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.

I [Jeff Killeen] found I had to be precise and resist my natural temptation to use too many superlatives when describing the accomplishments in the business. John would say, ‘You spin things all the time. You make everything sound good.’ I’d say, ‘John, that was good.’ And he would say, ‘But you make it sound like it’s even better than it is. We’re engineers. We don’t use words like terrific and outstanding. We say, “You did your job.” When you say that the team did a terrific job, they don’t believe you.’ We finally agreed that whenever he thought I was spinning, he would tell me. And whenever I thought he was underwhelming, I would tell him.”

Killeen elaborates on how he learned to communicate in an engineering culture. “The perspective from which John comes to the business is obsessive in a wonderful way. He harks back to the philosophy that he’s building a bridge and that a bridge cannot fail. I said, ‘John, but we’re not building a bridge, and failure is okay if we fail fast and incorporate that learning so that we can grow as fast as possible. It’s preferable to me to get eight things done well and fail a two versus doing three or four things to perfection.’ John said, ‘We’re not trained to accept a lot of failure or welcome it into the process.’ I said, ‘That’s a management concept we have to work on.

Leslie Hannah, an eminent business historian, has shown how the ‘rationalisation’ of industry, which was favoured by the British Government (represented by the Bank of England), set the stage for the new ‘corporate economy’ which would characterise Britain for decades. The 1920s saw the creation by merger of ICI (chemicals), the Distillers Company (Scotch whisky) and Unilever (soap and margarine). A similar wave of mergers in Germany established IG Farben and Vereinigte Stahlwerke as the dominant chemical and steel producers respectively. (Both these companies were dissolved by the victorious Allies in 1945.)

For Penrose, the firm was defined not by the assets it owned or the contracts it made but by its capabilities and its ability to deploy those capabilities in productive services: ‘All the evidence we have indicates that the growth of firms is connected with the attempts of a particular group of people to do something.’ Perhaps that seems obvious. But her emphasis

on ‘the group’ recognises the centrally cooperative nature of business activity, and her identification of purpose – ‘to do something’ – establishes its problem-related focus.

Business schools and consultancies as we mentioned earlier, are a key part of the internal communication system of management, and journals like this are how that communication system aligns itself. The JACF and its ideological peers were read by the people who went into the consultancies, banks and investment firms — they all shared the same language and the same assumptions.

That’s part of what made them so fearsome and effective, like any well-drilled cadre. Across the economy, corporate managers were left pleading about their history and community, the trust of their customers, the value of their technology. And time after time, they found that unless it could be quantified in an accounting system and placed into exactly the right kind of spreadsheet, this kind of information no longer mattered. So they borrowed more money, paid bigger dividends and hoped.