Reed Hastings: Risk-Taking Entrepreneur & Netflix Co-Founder - Essay Sample

Introduction

Reed Hastings is an American entrepreneur who is the co-founder of Netflix, which is a media rental platform that provides internet streaming to viewers globally. It was established in 1997, and its success is attributed to Reed, who believes that to succeed in entrepreneurship, you have to take a calculated risk. He was born in Boston, and his father was an attorney in the same state (Goncalves, 2018). When he was growing up, he was an adventurous young man whose favorite subject was mathematics. He served in U.S Marine Corps as well as a high school mathematics teacher for two years and later ventured into the business through a software company that was subsequently merged and later sold off.

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Netflix reinvented human resources by allowing employees to a vacation of the time. This may sound unrealistic, but it is necessary to increase productivity through decreased stress and burnout (McCord, 2014). Netflix's culture of freedom and responsibility has enabled the company to grow its customer base. Reed believes that for a company to be successful, employees should be given the freedom to rely on logic and common sense in whatever thing they do. This is a better and successful approach than applying formal policies. The secret to making the approach successful is ensuring that you hire employees who are qualified. Qualified employees prioritize the interests of the company and are dedicated to the improvement of the company. Companies spend a lot of money to enforce human resource policies, so the companies should avoid hiring unemployed employees, and if they make a mistake in the hiring process, they should consider retrenching them. Adult-like employees openly communicate the issues they have with their bosses. One of the experiences that may have contributed to Reed's management thinking is his contribution to the Marine Corps. He admits that he is not good at following orders.

Reed loved working on projects where there were no established rules, so your working was based on individual initiative. That is the reason why in Netflix, he makes few decisions and leaves the employees to take control by generating product ideas and initiatives. He attributes this to the short production of films such as "House of Cards." The culture of freedom and responsibility was also manifested through the hit serious prompt approval (McCord, 2014). When employees are given the power to be innovative and spearhead the agenda of the company, they are determined to achieve the objectives of the company and subsequently improves performance.

Reed is a transformational leader whose creative leadership practices include adequate personal time for employees as well as a travel policy that allows the employees to take a vacation of as much time as they require (McCord, 2014). Netflix qualified employees who can act like adults and act in the interests of the company. Additionally, there are no formal reviews, but instead, managers engage in meaningful conversations with their employees. In Netflix, there are no bonuses, so employees are given pay based on the market.

Reed Hastings' experience of a $40 fine for returning a movie late contributed to the start of the business (Copeland, 2010). He also indicated that the idea was inspired by a desire to solve a mathematics bandwidth problem of solving volume and distance traveled. Hastings is a problem solver, and since he loved watching movies, Netflix business is good for him. Additionally, entrepreneurship gives him freedom, and there are no established rules or orders.

There are various factors that contribute to the effectiveness of the various leadership styles embraced by leaders of different organizations. There are various leadership theories that guide employees in their work, and the theories guide managers on the right decisions that they are supposed to make. The theories include the trait theory that focuses on the personality of the person. The personality of the person influences the decisions that they are likely to make (Cherry, 2018). The theory suggests that there are five different personality traits of people, which include neuroticism, extroversion, agreeableness, and conscientiousness. Managers need to be careful to ensure that their personality traits do not influence their decisions negatively. The trait theory focuses on the traits of the personality in influencing the decisions made.

Another theory of leadership is the behavioral theory that is based on the behaviors that the person has acquired with the interaction with the environment. The environment of the person changes the thoughts of the person and how the person is likely to respond to different situations that they find themselves in (Nawaz, & Khan, 2016). People that have been exposed in leadership are more likely to make better decisions than the ones who have never been exposed to any kind of leadership. The environment influences the behaviors of the people and hence affects the behavior of decisions that they make for the organizations that they lead.

The contingency theory focuses on the various situations that people find themselves in and the decisions that they make to handle given situations. There are various contingency theories that give different approaches to situations. The theories include Fiedler's Contingency Model, House's Path-Goal Theory, and Hersey and Blanchard's Situational Model (Nawaz, & Khan, 2016). The contingency theory argues that the determination of the leaders to handle different situations. Leaders are encouraged to consult and involve other stakeholders while making the decisions to get their perspective of the situations. The consultations motivate other employees towards influencing the organization positively.

Reed Hastings's leadership style is the transformational leadership style, where he focuses on creating organizational culture and values that will guide the employees in their work. He leads by example for other people to follow. The organizational culture is in line with the behavioral theory that states that the behaviors of the people influence the decisions that they make. Organizational culture is meant to shape the behavior of the people (Scott, Jiang, Wildman, & Griffith, 2018). The transformation leadership of Reed Hasting has enabled him to make the employees capable of working and making decisions on their own. The leadership style of Reed Hasting incorporated the behavioral theory in making the employees get aligned with the goals of the organization.

Hastings has been able to improve his leadership style over the years by working on the mistakes done. According to the contingency theory, leadership experience plays an important role in improving the decisions made by different leaders of organizations (Scott, Jiang, Wildman, & Griffith, 2018). Over the years, Hastings has gained experience that has enabled him to avoid making errors during decision making. The experience in leadership also gives a person the opportunity to understand how people need to be managed for them to be more productive. The relationship between managers and employees influences the productivity of the employees. The skills gained include conflict resolution skills that are important in solving conflicts among the employees. The organization is managed according to its specific characteristics.

Reed Hastings has contributed greatly in transforming leadership by introducing new perspectives that are relevant up to date. The contributions include the application of logic and commons sense in solving various challenges that the organizations face (Goncalves, 2018). Leaders used to use policies and theories they have read in books in solving all the challenges that they face, and the theories might not always work. Reed Hasting transformed leadership by applying logic and common sense, inspiring modern leaders to have a different perspective of their leadership. There are situations that organizations find themselves in and require quick decisions; hence logic and common sense help leaders to make the right decision.

Another contribution of Reed Hasting includes involving all the employees in decision making to get different perspectives of the people that are major stakeholders in doing the work. Leaders also learn from junior employees because they do not do everything; therefore, getting the perspective can help in improving how the organization is run (Goncalves, 2018). Every time is the opportunity for leaders to learn, and juniors have information that can help the organization. Engaging the employees gives them morale and confidence to continue working hard. Reed has inspired other managers to involve all the stakeholders of the organization without discriminating against anyone.

Reed is a transformational leader who has a clear set of values as well as a strong, distinctive organizational culture (McCord, 2014). Through his leadership and success in entrepreneurship, we can understand the benefits of applying transformational leadership skills in organizations. With highly qualified employees, this is effective as each employee knows what they should achieve the company's objectives. In Netflix, there are no bonuses, and the employees are encouraged not to prioritize their interests but rather focus on the interests of the company. Reed gives his employees the power and control to innovate, which creates a sense of belonging to the organization. Employees feel that if the organization fails, it is they who have failed, which motivates them to work objectively.

Reed's contribution to contemporary management will help managers understand that employees are more productive when they are given freedom and responsibility (McCord, 2014). This approached has been proved effective by Netflix and is also less costly because policies require a lot of resources to implement. The contributions will also make managers understand the importance of giving adequate time for a vacation. When you hire qualified and mature employees, they can effectively manage themselves so they would be no need to strictly stipulating the duration they would take for vacation. Reed's contribution to avoiding formal reviews is likely to be embraced by managers in the future. Instead of conducting formal reviews such as performance appraisals, managers will consider communicating issues freely with their employees.

Conclusion

In conclusion, Reed Hasting has transformed leadership by embracing new leadership styles that transform the organization to improve management and inspire employees toward achieving organizational goals for the companies. Reed embraces policies from publications as well as using new leadership skills to solve organizational challenges. The performance of the organization is based on the leadership; hence Reed inspired other leaders to provide the best leadership to the organizations they lead.

References

Cherry, K. (2018). Understanding the trait theory of leadership.Copeland, M. V. (2010). Reed Hastings: Leader of the pack. Fortune (December 6).

Goncalves, V. (2018). A Leadership Analysis of Netflix CEO, Reed Hastings | PSY 532: Foundations of Leadership (Dobbs). Retrieved April 10, 2020, from https://sites.psu.edu/leaderfoundationsdobbs/2018/09/21/a-leadership-analysis-of-netflix-ceo-reed-hastings/

McCord, P. (2014). How Netflix reinvented HR. Harvard Business Review, 92(1), 71-76.

Nawaz, Z. A. K. D. A., & Khan_ Ph.D., I. (2016). Leadership theories and styles: A literature review. Leadership, 16(1), 1-7.

Scott, C. P., Jiang, H., Wildman, J. L., & Griffith, R. (2018). The impact of implicit collective leadership theories on the emergence and effectiveness of leadership networks in teams. Human Resource Management Review, 28(4), 464-481.