BR#26: Culture Not Strategy

Last week, I was listening to a podcast with Reed Hastings, who is the Co-founder and Chairman at Netflix and served as its CEO for 25 years.

He talked about how Netflix embraced and valued company culture above strategy.

In essence, the driving principle is that if you are good at finding and hiring great people, you can achieve outstanding results by granting those people the freedom and authority to do the best jobs they can. The opposite of that would be telling them what to do and how to do it.

Netflix of course isn’t alone in taking that approach. Some companies value culture above strategy, others prefer to have people work like a factory, where the name of the game is operational efficiency. It’s all about staying within your predefined bounds so that leadership can maximise its control over operations.

As a freelancer, I was able (and lucky enough) to work with companies on both sides of the spectrum and I’ve always preferred working with companies that lead like Netflix in that regard.

I’ve always been far more drawn to leadership styles that focus on empowering teams to really own and be responsible for their respective departments and objectives.

And here are some of the key reasons why:

First, the experience is naturally better for people who work with and at companies where their opinions and inputs are truly valued. Where you are truly trusted and given the space to do the best job that you can without micromanagement and obsessive oversight. That goes without saying. I don’t think anybody on Earth enjoys being micromanaged or distrusted.

But it also comes down to the business environment that you find yourself in. The factory mindset, where top leadership dictates the How and the What and the rest are just there to execute, leaves little room for creativity and flexibility.

If your company operates in a rapidly changing environment, that approach can cause all kinds of problems:

  • Duplication of work and redundancies;

  • Entire teams waiting around because they can’t make a decision without their manager who is on vacation;

  • An entire company following an outdated or bad strategy because they are afraid to raise concerns;

  • Fostering a culture of working in silos where one team knows nothing about what the other is doing or how they both contribute to a common goal. This is a recipe for counter-productive arguments and finger pointing when things go wrong.

The “factory” mindset may work for actual factories, and perhaps it can work for business models that aren’t susceptible to frequent change. But fewer and fewer business models fit that description. Nowadays, volatility and rapid change is the norm for a lot of people.

In order to succeed in a rapidly changing environment, a company needs to be equipped with a culture and a way of working that is compatible with rapid change.

That means hiring skilled, self-managed and proactive people who want that extra responsibility. And yes, that is usually more expensive, but I’ll take a team of 5 people like that over a team of 20 who need to be micromanaged any day.

It also means letting go of some controls. Not all of them, of course, because that can create a whole host of other problems. So when I talk about controls, I am not talking about security, privacy, legal, or ethics controls. But there are all kinds of management controls and approval loops in just about any company that, upon close inspection, may prove to be outdated, overly limiting or downright redundant.

So before looking at executional strategy as the means by which to achieve all goals, consider looking first at hiring policies, culture and ways of working.

You may find that the biggest opportunities for achieving profound positive change lie in those areas a lot more than they do in strategy.

Here’s a nice article I found if you’re interested in further reading: https://www.thecorporategovernanceinstitute.com/insights/guides/culture-vs-strategy-theres-only-one-winner/

P.S. Congratulations Mario for winning my Masterclass subscription giveaway last week! I’ll contact you soon to send you the subscription. Thanks again to all who read this newsletter!

Best Wishes,

Cata

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