Netflix's famous culture deck (2009)
Values are what you value, talent density is the only advantage, and freedom and responsibility
This is the best articulation of a lot of strong views, loosely held aspects of Netflix culture. There are so many hard-hitting ideas here. And some funny, memorable ones:
"There is also no clothing policy at Netflix, but no one has come to work naked lately." — Patty McCord
While most long PowerPoint decks hide shallow thinking behind complexity (“If you can't dazzle them with brilliance, then baffle them with bullshit”), this one stands out. Each slide presents a single, well-developed idea, demonstrating remarkably clear thinking and purposeful progression. I never thought I'd ever say that about a Powerpoint deck.
Reed Hastings breaks down the seven pillars of Netflix's "Freedom and Responsibility" culture, which he originally posted in 2009. The pillars are:
Values are what we value
High performance
Freedom and responsibility
Context, not control
Highly aligned, loosely coupled
Pay top of market
Promotions and development
The full deck is linked here.
Values are what we value
"The real company values, as opposed to the nice‐sounding values, are shown by who gets rewarded, promoted, or let go."
So many people profess to hold values, but they don't stick to their values. They're treated as shiny stickers to be displayed, rather than having any real value.
In the words of Jon Stewart:
"If you don't stick to your values when they're being tested, they're not values — they're hobbies."
So what does it mean to stick to values? You need to measure and reinforce behaving with values at all points: Netflix explicitly does this alignment at hiring 360 reviews, compensation review, exits, and in promotions.
Netflix calls out their values: judgment, communication, impact, curiosity, innovation, courage, passion, honesty, selflessness.
Otherwise, people won't know and stick to the values: what is measured is managed.
High performance
Netflix is known to be really strict on performance, and the foundation is that high performance is core to a great workplace.
"Great Workplace is Stunning Colleagues" v. "Great workplace is not day‐care, espresso, health benefits, sushi lunches, nice offices, or big compensation, and we only do those that are efficient at attraction stunning colleagues"
And it's with characteristic Netflix candor when they say:
"But, unlike many companies, we practice 'adequate performance gets a generous severance package.'"
"The Keeper Test: Which of my people, if they told me they were leaving in two months for a similar job at a peer company, would I fight hard to keep at Netflix?"
I find this chain of argument above, to be quite fascinating. It's almost like a mathematical proof, with "a great workplace is stunning colleagues" creating a bunch of different implications.
And while I thought Tobi Lutke at Shopify was the first to say this, turns out that it was Netflix!
"We're a team, not a family. We're like a pro sports team, not a kid's recreational team. Coaches' job at every level of Netflix to hire, develop and cut smartly, so we have stars in every position."
It's always interesting to see how organizations (like companies) think about loyalty. I think Netflix has a really thoughtful perspective on loyalty that I resonate with:
"Loyalty is good as a stabilizer."
"People who have been stars for us, and hit a bad patch, get a near term pass because we think they are likely to become stars for us again."
"We want the same: if Netflix hits a temporary bad patch, we want people to stick with us."
"But unlimited loyalty to a shrinking firm, or to an ineffective employee, is not what we are about."
Of course, all "high performance" cultures should have a section on how they treat high-performing jerks, because I think it's indicative of whether they thought hard enough about this question. I tend to agree with Netflix's take: "Brilliant jerks" create too high of a cost to effective teamwork.
Netflix operates in a creative industry (v. procedural work industry), which motivates their focus on high performance. As they say:
"In procedural work, the best are 2x better than the average."
"In creative work, the best are 10x better than the average, so huge premium on creating effective teams of the best."
Freedom and responsibility
This section is a masterclass in what I call, "the physics of organizational design." Netflix's fundamental axiom:
"Our model is to increase employee freedom as we grow, rather than limit it, to continue to attract and nourish innovative people, so we have better chance of long-term continued success."
In this section, I'll simply paraphrase the Netflix slides and include pictures, because this entire chain of argument is so elegantly illustrated.
Most companies curtail freedom as they get bigger to avoid errors. Growth will increase complexity of the organization, but talent density shrinks in most firms with growth. As a result, process emerges to stop the chaos, and the process-focus drives more talent out.
A highly-successful process-driven company often has a strong near-term outcome. But if the market shifts (new technology, new competitors, new business models), the process-centric company can't adapt quickly. (I think the exception to this I immediately think of is Danaher).
So there are three bad options:
stay creative by staying small
try to avoid rules as you grow and suffer chaos
use process to drive efficient execution of current model, but cripple creativity and ability to thrive when market shifts
Netflix has tried to choose a fourth option: avoid chaos as you grow with more high performance people, run informally with self-discipline and avoid chaos — informally run enables and attracts creativity.
And the main ways that Netflix tries to attract the best talent, is to offer them:
top of market of market compensation
freedom to make impact
demanding about high performance culture
Netflix is not without rules though. They do point out two types of necessary rules:
those that prevent irrevocable disaster (financials produced are wrong, hackers steal customers' credit card info)
moral, ethical, legal issues
Otherwise, rapid recovery is the right model. Just fix problems quickly, and this is easy because high performers make very few errors. In a creative-inventive market (v. safety-critical market like medicine or nuclear power), preventing error is not cheaper than fixing it.
"There is also no clothing policy at Netflix, but no one has come to work naked lately." — Patty McCord
You don't need detailed policies for everything.
Context, not control
Antoine de Saint‐Exupery, the author of The Little Prince, wrote:
"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."
Netflix echoes this mindset:
"The best managers figure out how to get great outcomes by setting the appropriate context, rather than by trying to control their people.”
The focus is on creating the conditions that inspire excellent decision-making and execution, rather than prescribing every step of the process.
Of course, there are sometimes you do need control — like in an emergency, when someone is still learning their area, or if you discover you’ve got the wrong person in a role altogether. But those are the exceptions.
They also take a different philosophical approach on leadership, especially on mistakes:
"Managers: When one of your talented people does something dumb, don't blame them. Instead, ask yourself what context you failed to set."
"Managers: When you are tempted to 'control' your people, ask yourself what context you could set instead. Are you articulate and inspiring enough about goals and strategies?"
Essentially, good leaders shape the environment and clarify the “why,” so people make better decisions. Netflix wants managers to challenge themselves to see if they’ve provided enough vision and clarity before jumping in with top-down control.
Highly aligned, loosely coupled
Netflix highlights three main ways companies approach interdepartmental collaboration:
1. Tightly-coupled monolith: The organization moves in lockstep under heavy coordination, but that coordination slows the entire system. High‐talent teams end up exhausted by bureaucracy and constrained by a bottleneck of approvals.
2. Independent silos: Each department or unit is isolated. There’s minimal collaboration and often alienation or suspicion between groups. It can work if every unit truly operates on its own, but that’s rare.
3. Highly aligned, loosely coupled: Everyone is aligned on the big picture (strategy, objectives, culture), while individual groups have autonomy to move quickly. This structure aims to retain speed and innovation without breeding chaos.
Netflix strives for that third model. They emphasize clarity around the high-level vision and objectives — so teams know where they’re headed — and then trust teams to figure out how to get there. This approach recognizes that alignment on goals matters far more than rigidly enforcing methods.
Pay top of market
Netflix also has a unique philosophy on compensation: they aim to pay “top of market” for every individual. They use three tests to determine if someone is being paid top of market:
1. What could the person get elsewhere?
2. What would Netflix pay for a replacement if this person left?
3. What would Netflix pay to keep this person if they received a bigger offer elsewhere?
The goal is for each employee to remain at the top of their personal market value. Titles matter little, because the real question is: “What’s someone worth for the impact they can deliver?” Netflix recalibrates salaries each year, rather than relying on a fixed “raise pool,” which is the way most companies do it.
They also emphasize that compensation isn’t pegged to how well Netflix as a company is doing. As they put it:
“Whether Netflix is prospering or floundering, we pay at the top of the market—just like a sports team with a losing record still pays talent the going rate.”
I actually do believe their sports team analogy is so incredible. As you all know, I love sports analogies: Nerds should train like professional athletes.
In addition, they believe a big, straightforward salary is the most efficient form of compensation. No complicated bonus programs, no free stock options, no philanthropic match. They’d rather put everything into salary and let people spend (or donate) as they see fit.
Promotions and development
Netflix’s perspective on promotions is refreshingly direct. Two conditions must be met before you can promote someone:
1. The job must be big enough. Sometimes a role isn’t large enough to warrant a higher title, no matter how good the person is.
2. The person must be a superstar in their current role. In Netflix’s words, “Could this person get the next-level job here if applying from outside and we knew their talents well?” and “Could they get that job at a peer firm that also knew them well?”
Another neat guideline:
“If a manager would promote an employee to keep them if they were thinking of leaving, that manager should promote them now — don’t wait.”
Netflix wants to be proactive about recognizing talent, rather than reactive. This is so different than all the other companies that stick to a prescribed review and promotion cycle.
As for development, Netflix is skeptical about formal programs like courses, assigned mentors, or rigid multi‐year career pathing. Instead, they trust “high performance people to be largely self-improving through experience, observation, introspection, reading, and discussion—provided they have stunning colleagues and big challenges.”
It’s also on individuals to manage their own career paths, not wait for the corporation to design it for them.
Culture is a work in progress
Netflix’s legendary culture deck closes by stressing that all of these principles — high performance, freedom and responsibility, paying top of market — are simply their current best thinking (as of 2009) on how to keep the company innovative and successful.
As the deck says:
"This slide deck is our current best thinking about maximizing our likelihood of continuous success."
And:
"Our culture is a work in progress. Every year we try to refine our culture further as we learn more."
Rather than being a final manifesto carved in stone, it’s treated as a living document, reflecting Netflix’s emphasis on constant evolution and experimentation.