Well, not really. I doubt Netflix was thinking how Jim Womack would apply lean to their board meetings. But in a new article, the Harvard Business Review describes how the company reinvented board meetings by creating a better way to share information with its board of directors.
The authors point out that without day-to-day exposure to the firm’s operations, directors typically have a thin understanding of the company. Their knowledge is based solely on turgid PowerPoint slides and carefully scripted presentations delivered by a chosen few executives.
Netflix takes a different approach (to the benefit of the company and the relief of anyone who’s had to sit through a 175 slide deck). First, board members attend monthly and quarterly senior management meetings as observers. CEO Reed Hastings says that direct observation of critical management discussions “is an efficient way for the board to understand the company better” and develop trust in the leadership.
This approach is really just an elegant adaptation of the lean precept of going to the gemba. In the same way a supervisor needs to see an operation or a process with her own eyes instead of relying upon reports delivered in a conference room, so too should a director directly observe how a company’s executives perform while doing their core work of planning and decision-making. The authors explain that
By directly observing management, directors gain a greater understanding of the range of issues facing the company, the analytical approach that underpins managerial decisions, and the full scope of the tradeoffs involved. Ultimately, the aspiration is that this will translate to significantly more confidence in management and its choices.
A second innovation is the format of communication with directors. Instead of the typical slide deck, Netflix provides
30-page online memos in narrative form that not only include links to supporting analysis but also allow open access to all data and information on the company’s internal shared systems. This includes the ability for directors to ask clarifying questions of the subject authors. . . . The memo itself consists of written text that highlights business performance, industry trends, competitive developments, and other strategic and organizational issues.
Directors receive these memos a few days in advance of the board meeting, during which time they can ask questions within the memo. Senior management responds to the questions prior to the meeting. As a result, board meetings are only three to four hours long, compared with the all day or multiple day exercises in tedium at many large corporations.
This approach reminds me of the lean approach to reducing setup times in machine changeovers. Essentially, Netflix has separated internal and external steps—the directors can ingest information and clarify issues before the actual meeting, rather than spending time receiving that information when everyone is gathered together. Not only do they benefit from shorter meetings, but there’s more time—and more mental bandwidth—to delve into substantive governance issues. (You could make a good argument that this approach should be taken with all serious company meetings, but I doubt that will ever happen.)
Netflix doesn’t explicitly pursue lean, but its willingness to rethink how it operates displays the hallmarks of an organization that’s constantly seeking to reduce waste and increase the amount of time and attention that people can devote to value-added activities. (Read about the legendary PowerPoint on corporate culture that Netflix created to rethink HR policies and make life easier for everyone.) Too many companies apply lean thinking only to manufacturing operations where the direct labor and material costs make it easy to calculate benefits. Netflix shows clearly that lean thinking can benefit a company everywhere.