Powerful: Building a Culture of Freedom and Responsibility Hardcover – January 9, 2018

The foundation of a great business book is a great story and boy does Patty McCord have a great story. She joined Netflix right at the start, carpooled into work with the CEO each day and spent 14 years pioneering a radically performance focused HR approach. What makes her journey especially exciting and valuable is that her experience at Netflix isn’t just a reaction to the unique circumstances Netflix was in - pioneering a new market and a new technology- its the fact that McCord and CEO Reed Hastings set out from the start to build a company based on a different approach to people. So this isn’t the Netflix story told from a people and HR perspective, the Netflix story was always going to be told from a people and HR perspective, that’s what makes what happened at Netflix so valuable as a case study for everyone else.McCord and Hastings had worked together before and had noticed that as companies grow and startups become scale ups, something bad happens. The talent density tends to drop. The ratio of super top high performers becomes less. It’s something I’ve personally seen and heard of a hundred times. It’s what is behind the constant warnings to entrepreneurs “Watch your culture as you grow”. These warnings are made with good intention, but they are ultimately useless as they come with no guidance as to what to do, how to “watch your culture” and what practically to do to keep that fast growing, autonomous startup mindset as you grow to hundreds or thousands of employees. Powerful is that guidance, it’s the manual.With several decades of work in the Valley, Patty has developed a love for working with software engineers and that influence means she applies a product manager’s approach to HR. She has a goal of operating with minimal process and constantly tests eliminating procedures. But she does this in an agile way, like a good product manager would. She sets a low bar for people process innovation - “Is it safe to test?”, rather than “will this work”. If it is safe let’s change the process (commonly “lets remove the process) and see. If it turns out he policy was needed just re-instate it.There are some things in the book that can only work in the Valley, in that unique place where VC cash at times is plentiful and the oversupply of jobs to talent distorts things like no where else on Earth. It’s easy to focus on these things, like “constantly ask your staff to interview elsewhere and see what they are worth” and dismiss the book as not practical to your situation or industry. But that would be a tragedy because the vast majority of the learnings and advice in this book are applicable to so many businesses and organisations.The new employee college, teaching every single person how to read the P&L, tacking everyone how the company makes money, teaching everyone the key projects and key performance indicators for each department, communicating to everyone constantly what the 5 big challenges are the company is faced with, encouraging a practice of constant, respectful, radical honesty and feedback, understanding that great jobs are challenging jobs where great things get done, accepting that perks and food are at best peripheral decoration and the core thing you need at work is amazing people to work with and a great challenge to overcome - these are the central tenants of Powerful and they are applicable to any business, anywhere.Powerful is beautifully written and Patty has an engaging, irreverent style. I flipped between the Kindle version and the audio book and can heartedly recommend both, sometimes its great to hear Patty’s voice and emphasis in the material.Powerful is a fantastic read for managers, leaders, CEO’s, HR people - anyone at any level who cares about business and people and wants to help the people they work with do their best work.

Netflix is one of the world’s greatest companies. They didn’t become a great company because they have a great strategy. Let’s be clear about this: strategy never made any company great. They are a great company because the have a sound strategy AND a superb people management system. This book is a description of that system by the Human Resource executive, Patty McCord, who to helped create it.McCord writes: “…we found that inculcating a core set of behaviours in people, then giving them the latitude to practice those behaviours—well, actually, demanding that they practice them—makes teams astonishingly energized and proactive.” To transform a culture in a team or the whole company, isn’t achieved by formulating a set of values and principles. It is only achieved when the behaviours you desire become consistent practice.This book describes the eight practices below:1. The greatest motivation is contributing to success2. Every single employee should understand the business3. Practice radical honesty4. Debate vigorously5. Build the company now that you want to be in the future6. Have the right person in every single position7. Pay people what they are worth to you8. Perfect parting well with non-performing staff or staff who are no longer required, and be a great reference company to have worked at.I will touch on only three.The first principle is that motivation flows from being a contributor to success, not from incentives and perks. Talented people who are adult in their behaviour, want nothing more than to be challenged. This requires that you employ talented people and then explain to them, clearly and continuously, what exactly you expect from them.The common alternative is to create policies and procedures as a substitute for explaining clearly and continuously. The weakness of this approach is that the manual cannot anticipate the ongoing changes that are inevitably required.Netflix was changing too fast to be able to follow a policies and procedures manual. The company had to have a flat management which allows for speed in execution. This became clear when they had to retrench, and many middle managers were included. The result of removing a layer of management was a quickening of response times Netflix had not anticipated.As the fortunes of the company improved and it grew, the challenge became how to sustain the creative spirit and extraordinary level of performance the teams had been demonstrating. This stimulated McCord to ask: “What if people in marketing and finance and my own group, human resources, were allowed to unleash their full powers?”Netflix began by trusting people to be responsible with their time, got rid of their expense and travel policy, and in place simply demanded that employees use good judgment about how they spend the company’s money. The company lawyers warned it would be a disaster, but what emerged was that people didn’t abuse the freedom. “We saw that we could treat people like adults,” and that the staff wanted this. Netflix then experimented with every possible way to liberate teams from unnecessary rules and approvals.This approach required management to appreciate that their most important job is to focus on building superb teams. The best achieving teams were those where all members understood the ultimate goal of their work and were freed to creatively solve the problem of how to get there.Netflix was able to prove to itself that operating with the leanest possible set of policies, procedures, rules, and approvals, releases speed and agility.This led to the second principle that every single employee should understand the business.What is required in the absence of rules, processes, approvals, bureaucracy, and permissions, is clear, continuous communication about the context of the work to be done. It is an ongoing discussion about where we are, and what we’re trying to accomplish.In Netflix’s case they were changing from a system where you paid per rental of a movie which was mailed to you, to a subscription model where you paid in advance for future benefits. This change had profound operational implications. Too many companies when faced with new and difficult challenges “invested so much in training programs of all sorts and spent so much time and effort to incentivize and measure performance, but they’ve failed to actually explain to all of their employees how their business runs,” McCord observes.Ask yourself these questions: Do your staff appreciate the most pressing issues facing the business? How much do you think they know about how their work contributes to the bottom line?If your instinctive response is that if you tried to explain, they would not understand, McCord advises: “The rule I would give them was this: explain it as though you’re explaining to your mother.” After all, if your staff aren’t informed by you, there is a good chance they’ll be misinformed by others.Communication between management and employees should flow in both directions. The more you actively encourage questions and suggestions, the more your people, at all levels, will offer ideas and insights that will amaze you.And the job of communicating is never done.To achieve all of the issues above, you have to have a focus on principle 6 - the right person in every single position.Netflix relied on the talent-management philosophy that “the responsibility for hiring great people, and for determining whether someone should move on, rested primarily with managers,” not on HR. HR is only an assistant in this process.They also required the deceptively difficult task of hiring a person who would be a great fit for the position (at whatever level,) and not just adequate. Building a great team is the managers’ most important job.“True and abiding happiness in work comes from being deeply engaged in solving a problem with talented people you know are also deeply engaged in solving it, and from knowing that the customer loves the product or service you all have worked so hard to make,” McCord explains. Money alone doesn’t buy love.This book is an accessible, very practical guide to managing staff at every level, based on insights from only one, very unique company – Netflix. However, it provides a valuable source of thought provoking ideas that you can easily adapt to your own circumstances.Readability Light -+--- SeriousInsights High --+-- LowPractical High +---- Low*Ian Mann of Gateways consults internationally on leadership and strategy, and is the author of the recently released ‘Executive Update.

I bought this book because it was required reading for an HR management class. It is a quick read and Mc McCord has a no-nonsense style of managing adults. Her style would not work if you are managing teens, and people who are not developed mentally and professionally. She highlights the fact that most people just want to be part of a winning team and are eager to contribute meaningful work. I recommend reading if you work in an HR capacity.