I am haunted by my past mistakes. My managerial ones. Especially as I just finished reading “No Rules Rules” written by Netflix CEO Reed Hastings and INSEAD professor Erin Meyer. It’s a great management book. To me, it triggered a mixture of remorse and regret — and a strong desire to correct a collective blunder.
I held management positions for a large part of my career in the news media. I hired at least 120 journalists and had a chance to build a newsroom from scratch when we launched the daily 20 minutes in France. Beyond that, I was involved in many non-editorial hirings.
Most of them were good picks who later found their way in all sorts of positions: some are renowned investigative reporters, others have become talented editors or even entrepreneurs. But I made my share of mistakes in hiring quite a few. Even worse, I waited too long to acknowledge my error and decide that a new hire wasn’t a good fit. Similarly, when landing in a new position, I often spotted quickly (the first two weeks), who should be let go, stay, be trained, or be promoted. Again, I waited, yielding to my own propensity to avoid conflict. I also balked at the typically French feeling of, “Oh, you can’t fire him (or her)”, which at many corporations is often pathetically justified by the litany of reasons that plague management decisions. “You will look bad” (No: I will look better in the long run); “You will traumatize your team” (No: some of them will discreetly thank me for getting rid of the bad apple); “The unions are going berserk and will retaliate on some other stuff where we are vulnerable” (OK: Let’s discuss the vulnerabilities and put a stop to them); “Look at his emails; it is obvious that the guy will sue.” In France, an employee facing a firing process will inevitably call Mommy (the unions, the guild), before reaching out to Daddy (the labor inspector, always eager to prove that the Lutte des classes remains alive and kicking). Usually, this part is solved by a decent severance check, “Take this now and move on, or take your chances and litigate.” Management is often paralyzed by the idea of conflictual firings. Then everybody waits. Months. “There is no problem for which the passage of time doesn’t offer a decent outcome,” a COO said to me once. The guy had elevated the notion of delaying painful decisions to an art form. Needless to say, the company underperformed over a long period of time and is now on a ventilator.
My great friend Jean-Louis Gassée, the co-writer of the Monday Note to whom I owe much business advice, told me years ago: “When you start to doubt [on someone’s competences or fit], you are always right”. At the time, I was whining about a key member of my team whom I deemed as subpar. As expected, my request to let him go was met with the same pillow-soft management behavior and all the arguments stated above. It happened too many times. And I’m blaming myself for my lack of tenacity or tactical sense.
When looking back, I’m absolutely certain that the current state of the media industry has something to do with these management deficiencies. This certitude is not only based on my own experiences but on numerous conversations I had with people like me in Europe or in the United States. Then, as someone writing on tech and media for the last thirteen years, I have also witnessed with horror the widening gap between the two worlds.
I won’t say that a company or a team should be run with an ax in one hand and a set of KPIs in the other. I don’t think the ever-revolving door of many American companies is optimal either. I wouldn’t work in a corporation that will sack an employee underperforming for a couple of months due to a grave family situation, and I don’t see the culture of fear that prevails at Amazon or Netflix as great models (read this devastating piece about Amazon in the New York Times and this one about Netflix in the Wall Street Journal).
But coming back to Hastings and Meyer’s book, there are some compelling principles that deserve a closer look.
“Freedom and Responsibility”
Netflix’s philosophy can be summed up by the following (italic is used to highlight Netflix’s lexicon):
• Innovation and creativity in a corporation entails a culture of freedom and responsibility.
• Going up, you can’t expect this without obsessively maintaining a high talent density able to function with very loose supervision. The book cites many examples of Netflix executives able — even encouraged — to act for the company on important contracts or investments without their superiors’ approval. This is unthinkable without a relentless focus on increasing different competencies.
• Attracting talent is costly. That explains Netflix’s emphasis on paying employees the top of their personal market, which invokes the following rationale: offering generous packages for a small number of talented people is actually cheaper than allowing for a larger pool compensated with average salaries. This obviousness, however, collides with the fact that middle managers often measure their importance by their headcount. Of course, the principle doesn’t apply across all operational roles but it brings a huge benefit in some. Here, Hastings quotes Bill Gates:
“Since then I have come to see that the best programmer doesn’t add ten times the value. She adds more like a hundred times. Bill Gates, whom I worked with while on the Microsoft board, purportedly went further. He is often quoted as saying: ‘A great lathe operator commands several times the wages of an average lathe operator, but a great writer of software code is worth ten thousand times the price of an average software writer.’”
Netflix draws its strength from building on this principle.
It is an understatement to say that deciding to pay top dollar (or euro) for talented people — a remarkable investigator, a unique writer, a renowned specialist, or a top editor poached from a competitor— is not the norm. The rule normally involves maintaining people in a rigid pay grid that was usually the result of an excruciating negotiation with unions or guilds.
The tech world was quick to free itself from this straightjacket (so did American universities by the way). To ensure (a) the survival of the company and (b) its development, talent must be scouted, captured, and nurtured at any cost. Google would not have gone that far if its founders had first and foremost decided to comply with the commonly accepted wage brackets for software engineers in the USA.
• I recently heard a French executive boasting about his propensity to say to his staff, “I don’t want you to understand, I want you to execute.”He can’t be further off Netflix’s motto outlined in the book, Lead with context, not control. In short, the more people know about the details of the business, the better they are at making the best decisions for the company. That, in turn, entails comprehensive transparency and staffers able to handle it, hence the quest for talent.
“No Rules Rules” is also filled with examples of how this was implemented — with hits and misses — over the last twenty years to make Netflix what it is today. I’m not going to go through all of them. Read the book, it’s worth it. And in passing, I can’t but praise Reed Hastings’ idea to team up with Erin Meyer. The INSEAD professor adds essential elements of context and insight; and her contribution also prevents the usual pitfall of the iconic founder celebrating his achievement (Meyer is also the acclaimed author of “The Culture Map: Breaking Through the Invisible Boundaries of Global Business”).
Coming back to the self-replicating mediocrity often seen in news operations, Erin Meyer mentions a stunning study conducted by the University of New South Wales in Australia on contagious behavior in the work environment. In short, the experiment involved a few groups asked to perform specific management tasks. Unbeknownst to the students, some groups included an actor playing the “jerk” or a sarcastic “slacker”. The study shows how fast and how profoundly the actors contaminate the rest of the group. (The study is called: “How, When, and Why Bad Apples Spoil the Barrel: Negative Group Members and Dysfunctional Groups” by Will Felps and you can download it here).
Careless management is part of the reason why the media industry has ceded a wide-open field to agile tech companies unencumbered by the weight of the past. My generation of journalists, totally untrained to become managers, let a culture of complacency and alleged intellectual superiority prevail where we should have changed the game and focused on innovation, creativity, and agility. Had we done so, a large part of news aggregation, search, Natural Language Processing, Machine Learning applied to information, advertising technologies, subscription systems, CMS, and newsletters would still be largely controlled by media operators.
This is what comes to my mind when I’m looking at my great students at SciencesPo, where I teach journalism and media studies. Aspiring reporters are left with bleak prospects when it comes to their careers (even if I will always strongly encourage and support those who choose to embrace this formidable profession). This crucial and collective failure — and the ways to correct it — is also what keeps me up at night.