Reed Hastings Leadership Style

Reed Hastings Leadership Style: Most people know Reed Hastings as the co-founder, co-CEO, and chairman of Netflix.

Hastings didn’t take the typical route to tech leadership. Instead, he spent college summer breaks in the Marine Corps. He even spent some time at Office Candidate School boot camp.

He never finished the program to become an officer. Instead, he took his love of mathematics abroad by joining the Peace Corps. During two years after college, he taught a group of about 800 students in Swaziland.

Following his stint abroad, he returned to the United States and enrolled at Stanford University, where he graduated with a Master’s Degree in Computer Science.

How Reed Hastings Got Started

After earning his Master’s Degree, he took a job with Adaptive Technology. While working there, he built a tool that could debug software.

Hastings knew that he wanted to build products independently, so he started laying the groundwork for his first company.

Living in Africa on very little money for two years gave Hastings a unique perspective that served him well. He has said that starting a business doesn’t seem very intimidating after hitchhiking across the continent.

His first business, Pure Software, continued Hastings’ interest in debugging software. He and a team of engineers built tools that could automatically debug and troubleshoot software.

The company grew rapidly, and Hastings found himself unable to keep up with the demanding needs of a larger workforce. He asked the corporate board to replace him as CEO, but the members refused. Instead, he needed to figure out how to become a leader.

The board made the right decision. Between 1991 and 1995, Hastings adjusted to his evolving role. It became so successful that Morgan Stanley took the company public in 1995.

Over the next few years, Pure Software would merge with Atria Software, becoming Pure Atria. Rational Software purchased the company in 1997, appointing Hastings as the CEO.

At this point, Hastings knew that he didn’t want to continue down this path. He resigned from his position and spent the next two years thinking about what kind of company he should start next.

Why Did Reed Hastings Invent Netflix?

Netflix co-founders Reed Hastings and Marc Randolph have told at least three stories about why they invented Netflix.

The most relatable version of Netflix’s origin comes from a time when Hastings accrued a $40 late fee at a movie rental store. Fed up with late fees, he decided that consumers needed access to a membership rental option.

Another story says that Hastings and Randolph struck on the idea while brainstorming concepts for a new company. They knew that they wanted to have a system similar to Amazon’s.

Unlike Amazon’s goal of selling practically everything customers could want, Hastings and Randolph wanted to focus on a specific type of product. They decided DVDs would meet their needs well. DVDs were likely their top choice because of their lightweight, compact designs and the large number of people interested in renting them.

A third origin story says that Hastings was inspired by a math problem developed to solve for volume and distance traveled. Thinking about the solution led to the idea of DVDs as the volume and distance traveled as customer locations.

What Qualities of Charismatic Leadership Does Reed Hastings Possess?

Hastings has several qualities that overlap with charismatic leadership styles. He’s an incredibly confident person who can communicate calmly with large groups of people.

When the company seems to waiver, he remains steady. It’s easy to see this trait’s origins in his experience with the military and Peace Corps. He has an idea of where he wants the company to go, and he remains focused on that destination until he gets there.

Hastings is also an optimistic, charming person. He laughs easily, making him a person employees feel that they can approach. He finds positive solutions to challenges, which makes him seem optimistic to most people.

As a creative problem solver, he wants to find opportunities that appeal to the majority. This characteristic is one of the reasons that he developed the concept behind Netflix as a subscription video rental service.

Is Reed Hastings A Participative Leader?

Reed Hastings as been a participative leader at some points of his career. Most famously, he encouraged Netflix employees to post anonymous questions that he and other members of the leadership team would answer.

The anonymous nature of this arrangement means that employees don’t need to worry about asking questions that would potentially offend their managers and executives. They’re free to pose difficult questions that most executives wouldn’t want to confront.

It’s difficult to imagine that questions and feedback from employees don’t influence the decisions Hastings makes at Netflix. Then again, he doesn’t always bend to the will of employees. He takes their feedback but uses their opinions judiciously.

More recently, critics believe Hastings has become less participative as a leader. Questions about controversial films usually receive answers within days, as do questions about which political campaigns receive money from the company. This seems to have changed with the deepening business relationship between Netflix and comedian Dave Chappelle.

When Ted Sarandos, Co-CEO and CCO, sent out a staff email that referred to Chappelle as “one of our most popular comedians today” and The Closer, one of Chappelle’s Netflix specials, as “our most watched, stickiest, and award winning stand up to date,” some people had questions. One employee posted the question, “My interpretation of this message is that sticky metrics outweigh the possibility of harm. Is that a fair interpretation of that email?”

According to an article from The Verge, the question sat unanswered for several days. It’s unclear whether executives ever addressed the question.

Assuming that this is an accurate portrayal of the situation, Hastings and other executives at Netflix might have shifted their leadership styles in response to the company’s recent performance. Netflix lost about 200,000 subscribers during the first quarter of 2022. It was the company’s first quarter that showed declining subscriptions.

Leadership might have reconsidered the immediate value of open conversation as they went into “emergency mode.” Perhaps it’s relatively easy to have deep conversations when your company posts strong numbers, but not nearly so simple when you worry about whether the company will survive.

What Theory of Leadership Applies To Reed Hastings?

Reed Hastings has a unique leadership style that borrows from multiple theories. He displays characteristics of transformational leadership by letting employees use company assets to thrive.

Occasionally, he follows an autocratic theory of leadership by ignoring input from employees and making decisions based on his perspective and clout.

However, he shares power with several executives at Netflix, so it’s difficult to imagine him making unilateral decisions without their input and consent.

Reed Hastings Leadership Style

Reed Hastings has a unique approach to leadership that combines elements of transformational and laissez-faire styles.

In some ways, Hastings gets closely involved with Netflix employees, helping them find opportunities for growth and success.

He rarely sets specific requirements, though, so employees need to make use of what the company gives them.

Is Reed Hastings A Transformational Leader?

There are several examples of Reed Hastings acting as a transformational leader. The hit series House of Cards stands out as one of the most prevalent times that he used the transformational leadership style.

Employees at Netflix developed the show long before bringing it to executives for approval. The team behind House of Cards had time to develop the show for an American audience because Netflix gives them significant control over what projects they commit to. In this way, Hastings creates opportunities for transformation.

The group did such terrific work that it only took executives about 30 minutes to approve the show. None of that would have happened without some elements of transformational leadership.

Examples of Reed Hastings Leadership

Reed Hastings has been at Netflix’s helm for nearly 25 years, so there are plenty of examples displaying his leadership style. Some of the examples that tend to stand out include:

• Creating an open corporate culture where employees are free to work independently on meaningful projects and question decisions from leadership.
• Letting employees choose how they will get compensated for their work (they can choose lower salaries with more stock options or higher salaries with fewer shares).
• Eliminating limits on paid time off, which shows immense trust in employees and encourages them to pursue their passions while maintaining a healthy work-life balance.
• Providing an open forum where employees can pose questions directly to members of the leadership team.

Is Reed Hastings’s Leadership Style Effective?

More often than not, Reed Hastings has an effective leadership style. In fact, it works so well that his SlideShare presentation has influenced countless tech executives. Key elements that make his style successful include:

• Combining freedom and responsibility.
• Establishing context instead of exerting control.
• Defining values that truly mean something to the business.
• Remaining honest even when answering difficult questions.

The presentation and other writings from Hastings have taken on lives of their own. They’ve also become filters that help prevent unsuitable employees from applying for jobs.

Hastings has made Netflix’s culture as transparent as possible. When potential applicants don’t like what they see, they tend to avoid job postings. That leaves more room and time for people who will excel in Netflix’s corporate culture.

Reed Hastings Democratic Leadership Style Qualities

Reed Hastings democratic leadership style comes from his willingness to listen to other people. He provides opportunities for employees to share their thoughts, concerns, and questions.

He still maintains control over the company, though. Their input might guide his decisions, but they do not establish how he will react to challenges.

How Much Of Netflix Does Reed Hastings Own?

Reed Hastings might not own any Netflix shares directly. Instead, he keeps his stock ownership in a trust. The trust contains about 5.2 million shares in the company.

In January of 2022, Hastings spent about $20 million buying 51,440 Netflix shares.

Is Reed Hastings Rich?

Hastings has an estimated net worth of $2.3 billion. He’s hardly the wealthiest tech entrepreneur in the world, but he is certainly rich.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.