People over Processes

Making deci­sions is often con­sid­ered an essen­tial ele­ment of lead­er­ship. An elite cir­cle of exec­u­tives makes deci­sions; at least the big and strate­gic ones and some­times, depend­ing on the lev­el of trust in the orga­ni­za­tion, also deci­sions on details, lead­ing to the plague of micro­man­age­ment. Reed Hast­ings, CEO of Net­flix, is lead­ing dif­fer­ent­ly. He prides him­self on mak­ing as few deci­sions as pos­si­ble. And his suc­cess shows that he is right, as 20 years after its foun­da­tion Net­flix is now the tenth largest Inter­net com­pa­ny in the world (Wikipedia).

I pride myself on mak­ing as few deci­sions as pos­si­ble in a quar­ter. And we’re get­ting bet­ter and bet­ter at that. There are some times I can go a whole quar­ter with­out mak­ing any decisions.
Reed Hast­ings

The basic phi­los­o­phy of Reed Hast­ings is “Peo­ple over process­es”. This direct­ly results in the first prin­ci­ple in Netflix’s very worth read­ing and often cit­ed cul­tur­al state­ment, name­ly to “encour­age inde­pen­dent deci­sion-mak­ing by employ­ees”. For this to work, Net­flix relies heav­i­ly on its sec­ond prin­ci­ple: “share infor­ma­tion open­ly, broad­ly and deliberately”. 

Every­body gets all the infor­ma­tion. So what we’re try­ing to do is build a sense of respon­si­bil­i­ty in peo­ple and the abil­i­ty to do things. I find out about big deci­sions now that are made all the time, I’ve nev­er even heard about it, which is great. And most­ly, they go well.
Reed Hast­ings

Deci­sion-mak­ing starts on a micro lev­el with “an open leave pol­i­cy, no set rules on expense accounts or trav­el, and no spend­ing ceil­ings on con­tract sign­ings. Good judg­ment, not admin­is­tra­tion, is the oper­at­ing prin­ci­ple” (Quartz at Work) allow­ing each Net­flix employ­ee to decide indi­vid­u­al­ly on the num­ber of vaca­tion days or due to the absence of trav­el guide­lines. Reed Hast­ings suc­cess­ful­ly counts on respon­si­ble employ­ees mak­ing good deci­sions for the ben­e­fit of the com­pa­ny. Where oth­er orga­ni­za­tions are so afraid of abuse that they can no longer see any light in the jun­gle of guide­lines and inca­pac­i­ta­tion gets a lit­tle worse with each new direc­tive, Net­flix instead works with faith in per­son­al respon­si­bil­i­ty. On a small scale as well as on a large scale.

Who­ev­er thinks that this only works in Inter­net com­pa­nies is com­plete­ly wrong. The Buurt­zorg nurs­ing orga­ni­za­tion is rig­or­ous­ly com­mit­ted to decen­tral­iza­tion. The nurs­es at Buurt­zorg are all gen­er­al­ists with regard to the dif­fer­ent clin­i­cal pic­tures as well as with regard to the orga­ni­za­tion of their work. They plan and orga­nize the care them­selves, con­duct job inter­views, rent offices, plan train­ing cours­es and much more, where the typ­i­cal con­troller imme­di­ate­ly smells wast­ed syn­er­gies. More than 10,000 employ­ees now work in 850 teams at Buurt­zorg in the Nether­lands in this way. They are sup­port­ed by a very lean back office with 45 employ­ees plus 15 coach­es and zero managers. 

Peo­ple always tend to act as they are con­sid­ered. If we open the spaces of free­dom, peo­ple will start devel­op­ing them­selves and they will set them­selves ambi­tious targets.
Jean François Zobrist

Jean François Zobrist reor­ga­nized the French die cast­ing man­u­fac­tur­er FAVI in mini fac­to­ries, which made all deci­sions for their respec­tive cus­tomers them­selves. And he also relies mas­sive­ly on trust and the per­son­al respon­si­bil­i­ty of the employ­ees by elim­i­nat­ing guide­lines in favor of trust. For exam­ple, there was a direc­tive that a work­er in order to get a new pair of gloves had to show the old pair to his super­vi­sor and then receive con­fir­ma­tion from him, which he had to show to get the gloves from the locked ware­house. One day, dur­ing his first time as CEO, on a tour around the fac­to­ry, Zobrist met a work­er wait­ing in front of the ware­house for his new gloves, he recal­cu­lat­ed and found out that this work­er was oper­at­ing a machine that cost 600 francs per hour, i.e. 10 francs per minute. Since the whole process took 10 min­utes dur­ing which the machine stopped, the gloves worth 5.80 francs cost the com­pa­ny an addi­tion­al 100 francs through this con­trol mech­a­nism! (Cor­po­rate Rebels, Part 1).

If you want peo­ple to to think, give them intent, not instruction.
David Mar­quet

How­ev­er, the same prin­ci­ple of decen­tral­ized deci­sion-mak­ing can also be found in a place where one would not expect it at all, name­ly on the nuclear sub­ma­rine USS San­ta Fe. Because he was trained on a com­plete­ly dif­fer­ent type of sub­ma­rine, David Mar­quet as com­man­der had imme­di­ate­ly renounced to give orders and there­by strength­ened the self-respon­si­bil­i­ty of the crew, which final­ly led to the USS San­ta Fe advanc­ing from worst to the best sub­ma­rine of the Navy: 

Share This Post

Leave a Reply