It was not obvious at the time, even to me, but we had one thing that Blockbuster did not: a culture that valued people over process, emphasized innovation over efficiency, and had very few controls. Our culture, which focused on achieving top performance with talent density and leading employees with context not control, has allowed us to continually grow and change as the world, and our members’ needs, have likewise morphed around us. Netflix is different. We have a culture where No Rules Rules.

As Netflix grows there are an increasing number of pockets where Reed’s modeling and Patty’s initial instructions don’t seem to have trickled down. On these Netflix teams, the “no vacation policy” does feel a bit like a “no vacation” policy. But many leaders at Netflix are consciously following Reed’s modeling, taking big vacations and making sure everyone is watching. And when they do, employees use the freedom Netflix provides in many surprising and beneficial ways.

Ten years before, in 2007, Leslie Kilgore had coined a phrase, which is now used across Netflix to describe exactly what Ted was doing as he walked out through the lobby of the hotel: “Lead with context, not control.” At just about any other company, with this much money on the table, the senior guy would get involved and control the negotiations. But that’s not what leadership looks like at Netflix. As Adam explained: “Ted wasn’t about to make that decision for me, but he set broad context to help align my thinking with the company’s strategy. That context he set laid the foundation for my decision.

We’ve looked at over a dozen policies and processes that most companies have but that we don’t have at Netflix. These include:

Vacation Policies

Decision-Making Approvals

Expense Policies

Performance Improvement Plans

Approval Processes

Raise Pools

Key Performance

Indicators Management by Objective

Travel Policies

Decision Making by Committee

Contract Sign-Offs

Salary Bands

Pay Grades

Pay-Per-Performance Bonuses

These are all ways of controlling people rather than inspiring them. It’s not easy to avoid chaos and anarchy as you remove these controls, but if you develop every employee’s sense of self-discipline and responsibility, help them develop enough knowledge to make good decisions, and develop a feedback culture to stimulate learning, you’ll be amazed at how effective your organization can be.

If your goal is to build a more inventive, fast, and flexible organization, develop a culture of freedom and responsibility by establishing the necessary conditions so you can remove these rules and processes too.