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Can Reed Hastings preserve Netflix’s culture of innovation as it grows?

10 Sep 2020

THE BEST way to stay innovative, many bosses will tell you, is to hire the best people and let them get on with it. Few take this as literally as Reed Hastings of Netflix. The video-streamer’s employees can take as much holiday as they fancy and put anything on the company’s tab so long as, to cite the entirety of its corporate expense policy, they “act in Netflix’s best interest”. Anyone may access sensitive information like a running tally of subscribers, which Wall Street would kill for. Executives seal multimillion-dollar deals without sign-off from top brass. High-achievers are rewarded with the plushest salaries in the business—whether their business is writing computer code or film scripts. Underperformers are unceremoniously cut loose.

It sounds like a recipe for expensive anarchy. But managing “on the edge of chaos”, as Mr Hastings mischievously puts it, has served Netflix well. Most of its 7,900 full-time workers seem happy being treated like professional athletes, paid handsomely as long as no one can do their job better. Each generates $2.6m in annual revenue on average, nine times more than Disney employees, and $26.5m in shareholder value, three times more than a Googler does.

Investors lap it up as hungrily as Netflix binge-watchers, who now number 193m worldwide. Since going public in 2002 the firm’s share price...


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This content was originally published by The Economist: Business. Original publishers retain all rights. It appears here for a limited time before automated archiving. By The Economist: Business

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