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The Knowledge Project · 3 min · Jun 10, 2025

Creative work needs variation, not manufacturing-style consistency

Reed Hastings contrasts manufacturing’s drive for consistency with creative work, where errors and variation are part of innovation. The right level of process depends on the work and its risks.

Reed Hastings

Reed Hastings is cofounder and former co-CEO of Netflix.

Co-founded Netflix and led it as CEO, then became majority owner and chair of Powder Mountain.

  • Shane Parrish, Host · Founder, Farnam Street

    Former intelligence agency employee; wrote the bestseller Clear Thinking.

About this segment

Reed Hastings contrasts manufacturing’s drive for consistency with creative work, where errors and variation are part of innovation. The right level of process depends on the work and its risks.

From “Reed Hastings: How Netflix Built a Culture That Fires Good People”, Jun 10, 2025. Watch the full episode

“So, think of it as in manufacturing, you want to drive out variation. And in innovation, you want to increase variation.”
Reed Hastingsat 23:22 · The Knowledge Project23:22

Takeaways

  1. Manufacturing aims to reduce variation.
  2. Innovation depends on trying different approaches.
  3. Safety-critical work calls for more process than creative work.

In this episode

Full episode
  1. 1:01:36Hastings says his weak sales judgment held Pure Software backPro pick 3:24
  2. 31:12Netflix separated entertainment from workplace conduct3:00

  3. 21:56Creative work needs variation, not manufacturing-style consistency2:33

Up next · All-InNASA’s bureaucracy pushes ownership away from the people doing the workPro pick 6:46

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

  1. 22:09

    You've said, and correct me if I'm wrong, processes can be the death of innovation, yet every company needs some structure as it scales. How do you decide which processes to add and which to remove? Yeah. I mean, that sounds like a long quote. I would say it. Let's tighten it up of, look, manufacturing provided most of the GDP growth from the beginning industrial age, so 1800, you know, through to, I don't know, 1990. Okay.

  2. 22:42

    So, 200 years, manufacturing is providing the GDP growth. And manufacturing is about consistency, about driving out error, about incredible process attention, replication, perfection. And it's not that they weren't ad agencies in the 1950s that were kind of kooky and crazy. They were, but it's a tiny part of the economy. Okay, so the metaphors that we all picked up around process, think of why classrooms are basically organized like factories.

  3. 23:13

    Lots of things are organized like factories because it was the prevailing metaphor. And then the economy shifted a lot to – and higher value things were creative work and inventive and intellectual. And for those things that are inventive, errors are an inherent part of the process. So, think of it as in manufacturing, you want to drive out variation. And in innovation, you want to increase variation.

  4. 23:47

    And so, process really is the language and model. of driving out variation and getting to consistency. And if you're in a safety-critical business like an airline, it's a good thing. And if you're an inventive, creative business where your main threats are that someone else is going to invent something nearby you, then you want to minimize that and maximize the innovation. A large part of the CEO's job seems to be rooting out bureaucracy.