Netflix is run by two co-CEOs, Ted Sarandos and Greg Peters, who together review the business as one operating segment; under them, functional teams run a single global service, and the board has been chaired by independent director Jay Hoag since June 2026. What makes the structure unusual is its operating system: the Netflix Culture Memo, updated in 2024, pushes decisions down to an “informed captain” and keeps rules to a minimum. Netflix had about 16,000 full-time employees at 31 December 2025.
Sarandos and Peters are both principal executive officers and sign the 10-K. Netflix names its co-CEOs as the chief operating decision maker, reviewing results on a consolidated basis.
02
One segment, organised by function
Netflix reports one operating segment: a single streaming service sold in more than 190 countries. That lets it organise by function rather than by country.
03
Informed captains
For each significant decision the memo names an informed captain who makes the call after 'farming for dissent'; others then 'disagree and commit'. Netflix calls this highly aligned, loosely coupled.
04
Few rules
Managers are asked to give context, not control. The vacation policy is two words, 'Take vacation', and the expenses policy is 'Act in Netflix's best interests'.
What changed in 2025-26
A new chair, no founder on the board
Co-founder Reed Hastings told Netflix in April 2026 he would not stand for re-election. Jay Hoag, lead independent director since 2012, became chairman at the June 2026 annual meeting, and the separate lead independent director role was dropped.
Headcount cuts in the fourth quarter
In its October 2026 letter Netflix said recently announced headcount reductions would cut its fourth-quarter 2026 operating margin by about 1.2 points. It said the changes let it keep investing in high-impact areas.
A rewritten culture memo
The 2024 memo groups the culture under four principles (the Dream Team, People over Process, Uncomfortably Exciting, Great and Always Better) and lists eight values, from selflessness and judgment to inclusion and resilience. The keeper test stays.
Generative AI in the risk factors
Netflix’s 2025 10-K warns that rivals using generative AI more effectively, and AI-powered discovery interfaces that span several services, could hurt its business. For an organisation built on judgment and talent density, that puts product and content teams under the same pressure.
Netflix's structure at a glance
Leadership
What it isCo-CEOs Ted Sarandos and Greg Peters
Source detailForm 10-K for 2025, signed 23 January 2026
Board chair
What it isJay Hoag, independent director
Source detailFrom the 4 June 2026 annual meeting (Form 8-K)
Reporting
What it isOne operating segment
Source detailForm 10-K for 2025
Workforce
What it isAbout 16,000 full-time; 68% in US and Canada
Source detailAs of 31 December 2025
Decision rule
What it isInformed captain, disagree and commit
Source detailNetflix Culture Memo, 2024
What it means for you
Name one informed captain for every significant decision and write down who it is.
Ask for dissent before the decision, then ask everyone to commit after it.
Replace a rule with context when the cost of an occasional mistake is lower than the cost of the process.
If you copy the keeper test, pair it with regular feedback so that partings are not a surprise.
Investors: read leadership changes in the 8-K filings; Netflix's 2026 chair change and headcount cuts were disclosed there and in the shareholder letter.
The Business Engineer lens
Netflix’s structure is a bet that dense talent plus clear context beats layers of approval. In the AI economy, where tools shrink the cost of execution, that bet on judgment over process becomes the main design question for every organisation.
Co-CEOs Ted Sarandos and Greg Peters. Jay Hoag has chaired the board since the June 2026 annual meeting, after co-founder Reed Hastings left the board.
Is Netflix's structure flat?
Its management layers are few and decisions are pushed down to informed captains, but it is a functional structure with co-CEOs at the top, not a structure without managers.
How many employees does Netflix have?
About 16,000 full-time employees as of 31 December 2025, of whom about 68% were in the United States and Canada.
What is the Netflix keeper test?
Managers ask whether they would fight to keep a team member who wanted to leave; if not, Netflix believes it is fairer to part ways quickly.
The complete explainer, cleaned up and reformatted for mobile.
In short
Netflix runs a functional structure with a flat, decentralised culture: content, product and technology, marketing and finance report to the co-CEOs, Ted Sarandos and Greg Peters, with decisions pushed down to teams.
Sources: Netflix Form 10-K for 2025 and Q2 2026 shareholder letter (SEC EDGAR). Analysis by The Business Engineer.
How we source: figures on this page come from the company’s own filings (SEC 10-K, 10-Q and earnings releases, or its annual report), with the period stated next to each number. Last refreshed October 2026. Our methodology.
At the heart of Netflix’s organizational philosophy lies the famous “Culture Deck,” a presentation that has been viewed millions of times and dubbed “the most important document ever to come out of the Valley” by Facebook’s Sheryl Sandberg. Created by former Chief Talent Officer Patty McCord and then-CEO Reed Hastings, this document fundamentally redefined how modern companies think about culture, performance, and employee relationships.
Netflix turns $12.6B of quarterly revenue into $4.2B of operating profit. Source: Netflix Q2 2026 shareholder letter (Form 8-K, SEC). Costs calculated; cost of revenues is mainly content amortisation per Netflix's filings. Analysis by The Business Engineer.
Company explainer · Netflix, explained
A 3-minute explainer of Netflix's business model and latest numbers, built from its SEC filings. Analysis by The Business Engineer.
The current culture memo, updated in 2024, lists the values Netflix looks for: selflessness, judgment, candor, creativity, courage, inclusion, curiosity and resilience. Rather than treating these as aspirational statements, Netflix uses them as active filters for hiring, promoting, and making strategic decisions. This cultural foundation enables the company’s unconventional structural choices to function effectively.
Freedom and Responsibility Framework
Netflix’s organizational structure operates on a fundamental principle: give employees extraordinary freedom while expecting extraordinary responsibility in return. This philosophy permeates every level of the organization, from individual contributors to senior executives. Employees are empowered to make decisions that would typically require multiple approval layers in traditional companies.
This freedom manifests in various ways: engineers can deploy code directly to production, content executives can greenlight projects worth millions, and managers can set their own team priorities without extensive oversight. However, this freedom comes with the expectation that employees will exercise sound judgment, communicate transparently about mistakes, and take ownership of outcomes.
How the structure supports the model
A single global service lets Netflix organise by function rather than by country, while local content teams commission shows that travel. The model supports $45.2B of revenue with about 16,000 employees.
Perhaps no single policy better exemplifies Netflix’s structural philosophy than its unlimited vacation approach. By eliminating formal vacation tracking, the company removes bureaucratic overhead while trusting employees to manage their own productivity and work-life balance. This policy reflects a deeper structural principle: focus on results rather than processes.
The policy works because it’s embedded within a high-performance culture where employees understand they’re accountable for outcomes regardless of time allocation. It also demonstrates Netflix’s commitment to treating employees as adults capable of making responsible decisions about their work and personal lives.
The Keeper Test and Performance Management
Netflix’s approach to performancemanagement centers on the “Keeper Test”—managers regularly ask themselves whether they would fight to keep each team member if they were considering leaving for another company. This creates a dynamic where only high performers remain, but also ensures those who stay receive significant investment and growth opportunities.
This approach eliminates the traditional corporate safety net but creates an organization of highly motivated, high-performing individuals. The structure supports rapid decision-making and innovation because every team member is expected to operate at an exceptional level.
Highly Aligned, Loosely Coupled Teams
One of Netflix’s most sophisticated organizational innovations is its “highly aligned, loosely coupled” team structure. This means teams share clear strategic objectives and context (highly aligned) but have significant autonomy in execution methods (loosely coupled).
This structure enables Netflix to operate with the agility of a startup while maintaining the coordination necessary for a global enterprise. Teams can move quickly without constant consultation, yet their efforts remain strategically coherent. Regular context-setting sessions ensure alignment while preserving operational independence.
Content-Tech-Product Integration
Netflix’s current organizational structure reflects its evolution into a content and technology company. The structure integrates three core functions: content creation and acquisition, technology platform development, and productinnovation. Unlike traditional media companies where these functions operate in silos, Netflix’s structure ensures seamless collaboration.
Content teams work closely with data scientists to understand viewing patterns, technology teams build platforms that enable new content formats, and product teams create interface — as explored in the interface layer wars reshaping consumer tech — s that enhance content discovery. This integrated structure has been crucial to Netflix’s ability to compete simultaneously against traditional studios, technology companies, and streaming services.
Evolution from DVD to Streaming to Gaming
Netflix’s organizational structure has evolved dramatically through three major business transformations. The original DVD-by-mail operation required a logistics-focused structure emphasizing warehouse efficiency and postal coordination. The transition to streaming necessitated building technology capabilities and content partnerships while maintaining operational excellence.
The current expansion into gaming represents another structural evolution, requiring new talent acquisition, different content creation processes, and novel technology integration. Throughout each transformation, Netflix has maintained its core cultural principles while adapting its organizational design to new strategic requirements.
The gaming expansion particularly demonstrates the flexibility of Netflix’s organizational approach. Rather than creating separate divisions, the company is integrating gaming capabilities into its existing structure, leveraging its content expertise and technology platform while building new competencies.
Conclusion
Netflix’s organizational structure succeeds because it aligns structure with strategy while maintaining cultural consistency. The company proves that radical organizationaldesign can drive businessperformance when properly implemented and supported by strong cultural foundations. As Netflix continues evolving into new entertainment frontiers, its organizational flexibility remains a critical competitive advantage in an increasingly dynamic industry.
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Netflix at a glance: $12.6B of revenue and a 33% operating margin in one quarter. Source: Netflix shareholder letters (Form 8-K, SEC EDGAR) (Q2 2026); 2025 from Form 10-K. YoY calculated. Analysis by The Business Engineer.
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Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
