Reed Hastings: This 3-word tactic helped make Netflix a $240 billion company

If you work for Reed Hastings, you'd better be ready to express your dissatisfaction.

Good leaders seek out critical feedback whenever possible, the Netflix co-founder and chairman recently told entrepreneur Tim Ferriss' podcast, "The Tim Ferriss Show." Hastings even has a simple, three-word term for the practice: "Farming for dissent."

"If you're a leader, it's important to farm for dissent, because it's not normal to disagree with your boss, right? [Normally] we learn deference," Hastings said. But because companies often need new ideas and fresh strategies to grow, employees need to be "willing to argue" with their managers at times, he added.

"Because it's difficult, emotionally, in most companies to disagree with your manager, we call it farming for dissent," he added. "We have managers do things like [ask]: 'What are three things you would do differently if you were in my job?'"

Hastings, who served as Netflix's CEO for more than two decades before becoming chairman last year, said he'd ask "50 top executives" every year or two to "write down what would be different" if they were in charge of the company. He used their feedback to experiment with different business strategies, some of which worked.

The strategies that didn't work served as learning opportunities, he added.

'Lots of people had severe doubts'

Hastings was inspired to seek critical feedback in the wake of one of Netflix's biggest debacles, he said: a failed attempt in 2011 to rebrand the company's DVD-by-mail service as a separate company called Qwickster.

Customers revolted at the idea of breaking up the company. Netflix's stock dropped. Hastings publicly apologized and reverse the decision. Still, he said the Qwickster disaster was his "favorite failure" of his career, because it taught him to ask for more input, positive or negative, before making a big decision. 

"We didn't do much farming for dissent in those days," said Hastings. "I was messianic, convinced this is the right move ... and, it turned out that lots of people had severe doubts, but they didn't know the other executives had doubts."

Hastings instituted a process where he'd ask dozens of Netflix executives and managers for their honest feedback on any "big decisions" the company had in the works, he said.

"We make everyone [submit a rating], 10 to -10, whether they think it's a smart idea," Hastings said. "If we had done that at the time [with Qwickster], we would've seen tons of -7, -6, -8, and that would've been shocking."

Doing so was a "very positive step" that helped Netflix make stronger decisions going forward, he added. Today, the company has a market capitalization of $240.2 billion.

'A culture of high standards'

The Netflix co-founder isn't the only business leader to embrace critical feedback from employees, a strategy reminiscent of ex-Google and Apple executive Kim Scott's "radical candor" philosophy.

Hastings cited Amazon founder Jeff Bezos as an example, noting Bezos' tendency to read reviews from "discontent" Amazon customers to help build "a culture of high standards" at the company. Bezos also advised listening to your critics and thoughtfully deciding if they have a point before changing as needed.

"You listen, you ask: 'Are they right?' Or, even if they're not completely right, is there some piece of it that's right that you can be inspired by [and] then you should change," Bezos said at a 2018 conference.

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