But this is the most important message of this chapter: even if your employees spend a little more when you give them freedom, the cost is still less than having a workplace where they can’t fly. If you limit their choices by making them check boxes and ask for permission, you won’t just frustrate your people, you’ll lose out on the speed and flexibility that comes from a low-rule environment. One of my favorite examples is from 2014, when a junior engineer saw a problem that needed to be solved. Friday morning April 8, Nigel Baptiste, director of partner engagement, arrived at the Netflix Silicon Valley office at 8:15. a.m. It was a warm, sunny day, and Nigel whistled as he grabbed a cup of coffee in the open kitchen on the fourth floor and strolled back to the area where he and his team test Netflix streaming on TVs made by official partners like Samsung and Sony. But when Nigel arrived at his work space, he stopped whistling and froze. What he saw, or, rather, what he didn’t see, sent him into a panic. He remembers it like this: Netflix had invested a big chunk of money so that our customers could watch House of Cards on new 4K ultra high definition TVs. The problem was that until this moment basically no TVs supported 4K. We had this fresh super-crisp look, but few could see it. Now, our partner Samsung had come out with the only 4K television so far on the market. These TVs were expensive, and it wasn’t clear if customers would buy them. My big goal that year was to work with Samsung to get lots of people watching House of Cards in 4K. We had a minor media coup when journalist Geoffrey Fowler, who reviews high-tech products for the Washington Post and has about two million readers, agreed to test House of Cards on Samsung’s new TV. His review would need to be great for 4K to take off. On Thursday Samsung engineers had come to Netflix with the 4K TV and checked it with my engineers to make sure Mr. Fowler would have a terrific viewing experience. Thursday evening, the TV tested, we all went home. But Friday morning, when I arrived at the office, the TV was gone. After checking with facilities, I realized it had been disposed of with a bunch of old TVs we’d told them to get rid of. This was serious. That TV was due in Fowler’s living room in two hours. It was too late to call the Samsung people. We’d have to buy another TV before ten a.m. I started calling every electronic store in town. The first three calls resulted in: “I’m sorry sir, we don’t have that TV.” My heart was pounding in my throat. We were going to miss the deadline. I was almost in tears when Nick, the most junior engineer on our team, sprinted into the office. “Don’t worry, Nigel,” Nick said. “I solved that. I came in last night, and I saw the TV had been disposed of. You didn’t respond to my calls and texts. So I drove out to the Best Buy in Tracy, bought the same TV, and tested it this morning. It cost twenty-five hundred dollars, but I thought it was the right thing to do.” I was floored. Two and a half thousand dollars! Imagine, a junior engineer feeling so empowered that he spends that much without approval because he thinks it’s the right decision. I felt a wave of relief. Due to all the sign-off policies this could never have happened at Microsoft, HP, or any other company I have worked for.” In the end, Fowler loved the high-definition streaming and wrote in his April 16 Wall Street Journal article: “Even the unflappable Francis Underwood perspires in ultra-high definition. I spotted sweat on the upper lip of Kevin Spacey’s fictitious vice president while streaming Netflix’s ‘House of Cards.’” I don’t want rules that prevent employees from making good decisions in a timely way. Fowler’s review was worth hundreds of times more to both Netflix and Samsung than that TV. Nick had just five words to guide his actions: “Act in Netflix’s best interest.” That freedom enabled him to use good judgment to do what was right for the company. But freedom isn’t the only benefit of removing your expense policy. The second benefit is that the lack of process speeds everything up.
Netflix operates without an approval policy for expenses and claims. Doing so, it aims to prioritize speed and empowerment over an insignificant amount of cost savings. The rationale being that by hiring the “best talent” in town, it would not make sense to hamper their decision making and slow them down with all these red tape.
Also as mentioned earlier in the book, context matters. There were employees who were audited and were found to have abused the system. These employees were fired to set an example.
I’m sure many of us were in situations where having to justify your expenses became a hassle and in some cases, you actually spent more of your company’s money. This policy might work, but it definitely requires discipline and awareness from management when implementing it. What do you think?
