What the Freedom & Responsibility Culture Could Mean to Your Company

And why not every company can have one.

Other than streaming and “Netflix and Chill,” the most enduring (and surprising) Netflix legacy must be its corporate culture.

In the famous Netflix Culture Memo, we describe our culture as being one of “Freedom & Responsibility” in which every employee is given the freedom to meet their objectives in whatever manner they see fit, so long as they accept their responsibility to achieve those objectives.

Some of the more dramatic manifestations of Freedom & Responsibility are the Netflix employee policies. For example, are you aware of the Netflix travel policy? There isn’t one! How about the Netflix vacation policy? There isn’t one! Or the Netflix expense policy? There isn’t one!

For the most part, there are no Netflix policies. It’s what my co-founder Reed Hastings describes as the “No Rules Rules”. In almost every case, the policy consists of the same four words: “Use Your Best Judgment.” This isn’t something unique to Netflix either — Nordstrom famously used those same four words in their employee manuals at one point as well.

But within the world of startups, nearly every company starts off this way, not because of some philosophical commitment, but because they don’t really have a choice. There are so many things to do when you’re early-stage — and so few resources to do them with — that the only workable management style is to tell people what you need and when you need it, and then turn them loose.

With a hand-picked all-star team, this works just fine. But as the team gets bigger, eventually someone falls short, and the well-meaning CEO thinks, “I wish I’d known that in advance. So from now on I need weekly status reports.” And reluctantly, the all-star team starts doing status reports.

The team gets bigger still and someone eventually overspends. The well-meaning CEO thinks, “I can’t have that. From now on we’ll require my pre-approval on anything over $5000.”

And soon there is a travel policy. And a vacation policy. And all manner of other policies, all designed with the best of intentions. Every policy is a guardrail, designed to protect the company from people who lack the judgment to know they need to communicate that they’re going to be late, or know how much is appropriate to spend on something, or decide what level hotel to stay in.

The Netflix culture experiment simply asks, “Instead of putting up guardrails to protect ourselves from people with bad judgment…what if we built a culture designed for people with good judgment?”

Because while “guardrails” might protect you from people with bad judgment, it also drives away the people with good judgment. It becomes a self-fulfilling prophecy.

This doesn’t mean that the solution to too many guardrails is to simply get rid of them, though. Freedom and Responsibility is a tremendously powerful culture, but as Uncle Ben Parker explains, “With great power comes great responsibility.” So before you make the decision to do away with travel policies, expense policies, and vacation policies, start by asking yourself if you already have most important component in place: the good judgment.

The only way a “No Rules Rules” culture works is if everyone has the judgment to make good decisions, and that doesn’t happen automatically…or even easily. It means that if you don’t have good judgment, you can’t work there. It often means letting go of a lot of people, which most managers (and corporations) don’t have the strength to do.

But if you do have the stomach for it, it’s worth it. Because there is nothing that a high performer wants more than to be to be given freedom and responsibility, and to be surrounded by other high performers.

Eliminating your superfluous policies won’t be a magic bullet. Dismantling the policy is easy. Making sure that everyone the policy applies to has the maturity and judgment to deal with it…that’s the hard part.

Good luck.

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