More Than Talk » Moving the Needle at Netflix

Jun 08 07

Moving the Needle at Netflix

We recently had a chance to talk with Steve Swassey, Director of Corporate Communications at Los Gatos, CA based Netflix Inc.. Steve talks about his role and what Netflix is doing to build culture, drive change, and create innovation.

Click here to listen to the podcast

Full transcript after the jump.

Renn: On this edition of More Than Talk, we talk with Steve Swasey,
Director of Communications at Netflix, the world’s largest online movie
rental service. Steve once worked at Peoplesoft before joining Los Gatos
based Netflix, and we’re happy to have him joining us today.
Steve, you’ve done a great job there at Netflix. Tell our audience a
little bit about how you approach corporate communications.

Steve Swasey: Well, I agree with you. I have a great job at Netflix.
Netflix is an innovative company. It’s a leading company. There are
innovators and there are imitators, and Netflix is one of those companies
that is often imitated now because of the very cool and progressive
service it offers – online DVD rentals.
And part of the culture of Netflix is to hire people who are very seasoned
in their disciplines. They have deep domain expertise and come to work
every day for the satisfaction of getting something done that moves the
needle. So what we do is come to work every day to change the way America
rents its movies, and that’s our incentive.
So unlike some corporate communications departments that incent their
employees with gifts, memorabilia, clubs and trips, Netflix members are
incented by doing the work. We don’t get a lot of backpats, there’s not a
President’s club, there’s not an Employee of the Month program. We don’t
have anybody getting free parking spaces closest to the building.
The point is, there’s not a lot of incentive programs at Netflix. Our
incentive is to get the job done in a way that has never been done before.
And that’s a very innovative and a very entrepreneurial environment. And
that’s what makes us tick.

Renn: Netflix has more than 1,400 employees, 400 of which are full
time. What do you do to build the sense of culture that you have, and then
how do you maintain that?

Steve Swasey: The culture is set at the top. Like any good organization,
the CEO drives the culture by his or her actions, his or her attitudes,
the work ethic that they demonstrate. It’s not an accident that Netflix
has a great corporate culture because Reed Hastings personally believes in
accountability, in freedom and responsibility, in innovation.
He is an innovator. He sets that expectation at the top, so his direct
reports are steeped in innovation, creativity, freedom and responsibility,
accountability. They, in kind, hire people who are steeped in innovation,
creativity, freedom and responsibility, accountability. And that permeates
the organization.
If that were not set at the top, it would be impossible to manage that
throughout the organization. But when it is set at the top, and everybody
is held to the same standards, starting with the CEO, then it’s not
difficult to keep that going throughout the organization.
The second part of my answer, and that was the first
part of your question, we do hire people that are going to be able to do
the job of three or four people. We are not process-intensive. What we are
is progress-intensive.
And Netflix employees are measured not by the output of their work, but
the results of their work. And it’s a key strategic difference with
Netflix if you are moving the needle, if you are creating something that
hasn’t been created before, if you are doing something that hasn’t been
achieved before. And we can measure that in terms of retention, or
satisfaction, or acquisition of members. That’s how you’re determined to
be successful employee.
The whole reason for Netflix to exist is to spread the love of movies and
connect people with movies they love. The way we measure that is how many
members are we generating, what is our retention of members, and what are
you doing to achieve those goals. So everybody in the company has that big
goal in mind. And they’re not in a department to do a department’s work.
They are in a department to do a company’s work.
And that’s the strategic difference that we have from a
lot of companies. So we hire people who are very seasoned, and I’m not
talking about ’senior’. There are some senior folks like myself tromping
around, that have been in business for a quarter century or more.
But we also have a lot of really young, innovative people that are doing
the work of three, or four, or five other people in other companies. And
we expect adults to come in and practice adult behavior. We give them lots
of freedom and lots of responsibility. And with that comes the requirement
that they achieve at amazingly high levels.
On our job center on our website, we have the eight values of Netflix. One
of them says, “You are the best at what you do, and what you do amazes
people.” So we expect people to come in and really be a high-performance
employee in a high-performance environment. And the rewards are doing
something that hasn’t been done before.

Renn: Prior to going to Netflix, Steve, you worked at Peoplesoft.
Comparing that experience with what you’re describing at Netflix, do you
see an innovation in how we run our businesses today, maybe modeled very
much on what Netflix is doing?

Steve Swasey: I absolutely agree that Netflix is really changing the
way, not only changing the way consumers behave in terms of movie rentals,
but changing the way that corporations behave.
You mentioned Peoplesoft. Peoplesoft was a great company. It was acquired
by Oracle Corporation for a number of reasons. And I wouldn’t necessarily
hold Peoplesoft up to the paradigm of an old school company. But I have
worked at other companies in very traditional industries where you have
specific objectives for employees by department that don’t necessarily
tie-in to the corporate objective.
And I think the key is, we’re all in it together. We do not make a
marketing decision at Netflix without taking into account the total effect
on operations, on finance, on the website. It’s all interrelated because
all of our products and services go out through out web pages
And Netflix is really superb in keeping this woven fabric together. Every
quarter, we have a quarterly business review at which all of the
director-level employees and up attend. And it’s required attendance, it’s
not optional, and it’s not an easy offsite. Everybody comes with their
best work and their biggest mistakes
And we superanalyze – we are a highly critical and a highly analytical
environment. We analyze the good and the bad and the ugly. And we are very
upfront. Here’s what went well, and aren’t we proud of it. But let’s not
spend any time with that, because that went well. We don’t need to analyze
that because that went really well.
Here’s what went wrong, and here’s what we think went wrong. And then
we get all the inputs, and as a marketing person, I’m standing up in front
of operations people, and logistics people, and finance people, and web
team developers and engineers and computer scientists, and they’re saying,
“Well, why was that blog interview, or that podcast interview, helpful?
What did that achieve?”
And I have to answer to that specific level of detail. We look at the
smallest detail with excruciating attention, so that we can continue to
improve the business, which of course lowers cost, drives greater
efficiency and higher customer satisfaction.

Renn: What advice do you give to folks who are responsible for the
kind of work you’re responsible for? And what do you tell the
telecommunications and marketing professionals who are trying to
perpetuate this kind of culture?

Steve Swasey: Always focus on your corporation’s mission and make that
first. Make that your highest priority, because you can never be defeated,
or you can never be set back by a naysayer if you can say, “I am doing
this because this is what our corporation exists to do.
And it’s so simple. It’s often one of those “Aha!” moments. Sometimes
people lose focus of the simplest concept – always focus on your company’s
reason for being and make every decision around that. Is this best for the
company and it’s objective?
And then you’ll never lose an argument because if you’re doing what is
truly best to generate retention, generate subscribers, generate users -
whatever your product or service is – to generate more use or service or
distribution of that, then you will be held in high esteem in your
organization and nobody’s going to argue with you, because they know
you’ve got the company’s best interest in mind.
And that’s why we all exist as corporations – to improve our
product/service offering, to improve our efficiencies, and ultimately, to
provide a better return to our investors. And that’s always measured by
greater efficiency, higher customer satisfaction, cost savings, and so on.
So, always focus on the corporate objective and you won’t go wrong.