“Most entrepreneurial ideas will sound crazy, stupid, and uneconomic, and then they’ll turn out to be right,” This quote defines Reed Hastings’s leadership style. His approach has been extraordinary. He started by transforming Netflix into a top streaming platform to create a culture of innovation. Are you curious about the trade secrets of Reed Hastings’s leadership style? Let’s get started.
What is Reed Hastings’s leadership style?
Reed Hastings’s leadership style is both transformational and participative. He consistently inspires people with his vision, as seen in Netflix’s bold strategic shift from a DVD-by-mail service to a leading streaming platform.
Moreover, Hastings encourages collective decision-making by promoting transparency and open communication. This approach makes employees feel valued. As a result, they contribute to the company’s success and innovation.
1. He introduced methods of ‘farming and Dissent,’ and the “keeper test.”
Reed Hastings has consistently focused on the importance of feedback in his leadership style. This creates a culture of innovation and collaboration. His method, termed ‘farming for dissent,’ encourages team members to express opposing opinions.
Furthermore, the “keeper test” is a management exercise described in Netflix’s company culture memo. Managers are encouraged to ask themselves if a team member wanted to leave, would they fight to keep them? The employee needs to be fired if the response is negative.
Before a June 2024 update, the keeper-test question was: if a team member were to leave for a similar role at another company, would you try to keep them? Reed Hastings’s leadership style reflects employee retention. By the end of 2023, Netflix reached an annual revenue of $33.7 billion.
2. Hastings always believed in paying people more than they expected.
Netflix believes that to attract the top talent, it has to pay them more than anyone else.
This sometimes involves offering employees more than they may agree to, frequently before they ever ask for a salary increase. Reed Hastings’s leadership style makes him stand out as a person who wants his brand to stand out.
In the US, the average Netflix employee makes $84,375 a year. The annual salary range for Netflix employees is $36,000 in the lowest 10% of pay and $196,000 in the highest 90%. Netflix salaries are also influenced by geographic location. The highest-paying Netflix employees are in Los Gatos, California.
3. Hastings believes that it’s worth taking a chance to trust people.
For Reed Hastings, company culture and values are critical to a successful business. Hastings believes in creating a work environment that fosters collaboration, creativity, and growth. Also, believes in trusting its employees to bring out the best in them. Like the quote we discussed earlier, Reed Hastings’s leadership style always focused on trusting the team.
Netflix has implemented various initiatives to promote diversity and inclusion, such as its “Inclusion Works” program. Moreover, it also commits to increasing the representation of women and people of color in leadership positions.
The company prioritizes diversity and inclusion. Besides that, Hastings believes that Netflix can continue to remain the World’s leading streaming platform. The company also made several changes to the logo, showing Reed Hastings’s leadership style to encourage creativity and adaptability.
4. In the beginning, Hastings was against the idea of downloading Netflix content
Hastings and the chief product officer of Netflixix believed that building a download functionality would pull valuable resources away from their focus.
However, they conducted interviews in Germany and India to test this theory. He discovered that a large number of YouTube users in Germany, as well as 70% of users in India, depended on downloading videos to watch at a later time.
The employees presented their results to their supervisor, who then forwarded them to their supervisor’s supervisor, and so on until they reached Hastings, who approved it. Netflix is now available for download.
5. Hastings encourages employees to make decisions and own their mistakes.
Did you know Yasemin Dormen was heading up a Turkish social media campaign for Netflix’s hit sci-fi show Black Mirror? Dormen thought it would catch people’s attention to create creepy, cryptic messages and post them online for the mysterious show’s upcoming fourth season.
But the idea backfired. When it was considered a “creepy marketing stunt” by British media, Netflix executives tried to fix the damage. Over the next few days, she wrote many memos and made several phone calls.
The well-known Reed Hastings’s leadership style suggests that staff members are free to take risks without approval. If they fail, though, they have to “sunshine” it. That means, if you’re a Netflix employee, and your project fails and burns, you share your assessment of what went wrong and what you learned with the company.
6. Netflix bought the best documentary by giving context, not directions.
Netflix doesn’t want its leaders to make all the big decisions and control every high-stakes situation for their direct reports. It wants them to lay out the context so that employees feel empowered and informed to make the judgment call themselves even when millions of dollars are on the line.
Director of Netflix’s original documentaries, Adam Del Deo, fell in love with the film Icarus. The documentary explored how a global drug crisis involving competitive cycling came to light. Del Deo wanted Netflix to purchase Icarus. But he was aware of the cost. Thus, got advice from Chief Content Officer Ted Sarandos but refused. He declared that it was his decision.
Sarandos told Del Deo if he believed Icarus was “the one,” he should feel free to do whatever he wanted for it. Del Deo felt good about Icarus. So he bought it for Netflix. Icarus turned out to be a hit. It won the Best Documentary prize at that year’s Oscars. Del Deo’s bet paid off. This episode summarizes an important Netflix principle: Lead with context, not control.
Conclusion
We hope this glimpse into Reed Hastings’s leadership style has inspired you to think differently about innovation and employee empowerment. His approach at Netflix shows the power of bold vision and trust. What do you think makes a great leader? Could these strategies work in your own life?
