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Good and Bad Process – Netflix's Playbook

As a consultant, you know the process of getting a contract signed is going to be laborious when after the first exchange of emails with a client, you are passed to the procurement office. It only gets worse when they insist on a conference call with not one but three procurement managers.  Now, I have worked in very large, bureaucratic organizations (think U.S. gov’t) but having escaped from that world more than a decade ago I have grown used to working in and for organizations that value speed, delivery, and performance more than process for process sake.

The experience that I mentioned in the opening sentences is unfortunately not made up. I really experienced that scenario earlier this year and it was as painful as you might imagine. The sad part is that there were talented, hardworking people in that company but at almost every turn their hands were tied. This is why I was refreshed to see this presentation from Netflix (NFLX) CEO Reed Hastings that addresses some of these very issues. For a person who tried to get a Fortune 100 company to bid out work to employees as if they were independent contractors and split the money for projects that came in under budget, I can appreciate the idea of trying to keep the most talented individuals in your organization as you grow large.  Don’t be intimidated by the 128 slides in this presentation, it is an easy read that is worthwhile. But for those not enticed enough, here are some of the more interesting points that Hastings mentions in the deck.

Don’t be intimidated by the 128 slides in this presentation, it is an easy read that is worthwhile. But for those not enticed enough, here are some of the more interesting points.
  1. Pay Top of Market for employees – outstanding employees get more done than two adequate employees and require less process (slide 93)
  2. Allow employees to decide how much stock or stock options they want to own (slide 107)
  3. Most companies curtail freedom as they get bigger because of the fear of chaos, process emerges to prevent chaos but this drives out talent – do the opposite, minimize complexity, run informally, and higher the best people (slides 41 – 52)
  4. Good processes help talented people get more done – Bad processes try to prevent recoverable mistakes (slide 61)

Part 2 of our upcoming book is about building processes for scale, and in fourteen chapters we cover everything from managing crisis situations to build vs. buy. One of the most important topics covered is how to determine the right process for your organization. On this topic we offer some guidelines for determining when you should consider adding process. One test is if there is repetitive management of the same task. If the task is getting accomplished without management then there is no need for process but if multiple employees require some help determining the appropriate steps, this is an indicator that a process might be needed. Another guideline that would suggest you consider adding a process is if everyone is doing the task differently. In a lot of cases this isn’t going to matter but when it does, consider establishing a light weight process. Once you’ve identified that you could use some process then you need to decide how much. You can read more about this subject in the book when it comes out in January or check it out now in draft form on InformIT.

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