Tuesday, 25 August 2009

Remove the Rules: Learn from Netflix

When Happy was voted the best company for customer service in the UK, I asked the judges why we won it. David Jackson, chair of the judges, replied that we clearly knew exactly what our customers wanted. "But", he continued "that is not unusual. Most companies understand what their customers want. But most companies then put in place rules and procedures which prevent their staff from delivering what the customers want. You don't."

Learn from Netflix
I was reminded of this when I was sent this great slide show from Reed Hastings, founder of Netflix. (Netflix is the leading US DVD rental service, the equivalent of Lovefilm in the UK - and a company that has won awards for some of the best customer service in the USA.). There are a lot of slides (123) but they are packed with interesting ideas:


Many companies assume you need more rule as you grow. Reed rejects this idea, saying that since Netflix went public in 2002 and continued to grow, they have substantially increased employee freedom.

Netflix Expenses Policy: 5 Words
For instance Netflix has no vacation policy, instead judging people on the work they do rather than the time they are in the office. Their policy on expenses, entertainment, gifts and travel is just 5 words long: "Act in Netflix's Best Interests". This is backed by guidance such as "Travel as you would if it were your own money". Instead of lots of rules they trust their people and rely on their common sense. As one Netflix employee puts it:

"There is also no clothing policy at Netflix, but no one has come to work naked lately" Patty McCord, 2004

What happens when trust doesn't work and your people do something dumb? Reed suggests you don't blame them but ask what part of the context you failed to set for them.

"Flexibility is more important than efficiency in the long-term."
That is an interesting view from Reed. It reminds me of my current dealings with my bank, NatWest. I would forgive their inefficiency (making 5 penalty charges for a payment I never made) but not their refusal to fix it, despite me being a telephone banking customer, unless I write a letter explaining my case.

For Reed the approach is based on ensuring you have only the most talented people and paying the top market rate. "One outstanding employee gets more done and costs less than two adequate employees." Look at the rules in your company. Do you really need them? What would happen if you replaced them with guidance and gave your people ore freedom to do a great job for your customers?

Yearn for the Vast and Endless Sea
To finish, I love this quote (again from Reed's slides):

"If you want to build a ship, don't drum up the people to gather wood, divide the work, and give orders. Instead, teach them to yearn for the vast and endless sea"
Antoine De saint-Exupery, author of The Little Prince