Powerful. Patty McCord
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and I’d go to lots of the practices. Watching the kids was hysterical. They’d just clump around the ball. I asked my husband in the car on the way to the team’s first game, “So what’s your strategy for the game?” He said, “Well, I was going to really attempt to have everybody moving down the field in the same direction at the same time.” I responded, “You know, I think that’s achievable,” and he said, “Well, but in the second half, they’ve got to go the other way.” The World Cup fell later in the season, and I had the kids over to watch. When they saw the view of the game from the blimp, they realized, Oh! That’s what a pass looks like! Business is no different.
People need to see the view from the C suite in order to feel truly connected to the problem solving that must be done at all levels and on all teams, so that the company is spotting issues and opportunities in every corner of the business and effectively acting on them. The irony is that companies have invested so much in training programs of all sorts and spent so much time and effort to incentivize and measure performance, but they’ve failed to actually explain to all of their employees how their business runs.
The Heartbeat of Communication
Of course, as a business grows more complex, communicating about how it works, let alone about the course for the future, also becomes more complicated. Working out how to do this—and, for company leaders and HR executives, coaching all managers to do it, and do it consistently and continuously—takes time. The key is to establish what I call a strong heartbeat of communication, and that takes experimentation and practice.
For a time, Reed and I would meet with every ten new hires in a room and go through a PowerPoint, which was our starting point in creating the Culture Deck. We’d say, “This is your cheat sheet. This is what you should expect from one another and absolutely expect from your management.” Over time, we developed “new employee college.” For one whole day each quarter, every head of every department would make an hourlong presentation on the important issues and developments in their part of the business. The idea for the college actually came from Cindy Holland, who is now VP of content acquisition/original series. She and I were backstage watching a set of management presentations the executive team was giving to a group of investors. She realized that she was learning a great deal, and she turned to me and asked, “Why do we do all of this hard work for a bunch of strangers but don’t do it for ourselves?” So we rolled it out for everybody.
Netflixers will recall with a kind of awe that taking in all the information at new employee college was like drinking from a fire hose. They heard detailed presentations that included the metrics and the deliverables of each department. This not only gave employees a deep understanding of our business but also introduced them to the heads of the different parts of the business. Better still, they could ask those people questions.
Ensure That Communication Flows Both Up and Down
It’s vital that communication go both ways. People must be able to ask questions and offer critiques and ideas. Ideally, they should be able to do so with all managers, up to the CEO. At new employee college, as we started the proceedings, we’d say to the participants, “You will take out of this day what you put into it. If you don’t ask questions, you won’t get answers.” I look back now and realize that this was crucial early stage-setting for the success of the company. It gave people at all levels license to freely ask for clarification, whether about something they were expected to do or about a decision made by management. Not only did this mean they were better informed, but over time it instilled throughout the company a culture of curiosity. That meant managers often gained important insights because someone had asked a really good question. Here’s a great example. During new employee college, Ted Sarandos explained what’s called windowing of content. The term refers to the traditional system that developed for feature film distribution: a movie would first come out in theaters, then go to hotels, then to DVD, and at that point Netflix could bid to pick it up. During the Q&A, an engineer asked Ted, “Why does the windowing of content happen like that? It seems stupid.” Ted recalls that the question stopped him cold. He realized that although it was the convention, he really didn’t know why, and he answered frankly, “I don’t know.” He told me that the question stuck with him and that it “made me challenge everything about the windowing of content, and years later, it contributed to my complete comfort with releasing all episodes of a series at once, even though no one had ever done that in television.”
Never underestimate the value of the ideas, and the questions, that employees at all levels may surprise you with.
Everyone Working for You, at All Levels, Can Understand Your Business
I expect you’ve had the experience of talking to someone on your team about a business issue and being asked a question that makes you think, This person is clueless! Well, next time it happens, I want you to say to yourself, Wait, right, this person is clueless. He doesn’t know what I know. So I have to inform him.
When I would talk with a team leader at Netflix about a team member who needed more help understanding a problem— which, given the fast-moving and technical nature of so much of the business, happened regularly—sometimes I’d get pushback. They’d say something like “I tried to explain it to him but he’s too stupid to listen.” My answer was always “Well, then you made it too complicated to understand.” The rule I would give them was this: explain it as though you’re explaining to your mother. This was because often through the years, when I’d talk to my mom about some HR initiative I was spearheading, speaking fluent HR gobbledygook, she’d say to me, “Honey, that just sounds stupid.” She was always right.
Coming up with simple yet robust ways to explain every aspect of the business isn’t easy, but it pays huge rewards. To drive this home when I consult, I often ask managers of companies with a customer service group, “How much do you think your customer service representatives understand about how your business works? Do they appreciate the most pressing issues facing the business? How much do you think they know about how their work contributes to the bottom line— and I mean really know, meaning the numbers?”
Now, how often do you think companies drop the ball when it comes to customer service, despite all the talk about improving the customer experience? The research offers a wealth of appalling data. Reportedly 78 percent of consumers have failed to complete a purchase or other transaction because of a poor service experience, and the costs to businesses in the United States have been estimated at $62 billion annually. Research also shows that word of bad customer experiences spreads to twice as many people as that of good experiences. This is a problem that must still by and large be solved by people. Despite attempts to offer customer service through computer bots or preprogrammed FAQs or messaging systems, face-to-face or voice-to-voice service is far and away most effective.
Any company with a customer service organization wants those people to be highly engaged, and the first step is to teach them how to read the company’s P&L. Of course, generally they are the last people the P&L would be shown to. After all, most of them don’t stay long, right? They’re the lowest on the totem pole. Yet all business success is fundamentally driven by word-of-mouth marketing, and the people who are in direct contact with customers must understand that their every interaction with a customer leads to that person telling another person, for free, either to use the company’s product or service or not to. Everyone in customer service, from day one, should understand exactly how the experience they provide customers directly impacts the bottom line. Making that clear isn’t difficult. Every company has calculated its cost of customer acquisition, and each person who becomes a customer on another customer’s recommendation saves the company that amount of money. Every company can share that information with service representatives as part of bringing them on board.
When I give this advice about sharing business details, I sometimes get the response that only smart people can understand this information and only smart people want it. I find that there’s a bias among executives that this is “MBA stuff” and