, pivoting away from you to Nick. So yeah, yeah, let me tell this great, this great research that you've, brought up. This William Phelps research, I love it. So Professor William Phelps, who's a professor

at another business school, did this research, and he invited four MBA students into his lab at a time. He gave them a 45-minute task, and he rewarded them financially based on how well they behaved, right? Sorry, how well they performed, not behaved. And unbeknownst to them, in 50% of the teams, there was an interloper. And the interloper was this actor named Nick. So Nick had been hired to act just like an MBA student, just like a regular one, but to do some things that were a little bit like unamazing. So sometimes he would do things like put his feet up on the desk and text his girlfriend. Sometimes he would say kind of nasty things like, have you ever even attended a business school class before. And what was so interesting was that, first of all, two things. I mean,

Phelps prove, first of all, on team after team after team, that those teams that had Nick on them performed at a 45% worse rate. Okay, so that's already interesting. But more interesting than that was that the other three people, the real MBA students, they started to behave like Nick. So after even 20 minutes, like when he's behaving like a like he's bored, they start, you know, leaning back in their desk. There's one video where you can see the real MBA student. She puts her head down on the table and says, well, when is this going to be over? Right. And when he's jerky, like he's kind of rude to them, right? They start being jerky too, but not just to him told one another. So you really can see this like this contagiousness of the

behavior. And what we've seen in this research, and I'm sorry to report it, a lot of other research, is that the best predictor of how a team will perform is not what the best performer is like or even what the middle performer is like. It's what the lowest performer is like. So that's where we get to. And I know, I mean, I was shocked when I first heard it too, but I know I know it's super provocative, but that's where we get to Reed's idea that adequate performance gets a generous severance. because if you get rid of those adequate performers, then suddenly you'll see that that high performance just spirals up with your team. So everybody listening to this is like, well, of course, I'm just going to hire the best people. That's obvious. But in reality, they're like, well, I have 10 spots to fill.

And I remember saying this, I've had guests on the show say at times, I need bodies. I need people to come in. I get sales jobs. I got other jobs. I need bodies. I need people. I have too many jobs and not enough people. I have a strict hiring process. We ask questions in order to get the best of the best. And we're left with nobody to hire. So how does like I agree with that. I love that having high standards being picky, making sure you get the

top caliber people because they are so contagious, both the good and the bad. How to deal with kind of the real life issues of the fact that people want to do that. Yet when they put it in a practice, it just isn't possible. What do you think about that? Yeah. So I think it's quite important to think about two different types of jobs. What we'll call operational jobs versus creative jobs. So operational jobs are jobs where clearly you need to have a fixed number of people, right? So like if you are, you have, you're hiring ice cream scoopers, right? You can only scoop ice cream so fast. There's nothing particularly creative about it, right? You can't like, there's like the best ice cream scooper is not that much better than the average ice cream scooper, right? So those ones we

probably should use just kind of the traditional method of adequate performance is fine. As you said, we need bodies, right? But when it comes to creative work, and I don't mean just like maybe kind of more traditional creative jobs, any jobs where you're really relying on your brain, right? So you can think of new methods for doing something and that that would then have a huge impact. on your team or on your your organization. For any creative job, what they rely on at Netflix, I mean, the whole idea of talent density is that it's better to have a lot less people and pay them a lot more in order to have the very best, right?

And that's where you get this kind of, this, this denseness of talent, which then spirals up. And, you know, they have this quote, which is that for stunning, for really, high performers, a great workplace is stunning colleagues. Now, I realized that wasn't really your question. Your question was, okay, great, I'm going for high performers. I need somebody else. Can I just keep this adequate performer on here for a while until I can find someone studying to hire? I mean, of course, we have to juggle the realities of the situation, but I do think generally for creative jobs, it's better to have last.

even maybe if you're lacking, then to let those adequate performers on the team or those mediocre performers, which are likely to suck down the energy of the others on the team and use up all of management's time also. Right. I think, too, the world is shifting to having less ice cream scoopers and more people who need to use their brain. Seriously, I mean, if you think about like innovating and change and getting ahead of that and not becoming Blockbuster, like Blockbuster needed some of these high performers that are willing to change and there's everyone knows the story now about them and and and uh i i just think that's something to really consider and think about us let's maybe we go with less maybe we have fewer people because i know from one of the mistakes

i made early on in my management career erin was the kind of i need a body uh type of a hiring process because i had a boss telling me like fill that position now you have a quota as a sales job you have a quoted a hit. You're not going to hit it with an empty seat. And so you do that. And then you're like, I think she, yeah, I think he's good enough. Okay. And you bring him in and it brings the whole quality out on. But what I learned through a little bit of luck or probably a lot of it of luck, when you get some really high performers, it's funny who they're friends with. They tend to be friends with other really high performers. And my team became a recruiting machine. And I didn't even have to do it. They were doing it for me because they were, they, they enjoyed the

environment and they saw a bunch of high performers and that actually just became this flywheel where we could move adequate performers out or or sometimes to another place of the business that was a better fit and a higher performer could come in because they wanted to be surrounded by high performance and then it was like once we got it gone you know how flywheels it was awesome and I think that's the part of it that sounds like Netflix has really figured out yeah and that's a great example because of course any sales job is clearly a creative job And you clear, so what they, and this is actually, this is based on very interesting research that I was totally unaware of, but apparently all software engineers know, which is something that's called the rock star principle. So this research that was done back in the 60s showed that if you, if you take software engineers, that the top, that the best software engineer can code at a 10 to 25 percent,

it's a better rate, so both faster and more and more effectively than the average performer. So if you're hiring software engineers, you would be just as good to hire one like rock star than 25 average people or 10 to 25. So Reed, who is a software engineer, he knew that. And that's why he thought, well, why wouldn't that be true for any creative job? And we can really see that with a sales job, right? You know it, Ryan, right? If you have a really great salesperson, I mean, that person can easily bring in 10 to 25, maybe even, you know, 250 times the value to your organization than just a medium one cat. Yeah, I think that's a critical component. So one of the topics we tease earlier in this conversation, Aaron, is that of candor. And you've said, you know,

We hate it, but we still want it. And my question to you, and there's a lot about this for Netflix's culture, my question is, let's get practical for a moment when it comes to leaders in general, outside of Netflix, just working within a business or for a team or even within your families at times. And that is, how do we get better at both giving critical feedback and positive, I guess I should say, giving feedback and maybe even more importantly, receiving feedback in a way that encourages people to continue giving it to us because I found that's the superpower of improvement is having your who, the people around you, knowing that they can tell you the truth and they can help you

because we all screw up all the time and we need those people to let us know. So how do we get better as leaders at both giving and receiving feedback? Yeah, so thank you. So that's the second. that's the second step to this Netflix, to this culture of innovation, right? So the first is we get that really high talent density. And the second is that we introduce candor. And I love it, because you use the word superpower. That's the word that I've been using lately also, because I find that a lot of companies are talking about the importance of feedback. But then you ask yourself, like, is feedback really our superpower in this company? And most companies, I would say no. But at Netflix, it's clearly the case that they have so much candid feedback going on that these top performers

are continually helping one another get better, which really leads to that kind of spiral up. Okay, so what are they doing? So the first thing is that, I mean, this is just a very simple thing, but most of us don't like to give and receive feedback, right, despite what we say. That's because of our amygdala. I mean, the amygdala is the most primitive part of your brain. It's very focused on finding safety in numbers. So like if you tell me, Ryan, something that you didn't think I did well, like maybe you say,

oh, Aaron, you know, you speak so loud and you talk, you take up so much space in the conversation. When you tell me that, even if your intention is to help me, my amygdala starts screaming, oh my gosh, you know, Ryan is going to reject me and I'm going to get kicked out of the team. And we all know what it feels like to have our amygdala go off. It sends us into a fight or flight mode. So either I fight. I say, no, no, no, Ryan, it's not true, right? You're the problem. Or I flee, right? I don't want to talk to you again. But of course, we also have the frontal cortex. The frontal cortex is the most logical part of the brain. And the frontal cortex sees the advantage. of feedback. It recognizes that, you know, if I get feedback, it's really going to help me improve.

There was one extensive research project that showed that 72% of employees in various industries said they thought they could do a better job in their work if they got more candid feedback. So the question then becomes, like, what can we do as an organization to get our teams to quiet down the amygdala? And at Netflix, their big thing is just putting feedback on the agenda. So, you know, maybe we meet four times a month, you and me, Ryan, and at the beginning of the first Monday of every month, the first item is feedback. Every month, I know you're going to give me some feedback, and I'm going to give you some feedback. Just putting those mechanisms in place really gets a lot of feedback out there. And then they do these crazy things. So the big one is that they do

what they call live 360 feedback dinners. And a live 360 feedback dinner is that basically we go out as a team. I guess they're doing it over Zoom lately. I think you can, right? But we go out as a team maybe once a year over a long meal. And during that time, we take turns. So I go up first. You know, I'm maybe sitting in the hot seat. And we go around and each person gives me feedback about what they think I should do differently. And then we move on to the next person. And when I first heard that, I just thought, I thought it was crazy. I thought, well, what's the point of like dragging my weaknesses in front of the entire team? I mean, can't you tell me that in private? But I saw it creates this really useful mechanism because if you individually give me feedback, I always kind of wonder, is it maybe more about you or is it about something in our

relationship? But when we're in a group like that, it makes it very clear, you know, that one issue is just about me and her, but there's another theme that's clearly what everyone feels I need to be working on. So I find this very valuable. I actually started doing them with my own teams here at here at NCAT. I recommend it. Wow. I would love to sit in on one of those. Like what's the my fear is is people would either just copy what others said if there's not psychological safety there or they would they would kind of do the PCP, which the praise criticism praise sandwich, you know, where you, you make sure the praise is awesome and the criticism is something that's not even really criticism. And then the praise, like, how do you

ensure that they're getting real candid feedback? And it's not so hurtful that it could damage a relationship. I feel like we're like really on a fine line here between that. How does, how do you make sure you don't maybe cross it and do irreparable harm to somebody or to even your culture? Right. It's concerning, right? I mean, it is, it is worrisome. Um, So they talk so much about how to give the feedback. And I think that that's what's so important. I think that's what we all can learn from. So first of all, they use what I call this 4A method of feedback.

This is for all feedback, not just for those dinners. So the 4A method is that, number one, your feedback needs to aim to assist. So I can't just give feedback to give, like make myself feel better. It has to really be clear to you and me that I'm doing this to try to be helpful. So that's your first day. The second is that the feedback has to be actionable. It has to be clear to you and me exactly what you could do in order to do a better job with this. The third day is about receiving feedback.

And that has to do with that whole amygdala problem. So that's that when you give me feedback, I need to express appreciation. Thank you. Thank you, Ryan. Thank you so much for having told me that. right? And that helps you understand that you can do that again and that I'm not going to, I'm not going to, you know, flip out. And then the fourth point is that you can accept or decline it. So you don't have to do what everybody is suggesting to you. If you really get a

feedback culture going, you're going to get a lot of feedback on a weekly basis. But that doesn't mean you have to take on all of it. You can decide what you actually believe you need to be working on. And everyone knows that, right? And then the other thing, I mean, this is, I think, a particularly American issue that we need to be working on. This brings me back to my national cultural research. But Americans particularly, our culture is particularly focused on wrapping positives around negatives, right? So, I mean, that's so deep in our culture to give three positives with every negative and catch people doing things right to focus above all on the self-esteem. So it makes it hard for us to kind of get to the real candid. This is what I think you didn't do well. So I mean,

the guideline that I would recommend is that when you do, if you do these 360 feedback dinners, for example, is that you say to the team, okay, 25% of your feedback can be actionable, positive of feedback, like please continue doing this. But 75% of the feedback needs to be, you know, something that we can do to improve. And just putting those guidelines on and helps us all do a better job. I love that those actionable steps of the four A's to it, right, aim to assist. It's got to be actionable. It's specifically when it comes to receiving feedback, when I think of the great bosses

versus the bad bosses I've had, the great bosses were really good at this. they received it really well and it made me want to be better at receiving it from them and the bad ones you couldn't even you couldn't even say anything because they let it be known that they were not going to receive it well and those people that's probably why they were bad boss and then you can accept or decline it

I know I think of you probably had this not a new idea but one I've copy when it comes to writing books is to create a challenge network and these are the people in your life who you respect them enough that you are asking them to be critical of your work. And they're welcome to say what's good about it, but you care more about what would they cut.

And so I send early manuscripts of my book to people on that challenge network and explicitly state, what would you cut? What would you cut? You're welcome to compliment me here in a separate email. But this email, one here that I'm getting back for you, we're going to have a phone call to is only about what you would cut. and why. And I found that I love those friends. I truly have a place in my heart of love for those people who have the guts and the willingness and the ability to provide that feedback because

I say it's about making the work better, which then could impact people all over the world, as we've talked about the importance of publishing books here, Aaron. And so that's what we're trying to do here. And I really appreciate that. And I found when I kind of stayed up front how much I value them and then afterwards kind of go over the top with my gratitude towards them because I really mean it, but make sure that they feel that. They're more apt to continue to challenge me, to continue to be critical of me. And that in turn makes me better, makes the work better. And I like that loop.

I think that seems to be a better loop when it comes to feedback. And those people, too, I love them. I value them so much. And I think that seems to be a process that I've learned from others that seems to work okay. Yeah, well, that's a, it's a great example. And what I was thinking as you were talking is, oh, Ryan's developed a really tough skin. I mean, I don't know. I think my skin is that tough.

I had these situations at Netflix. I think I want to tell one of the stories so you can kind of see kind of how extreme this gets. But when I was first working at Netflix, before I started doing the research there, I gave, the first time I went there, I gave a presentation at this big leadership conference. We were in Cuba. And there were about, I don't know, maybe 700 people in the audience. and I gave them a task and I came down from stage. So they were working in small groups and I was walking around and I should add that I had been kind of nervous because this was brand new material. I really wanted it to go well.

So my heart was kind of like really in it, right? And I was walking around and I saw this one woman who was in the audience and she was talking to her colleagues this really animated way. And when she saw me, she beckoned me over. And I came over and she said, Aaron, I just want to tell. Oh, and I should say that one of the rules at Netflix are one of the guidelines is you should never say about somebody what you wouldn't say to their face, right? So that's what she was doing, right? She saw me. She was talking about me and she followed the guideline. She called me over, right? And then she said to me, she said, Aaron, I got to tell you, the way you're facilitating the discussion from the stage, I believe is totally,

undermining your point because you're talking about cultural diversity, but then you're asking for volunteers and only the Americans are volunteering, right? And she said, you've got to fix this fast. And this was the first time, you know, that anyone had given me a feedback, candid feedback, right in the middle of a presentation. So at first I was kind of stunned, you know, like, what? You're telling me this now in front of your colleagues? But I had about two and a half minutes before I had to go back on stage. And that two and a half minutes was enough for me to come up with a different method for how to facilitate the discussion. And when I came back on stage, I said, okay, great, let's start with the group from Brazil and then we'll go on to Japan.

And I actually think that she saved my presentation. So we really can see here both that candor is uncomfortable, but it's also really useful once we get that muscle built up. up. I love it. I think part of the thick skin probably comes from having a background playing football growing up and in high school and college. And it was very normal to just get ripped to shreds in front of my teammates every day, especially when we watch film of practice or the games. You throw enough interceptions as a quarterback. You develop some tough skin because you're just getting destroyed by your coaches that it's very normal for me. So I'm used to it. One more question about from a leadership perspective, Aaron, when you think about your career and the leaders that you've spent time around

some remarkable people and you're still like right in the midst of all this right now, what have you found to be some of the common themes and or behaviors of leaders who sustain excellence over an extended period of time? Well, I think the number one, well, because not the number one, but humility. I mean, that's what was so, so fascinating about working with these leaders at Netflix is that, you know, these just people with like, I mean, really amazing amounts of accomplishment and power, but just this huge amount of humility and curiosity to learn. And as, you know, we've been saying, my main love is national cultural differences. I mean, there's nothing worse than when I talk to someone who says to me, oh, you know what,

Aaron, I don't really need to talk about national cultural differences because I've been working across cultures for a lot of years now. I mean, when someone says that, you just know, oh my gosh, he doesn't know anything. Because when it really comes to these tough principles, we never stop learning, right? We never get to a point that we've mastered it. And I think that's what we can see from real leaders, is that recognition that we always have. so much to learn. Love it. One more question. Now we're up against a clock. I, you also are a person who has helped so many people over the course of your career. I would imagine you get peppered with advice questions constantly. So I'm curious when a young, ambitious, growth oriented, curious

person shows up at office hours or emails you or has a Zoom with you, what are some general pieces of life slash career advice you give to them? Yeah, well, I'm going to twist your answer since I know we're running out of time and I want to make the third point about the book. Okay. Here's my answer. If that young person is an entrepreneur and at my school, often they are, they're MBA students who want to start companies, right? My number one piece of advice is once you get the talent right and then you get the candor right, then you get to eat the cake. And what I mean by that is, so I'm kind of pivoting back to this whole Netflix story, but.

if you get that high talent density and you get candor as your superpower, now you can remove all those rules and processes that we put in place at most organizations, vacation, you know, the symbols like vacation policies and travel policies, those top performers in a candid environment, they don't need them. But also management by objective, KPIs, pay per performance bonuses. These are all processes that we use at most companies to give our employees some freedom, but also to keep our hands fully on our employee's shoulder and make sure we control that they're moving in the right direction. And then decision-making processes, right?

So instead of trying to get our employees to bring their ideas to us so that we, the experts, can make the decisions. Instead, as they say at Netflix, lead with context not control, right? So help your employees understand this is the direction we're running. These are the things that we need to keep in mind. This is the North Star, right? But once your top performers have all that context, you can remove the controls and let them run free. And then you might find that your company also sees these kind of fast,

an amazing innovation that we've seen at Netflix. And I really believe, I believe that that is a story for the future. So yeah, that's what I hope. I hope you have time for one more. Yes, please, please. One more that that follows up with that because I read that when you and Reed agreed to collaborate on this book, you asked him, like, how would you have time for this? How are you going to find time for this? And he said to you, quote, oh, I can give this pretty much whatever time you think it will need. And I think this answer seemed to surprise you. It would surprise most people because he's CEO of Netflix. You'd think he'd have like, I could squeeze an hour in here, maybe an hour there, but Aaron, you're going to have to kind of run with this on your own and I'll help where I can. And he

basically said the opposite. Why does Reed and why do you believe that CEOs and or leaders in general should not be crazy, busy back to back to back to back to back like most people are when you look at their calendars? And that he actually has an opposite approach of that. Yeah. So at most companies, decision making is like a pyramid. The chairman at the top and the low level employees at the bottom. The lower level employees can make small and expensive decisions. But for anything important or expensive, it has to get pushed up the pyramid for approval. Right. At Netflix, the decision making is like a tree. So you have the chairman who's down there in the dirt, right? Who's down there at the roots of the tree. Not very glad. but very useful. And she, that chairman, she's sitting there, you know, creating the direction, right? These are all the context that we need to keep in mind as an organization as we grow, right? And then you have the top executive team who's at the kind of the low trunks of the tree. Again, setting more context for those people in their departments. But the real decision makers,

those are the lower level managers who are there at the, at the leaves or the, outer branches of the trees. And those are the top, those are the employees who are making the multi-million dollar decisions every day without needing approval from their boss. At Netflix, they say, don't seek to please your boss. Seek to do what's best for the organization. And that's where we just see this amazing, this amazing, let's say, spiral of energy and enthusiasm take take off and of course a pyramid can only grow so fast right but a tree a tree can grow at these amazing rates like what we've seen at Netflix and of course with a tree you don't have the chairman who's the bottleneck at the top making all the decisions which is of course what we saw

what we saw why read and he said that to me again just a couple months ago don't worry I'm not very busy. Really? That is the opposite of pretty much every senior leader that I talk to. Well, it's a lesson, right? Because I think the question we can ask ourselves then is if, you know, if I'm really leading with context, not control, then I should be able to step back and let all those people in my, in my organization make the important decisions. It only happens with talent density. And I heard he goes on at least, at least six vacations a year. Is that right? Well, yeah, but that's for a different reason. That's because the Netflix, the vacation policy is take some, right? I mean, there is no vacation policy. And of course, if there is no vacation policy, then the employees will look around them for leadership to see how much vacation they should take. So Reed tries to set an example of taking a lot of vacation himself and talking about it a lot so that other people in the organization see, although there's no policy telling me, what I shouldn't, shouldn't do. Leaders are expected, and I want to be a leader,

leaders are expected to take big vacation here. So that's part of the context setting. I think that's a really critical point because you are, sometimes I read a lot of like the negative aspects of not having a vacation policy, policy where people basically never take vacation because they look around and they look lazy and the leaders never take vacations. But in his case, he's leading from the front as in, you're going to, they're going to look to him to what he does or if someone has a baby, like how are they treated? How much time do they take off? You're going to look to them. And that's what you're probably going to follow if they're a senior leader. So that's critical. Like I think it's also deals with the weight of your words and your actions as a

leader. They're watching. You may not even feel it or realize it, but they are watching closely and listening closely to what you say and what you do. And we'll probably mirror and model their behavior after. So if you have no vacation policy and you work 365 days a year, that you're get ready, your employees are probably going to quit at some point because they're just going to be tired of it and they're never going to take vacation. Yeah, and that's what I found in my research. I was looking into other companies who had gotten rid of their vacation policy and I came across several where the CEOs, smaller companies, right, but the CEOs had tried it. They tried removing vacation policy and then they said, well, it didn't work. You know, I didn't take any vacation and

no one else did either. So they were missing the fundamental part, which is if you remove the process. the policy, the process, then you have to lead with context. Love it. Well, I mean, Aaron, we might have to have schedule around two here because I have tons of notes from both of your books and we touched on some of them. But this was a lot of fun. I really appreciate how much juice you brought to this. I hope you take that as a big compliment because you bringing the energy,

made this a lot of fun. And certainly I have pages of notes here. So thank you so much for investing your time with me today. Thank you, Ryan. I really enjoyed it. I'll come back next time we can talk about national cultural differences. Let's do it. By the way, where would you send people to go a little bit further about you online?

Yeah, so my website is Aaron Meyer.com. You can join me on LinkedIn. Would be a pleasure to meet with all of you. Awesome. Well, thank you, Aaron. I certainly would love to continue our dialogue as we both progress. Okay, great. Take care.

Thanks, Ryan. Nice to work with you. Bye now. Wow. I'm a big fan of Aaron's work and the energy and intellect she brought to this one. I am looking forward to many more conversations with her in the future. A few takeaways from my notes. How to create a culture of freedom and responsibility.

Build up talent density. Increase candor and then remove controls. Certainly a lot easier said than done. but love the approach that Reed Hastings and Aaron learned about from Reed Hastings that he's done at Netflix and their great senior leadership team to do what they've done. To have 360 dinners, those meetings where you get together and provide feedback for one another, that's how you can increase candor. And remember the 4A method. One, aim to assist. Two, it must be actionable.

You've got to be clear with what they could actually do with the feedback. Three, from a receiving perspective, be grateful. Receive it with appreciation. Thank the person. Then four, you can accept or decline it. Just because you receive feedback, it doesn't mean it's always going to be right. And if you're out there seeking it out, there will be times where the feedback will not be accurate or useful. But you still can be grateful that the person is giving.

giving it to you and think about it prior to making that choice. And then how about the rock star principle? High performers want to be around other high performers. And it's contagious. And Aaron shared the research that went in behind the rock star principle. I want to say thank you once again for continuing to spread the word, for telling a friend or two, hey, you should listen to this episode of The Learning Leader Show with Aaron

admire, it will help you become a more effective leader and build a high performance culture. And because you continue to do that, and because you write reviews on Apple podcast and rate the show, hopefully five stars, you are continuing to give me the opportunity to do what I love on a daily basis. And for that, I will forever be grateful. Thank you so much. Talking to soon, can't wait.