How Your Nonprofit Could Be as Big as Netflix

If you don't know Netflix's story, then I suggest you get the book, "No Rules Rules: Netflix and the Culture of Reinvention." When I was a nonprofit leader, I took my organization from the kitchen table to one with more than $70 million in revenue. And I did it within five years. In the process, I continually immersed myself in learning. As we know, it's essential to keep figuring out how to grow and develop one's thinking as a leader.

In taking a look at the book Reed Hastings, CEO of Netflix and Erin Meyer co-wrote, I realized that a few of the takeaways are what I discovered in my leadership roles as well. What's more, in today's fast-changing world, where even nonprofits got the message that they have to be quick and agile, what they have to say is very important.

So let's explore a few of the critical elements that may make the difference in growing your organization and competing in a big way.

1. Talent Density Matters

Perhaps the No. 1 takeaway from Hastings and Meyer's book is that talent density matters. So, what is that concept? It means hiring (and paying) the best talent out on the market. Most leaders and managers understand that they have to get the best. Still, we pay less attention to why your team's average and mediocre members hold back creativity and innovation.

As you'll read in the book, Reed states that "adequate" performers sap their managers' energy, which keeps them from spending more time with the top performers. Another very critical idea is the average performers lower the quality and overall team IQ. Think of that the next time you have a meeting. The average workers also reduce overall efficiency, promote mediocrity within the organization and compel top talent to leave. Those ideas are compelling and one of the reasons you should believe in top talent.

In short, talent density means not accepting mediocrity or the average as the best you could do. Many in the nonprofit sector put up with average workers out of a sense of loyalty or doing good. It's misguided. Your loyalty lies to your community and the problem you’re trying to alleviate. Therefore, you need to have the best talent you could attract, and with talent density, all of the resistance and drag start to dissipate.

2. Radical and Positive Feedback

The idea of feedback is another essential element, and Reed nails it. He suggests that everyday human interactions are too polite. That's all well and good, but it doesn't help you get your nonprofit or organization where it needs to go and excel. Reed talks about how he met Patty McCord while running his first company, Pure Software.

At the time, McCord worked at Sun Microsystems but wanted to switch and called Pure Software, asking to speak to the CEO. During the meeting, McCord spoke about how employees needed to "draw a line between their contribution to the corporation and their individual aspirations." She also talked to Reed about ensuring they developed the leadership team's high emotional intelligence and increased employee engagement.

At the time, Reed said he had no idea what she meant, and he told her so. He told her that if they were going to work together, she would have to "stop talking like that." However, they hit upon something, and that's honest and genuine feedback — told positively. As a company, Reed's company, Netflix, people say what they think — with positive intent. That's golden for moving projects forward.

3. Mistakes Are OK, But Dumb Mistakes Are Not

Reed and Hastings offer many excellent insights about leadership and management in a company that is one of the world's best companies. As we know, Netflix is innovative, but some things you might not know about it is that Reed once pitched the company to Blockbuster. Blockbuster declined, and in less than a decade, Blockbuster was gone, and Netflix was a global entertainment company.

At Netflix, the culture is radical and unique by traditional standards. However, it's one of the top companies for workers, and those who do work there love it. There are no vacation policies, travel or expense policies, and the concept of "freedom and responsibility" is ingrained in the culture. And that's why dumb mistakes don't get tolerated.

For example, an employee in Taiwan got reimbursed for more than $100,000 in travel expenses over three years. However, those expenses were for personal travel and not the business. Once a finance audit caught the fraud, the worker's manager got fired for a dumb mistake. In short, smart errors that test ideas and are strategic are OK as they are part of innovation and creativity. Stupid mistakes are not acceptable.

In sum, smart leaders understand that the landscape, even in the nonprofit sector, is changing — rapidly. That means immersing oneself in ideas and innovative thinking to ensure that your organization could ensure your organization's success now and well into the future.