This is a story you've never heard before. You can only hear this from Netflix. But if you want to create an innovation that can take over the world, it might be good to take note of this action. Of course if you try this at school or in class, you'll get into trouble. 'Let's kill everyone who gets bad grade and who has bad attitudes!' If you do this at school, 'Now there are only 7 students left in class B of grade 6' things like this will happen. Originally, there were 30 students but because class B of grade 6 chose to adapt the Netflix method class B will be left with only 7 students and class C would be left with 4 students in grade 6. This would happen in a neighborhood meeting, a class room, or even within family members. But if you really want to make your business successful, when you are focusing on innovation and success, I think it would be interesting to take note of one example in which a company becoming successful through adapting the opposite method of allowing easy-going attitude in organization. Now, we only have the brilliant employees. First, the CEO. The job of CEO is to create an environment which consists of only the competent and cooperative employees. That is the role of a leader. And in order to secure those people, they will receive high salaries that are world class. Haven't you ever heard that the guarantees and the treatments Netflix offers are exceptional? In the TV industry, or even in Youtube in my case, we hear this a lot. Netflix offers a great guarantee. I think that's what draws people in. Top class TV stars and performers and drawn into this. They get scouted for Netflix original programs Because the company has a lot of money. It's not just the money but it's the company's attitude. To bring together only the best and to pay them a lot of money. They are paying these amazing people the amount of money that they used to pay the average employees. Isn't this amazing? In some sense, it can be viewed as a merit system. I think Blockbuster started to fail to do this from some point on. That was the target of attack. Now when you've gathered these brilliant people then the next most important this is honesty, feedback. What does this mean? Honesty? Feedback? What's that? To make this easier, it means pointing out. Creating an environment where it's easy to point out thiings. You have this, right? 'Excuse me…' 'Excuse me sir, that project you've been talking about… I don't think it's going to work.' There is no way that you can say thi.s 'Who do you think you are!' 'Who… Who do you think you are!' 'Why do you think that!' 'Well, there are two reasons.' 'You are using this data as the overall basis of the project' 'but this data is too old. And if you take this data, then it would create a project which would be a complete opposite to this one, wouldn't it?' 'According to our customer opinions, this project can never work.' 'Oh, alright.' 'This ends the meeting then!' 'You, come here!' This would happen. You're going to be in a big trouble. So even when it doesn't look like something's going to work, even when you see the problem, even when you think some is acting weird, you try your best not to talk about it. But if you have a pool of brilliant people, then they need to talk about those things. Because brilliant people improve themselves faster when they get more feedbacks so more feedbacks will lead them to create better results. This means that opportunities will be lost if they aren't given feedbacks. And the loss is Netflix's. They have to trust each other because the place only has brilliant people. So the company chose to welcome the act of 'pointing out'. But they're not just pointing out anything and everything, that's the point The company made a guideline. There's still freedom but there's also a very through guideline. The guideline is called '4A guideline'. There are four A's, 'Assist', 'Action', 'Appreciate', 'Accept'. First one is for those who are giving feedbacks. When you give a feedback, when you are pointing something to someone else you need to see how you can 'assist'. You want to help them. 'I'm going to degrade him by talking about his mistakes!' If you are thinking like this, then you should probably be quiet. That damages both parties. When someone can do this better using another idea, you can look back at the idea trying to 'assist' the person. 'Wow, this is so stupid. He can't even correct his own mistake', this is not how you do this. Trying to 'assist', that's the important thing. And the next one is 'action', it needs to require a change of action. You shouldn't defy the person's characteristic. It's, 'if you try doing it like this in your own way, then it will give you this result.' You are eager to help your manager out so you say, 'Sir, about the project…' 'Wouldn't it be more effective to do it this way?' 'I'm just trying to help you out.' 'I think it would be better to do the project like this,' 'Sir, you shouldn't do that', this is not acceptable. You have to point out how to change the action rather than defying their characteristics. 'Wouldn't it be better if you try it this way?' This is important. Then how should the person take the feedbacks? 'Appreciation', you thank the person. 'Thank you for telling me.' Well, humans always defend themselves or make up excuses when they are pointed out. You know what I mean, right? You probably have an experience of saying 'no, but…' when someone said 'wouldn't it be better to do it this way?' 'No… no, no. That's not it~' 'There is a reason why I did it like this, okay?' 'For these reasons, I did it like this on purpose so your advice is useless.' 'It's completely wrong and useless, thanks.' You probably want to say this first. But you thank the person first. 'That person's assisting me', and you thank the person. And you can choose to accept the feedback or not. To 'accept', to take it in. You can take the advice or you can choose not to. 'Okay.' This is very important. When you use feedbacks well, it's very effective. Nakata, that's me, looks like someone who doesn't accept feedbacks, right? I look stubborn and proud. But I actually take in a lot of feedbacks. Have you ever watched Yoshimoto New Star Creation on NSC? A college student comes up and shows off his comedy gig. Then a veteran writer says 'Hm, I think it would be better you do it like this.' The kid's young, he's just a college student. He could think, 'what do you know, old man?' 'Old man, you know nothing. I made this with the fresh vibe that we, young people have.' But he could also choose to take the advice, when he wants to. What's important here is that he chooses what to do. Once, there were four instructors and all four had different ideas. 'You should make this longer.', 'I like this part because it's short.' Who do you listen to? 'I like this part', 'no, let's get rid of this part', really, who do you listen to? The ability to improve depends heavily on how you take in the advices that are worth believing in and lose the advices that aren't worth it. Same with the comments on Youtube, there are so many different opinions. 'Make the video like this, do it like that.' But I did take in many of those opinions. Voice setting, lights setting, white board, costumes, and my actions, they all come from the comments section. If you take a look at my earlier videos, it's terrible. My voice echoes, you can barely see the whiteboard, and I was terrible at lecturing, I was constantly distracted. But I took in the advices on how to use the whiteboard. But… there are many opinions that I didn't take in. But I click the hearts. I click the hearts. Although I'm not going to take in the feedback, I click the hearts and thank them. And I choose. By doing this, my Youtube and humor are both improved. Thanks to the opinions of the instructors, I could put on skits. And thanks to you, we have 'Youtube University' today. It's like that. So, when you have the four guidelines and the people giving and receiving feedbacks the company grows much faster than the company with a culture where everyone says 'don't point things out, what if other people hears this!' Aren't there many companies who shut up the employees, it doesn't matter whether they're average employees or competent troublemakers, so that they can keep the warm atmosphere of the company? This company got rid of that. Every bit of it. The important thing here is that this applies to the highest authorities too. The employees aren't the only ones to get pointed out. 4A guideline is easy to follow when the employee is at a lower rank but it's hard to follow when you have to give feedbacks to someone who's at the highest rank. but it's hard to follow when you have to give feedbacks to someone who's at the highest rank. So when the highest authority takes in the feedback, he will thank the person first and follow the guideline. So, the highest authority will also thank the person for his presence in the team and let the person know that he knows what's best for the team. This is important. It's like saying this. 'It's fine, you must have been scared, right?' 'Pointing out something to the highest authority is very difficult to do.' 'It's hard to ask for an improvement on the system.' 'That's the ace of Netflix.' 'Thank you, you are an indispensable talent in Netflix.' This is important. The highest authority will tell this to the person who pointed something out to him in person. But what's tricky is that all this needs to happen after eliminating the 'unlikeable' category. I told you before that there's an 'unlikeable' category of people. This comes after eliminating those people who like to talk abad about other people. The thing that interferes with giving feedback the most is these unlikeable people. If someone is sharp-tongued, the guideline on feedback doesn't work. If someone says things like 'Do this like this! Here's a feedback for you.' Then the whole guideline falls apart. First, you need to send those 'who are competent but who are foul mouthed' home. These are the restrictions. Netflix talks about ideal things but in ways it still has many restrictions. They do have many restrictions. This kind of balance is how they create a freedom without it being too chaotic. Isn't this interesting? Now, when you have a dense competency level and created a good environment for giving feedbacks then the real game starts. This is where it really starts. It's the abolishment of regulations. What does this mean? Vacations and expenses. At Netflix, you can get unlimited number of vacations. And the expenses covered are unlimited as well. Doesn't it sound like I'm lying? Usually, vacations are limited to few days. There are regulations which outlines how many vacations and how many days in vacations you get annually. There is a limit to how many days you can get and you have to follow the procedures to get permission for your vacations. When you say 'execuse me, I would like to go on a paid vacation…' then the person in charge would ask 'under what purpose?' 'Fill out the paper and bring it back.' 'No, actually I just wanted to get some rest…' 'Do I need a reason to get a paid vacation?' 'But everyone's so busy.' 'Everyone's busy? Then… Why do we have paid vacations?' This happens a lot. Same with covering expenses, they always say 'Huh? What's this?!' Why, it doesn't make any sense. I purchased this so because I thought this was essential in benefiting the company and now the company wants me to pay for this? The company wants me to entertain the company guests with my own money? What is this. What is this. That's why we have this right here. Everyone, you did great sticking around this far. After the density of competency is increased and when the everyone can freely exchange feedbacks, the company is ready to change. Now that it's ready, the regulations have to be abolished and now they can be abolished. Right? These brilliant members will leave to another company if they get just a limited number of vacations or if the company requires certain qualifications to get vacations. They'll also leave if the company doesn't cover all the expenses. That's why you should let them use the money however they like. There aren't many risks because these are brilliant people. Actually, what scares the CEOs the most when they allow unlimited vacations and unlimited use of expense some might just say 'have a good day~' and come in to work for only three days in a year for no specific reason. 'It's true that I get a lot of vacations but isn't it unlimited anyways?' They might say things like this. 'You told me that I could spend the expenses unlimitedly, so I spent it all on wine.' Or things like this. 'Why would he drink wine with the company expenses and sleep at home all the time using his vacations?' They worry about these things. But if you design things well, this problems can be solved. This is what I'm going to talk about here, we can clear out these things. Brilliant members don't do such things. It's fascinating. What comes to your mind just about now is the school with strict regulations and the school that doesn't have as many regulations. The schools that has a high deviation is usually the school that doesn't have many regulations, isn't it? Isn't that right? They wear casual clothes. They have uniforms but they can also wear casuals. This means that it's okay to wear whatever. The students can join a club or they can choose not to. They can take classes but they don't have to. They can sit anywhere in the classroom. But they still get good grades. Whereas there are school like this, there are schools with metal bars. 'You are a trash.' 'You're stupid and you can't even abide by the rules?' And they hit the students. They shave their hair off, zoom. They shave their hair off and criticize them and hit them because their hair has been shaved off. When someone says 'so and so ran away!' Then they will say 'go get him then!' Then students will escape through the sparse metal bars. Students will never get good grades in such school If this school had the highest deviation in Japan then it would become a hot issue. Because they get really bad grades. Isn't this fascinating? The school where students get bad grades have strict regulations and the schools where students get good grade have flexible regulations. Should stricter regulations make students get better grades? No. In prestigious schools, all the members are outstanding so order is maintained even when the regulations are flexible. This is the cruel reality. This is the cruel reality. So when you create a great company even when you give unlimited vacations and expenses to the employees, things don't break apart. Actually, skipping procedures makes things faster. You can go on vacations without having to make fuss about it. You can tell the company that you'll be going on a trip abroad starting next week. There's a cool episode about this. The CEO of Netflix said this. 'This guy in our company always goes on trips abroad out of nowhere' 'He spends two weeks in Africa and two weeks in Europe.' 'He just leaves and refreshes himself on an island and comes back.' 'And when he returns, he always brings amazing ideas.' I have no idea what this is, what kind of person does this? He leave for two weeks to travel around the African islands and returns with great ideas. These kinds of people changed Netflix. Does it sound too idealistic? But when done right, when you gather these people and allow them to go on as many vacations as they like and spend as much as they like then it brings in more amazing people. So you will have more super employees who will come back with awesome ideas. 'Then he realized.' '1 superstar is better than 100 average employees.' That's the cruel reality. That's the cruel reality. It's not the100 employees who are worried that they might not get to go on vacations that changed Netflix, it's the people who just leaves to an island saying 'bye~' and comes back with 'hey I have an idea~' These ideas that they use to create exceptional contents in their studios are all made by superstar employees who enjoy the unlimited vacations and expenses . Don't let go of these superstar employees. This is what's important. 'You don't need multiple rules, just one will do it.' 'Just a statement will do.' ''One must always work for the best interest of Netflix.' 'That's all you need.' If traveling around in a luxurious business class seat or a first class seat is in the best interests of Netflix, then you're permitted to do so. If taking a four days vacations here and purchasing that much wine is in the best interests of Netflix, that you are permitted to do so. You can do whatever you want. That's all there is to this. Whether something benefits the organization or not, that's the only thing that matters. It's clear, you don't even need procedures for this. But there is a very important thing here. Taking control of certain things in order to prevent creating a chaos, what does this mean? I means, don't forget about the context of the entrance and check the exit. Context. Here's a difficult word, context. So, when you are using the expenses or on a vacation, do you have a reason for that in your head. For example, do you know the reason why you had to serve the guests course menus that costs one hundred thousand yen each, why you didn't choose the course that costs 6 thousand yen, why you had to get two separate cabs, and etc. If you can clearly explain the context, then it's fine. That's all. The next thing is checking the exit. You can use it however you like but he's saying that they are going to check things thoroughly. He told you to use it freely. It seems like nobody's checking what you're doing, but they are. And if you have used it for a reason that's not justifiable, then you'll get fired right away. No matter how brilliant you are, you'll be fired right away. Apparently, this really happened. Someone paid the bill that came from eating out in a restaurant with her family with company expenses. She was using the money although she wasn't dining out with the company guests and when it wasn't for the best interests of the company. She was a brilliant employee but when she was called out and asked about this she just kept her silence without given any reason. And that employee was fired the next week. That employee is thriving in another company now. But she regrets the fact that she had to get fired because she did this. It was a woman and I guess she couldn't adapt to the rules in Netflix, right? Or maybe she was just feeling powerful knowing that she can use the money however she likes. But the company informs everyone that when they take advantage of this, they'll get fired right away and that there was an instance where it actually happened. So the company shares that someone dined out with her family and paid the expense with the company money, that she was using this much money and using it this often. And that she was fired the next week. Everyone is shared with the information how and what happened. So the clearly understand that they must keep this in mind. This prevents them from taking advantage of things. And in some cases, they even save up the money flexibily. For example, when they fix the amount of expense the use for entertaining the guests and such they're going to use that much even when it doesn't cost them as much. For example, let's say that 5 thousand yen(50 thousand won) is the limit. Then if 5 thousand yet is the limit, they're going to take that they can order whatever they want, be it coffee at a cafe or anything, and order more things. I don't know, they could order three milkshakes for no reason. This is how things turn out, it's the same thing with the expenses in clubs. People just try to use as much money as they can within the limit. If you don't use up the money then you might get less later, so you buy random things. Things like this happen. You don't need to have that millefeuille cake. So having that context in the entrance means that when you call called to the check exit, you can say, 'no, it's not like that.' 'These two are not in good terms so if I didn't give them two separate cabs' 'they would never engage in business with us.' 'That's why I got two separate cabs for them.' And the company will understand you. 'This actor hates riding in a car with other people.' 'I saw in an article that this actor likes the cakes from this brand, so I chose this one.' "It's a little bit more expensive but I prepared it so that the actor will like our company more.' If you have these kinds of reasons in mind, then you're going to be fine when they start checkiing. If there is no context for your choice when they check what you did. The standards are very strict. So average employees, foul mouthed employees, negative employees, and employees that take advantage of things, they're all fired. They really quick to say 'goodbye'. 'Goodbye', right? It's a quick 'goodbye'. Next you gather only the best employees and organize the environment and let them enjoy their freedom. They can use whatever they want. It's a paradise offered to those who have been chosen. It's speedy. These are the four rapid progress that Netflix made. Because Blockbuster couldn't do these, it… went bankrupted. Everyone, this is life and death we have here. Thinking that such a company is just an idealistic company is like slowly committing a suicide. In the next generation, these companies may not be the companies that will succeed. In fact, it could be that any companies that aren't like this may not survive. Didn't you nod your head saying 'that's right, that's right' while listening to this story? Actually what Netflix is doing isn't extreme at all. It just took some courage to take actions in the things that everyone agrees on. Goodbye average employees, goodbye competent troublemakers, welcome feedback, but goodbye rule breakers. Break through all the regulations but say goodbye to those who take advantage of the situation. It's an amazing carrot-and-stick system. It's a very logical use of carrot-and-stick system. That's it. And it made the innovation possible Is your company or the company that you work for a Blockbuster or a Netflix? If it is a Blockbuster then say goodbye to it as soon as you can. Then, goodbye! Web community, PROGRESS. [Nakata Atsuhiki online salon PROGRESS, 3700 members, monthly payment of 980 yen]
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