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Lead with Context, Not Control

Give people the goal, the stakes and the limits, then let them make the call.

◷ 4 min read▤ 2 true storiesWorks the same with AISee its neighbors on the map →

Nordstrom is famous for an employee handbook that fits on a card. The version the company shared with Business Insider in 2014 opens with a welcome and a goal: “Our number one goal is to provide outstanding customer service.” Then come the rules. “Rule #1: Use best judgment in all situations. There will be no additional rules.”

By 1990 the Seattle Times could write that Nordstrom’s “philosophy of providing its clerks with appealing sales incentives and wide autonomy has made it a favorite of management gurus.” Its salespeople, on commission, delivered purchases to customers’ homes and wrote them thank-you notes.

On February 15, 1990, Washington’s Department of Labor and Industries ruled that Nordstrom had broken state wage law by not paying some employees for work done away from the store or after they had clocked out. It found a “pattern”: store meetings, carrying merchandise to customers, writing thank-you notes.

Some of the famous service, the state said, had been done for free.

One card, two messages

The idea Nordstrom was living by has a name from Netflix’s 2009 culture deck, “Context, not Control,” which listed context as strategy, metrics, assumptions, objectives, clearly defined roles, knowledge of the stakes and transparency around decisions, and control as top-down decisions, management approval and committees. You give people the goal, the stakes and the limits, then let them make the call.

The case for it starts with what rules can’t do. A rule is written for situations someone has already imagined. A man rolling in tires to return to a company that sold clothes and shoes is not a case anyone writes a policy for in advance. By the company’s account, an associate in Fairbanks handled it anyway: he called a tire company to ask what they were worth and paid the customer that amount.

A rule is a recipe. Context is knowing who’s coming to dinner, and that one guest can’t eat nuts. On an ordinary night the recipe is faster. When the shop is out of something, only the second one helps.

But people read context from everything a company does, not only from what it prints. The card said serve the customer. The union’s president said the scorecard was sales per hour, and that clerks did the extras off the clock to keep their ratings up. Nordstrom’s position was that such work belonged in paid hours, and that it would pay anyone who turned in time slips. Employees said they were pressured not to. Either way, the card was only one of the messages arriving.

Where the card stops

Even Netflix’s deck made exceptions: control in an emergency, for someone still learning the area or for the wrong person in a role, plus “necessary rules” against irrevocable disasters, such as wrong financial statements, and against dishonesty and harassment.

Nordstrom kept its rule. Its 2025 Code of Conduct & Ethics says the one rule is where things start, then adds that the code “can’t anticipate every situation” and points to policies that give more detail, which employees can be fired for breaking.

The evidence is thinner than the slogan. Context, not control is a practitioner’s principle, written by companies about themselves. The research cited here doesn’t test it directly; the nearest is on “empowering leadership.” A 2018 meta-analysis by Allan Lee, Sara Willis and Amy Wei Tian pooled 105 samples and found it linked to better performance, more creativity and more help beyond the job description, for individuals and for teams, with trust in the leader and people’s sense of empowerment helping explain the link. That is a broad style of managing, not Netflix’s system, and a pooled average can’t tell you how it plays out where a single error can’t be undone.

The refund cap

Imagine a support lead whose team keeps escalating refunds to her, because an old rule caps what agents may approve. She could raise the cap, and write the next rule when the next odd case arrives.

Or she could tell them what the cap was for: a wave of fraud from brand-new accounts, mostly through one payment method. Agents who know that could wave through a longtime customer’s broken kettle and still stop the pattern the rule was written to catch. Fewer refunds might reach her, and the ones that still do might be the ones that need her judgment.

The catch is the Nordstrom catch. If her team is scored only on how fast tickets close, that number will be context too, and it may speak louder than anything she explains.

The reason behind the rule

The same trade shows up when the one following instructions is a model. Anthropic’s prompting guide for Claude sets two versions of an instruction side by side. The less effective one: “NEVER use ellipses.” The more effective one: “Your response will be read aloud by a text-to-speech engine, so never use ellipses since the text-to-speech engine will not know how to pronounce them.” The guide’s explanation is one line: “Claude can generalize from the explanation.”

Anthropic’s constitution for Claude, published in January 2026, makes the same bet at larger scale: “We generally favor cultivating good values and judgment over strict rules and decision procedures, and we try to explain any rules we do want Claude to follow.” It also keeps a short list of hard constraints, and it says clear rules make the most sense “when the costs of errors are severe enough that predictability and evaluability become critical.”

This is a vendor’s guidance about its own models, not an independent experiment, and Anthropic says Claude’s outputs “might not always adhere” to the constitution. An explained instruction still needs its result checked.

The tires still hang in some Nordstrom stores and break rooms. The one rule is still there too, on page five of thirty.

Stories behind it

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Sources

  1. Suzanne Lucas, Nordstrom's awesome employee handbook is a myth, CBS News MoneyWatch, October 15, 2014
  2. Seattle Times, On The Firing Line, Nordstrom Learns PR Counts, April 9, 1990
  3. Seattle Times, Nordstrom Target Of Lawsuit, March 1, 1990
  4. Seattle Times, Nordstrom Clarifies Pay Policies, February 23, 1990
  5. Women's Wear Daily, Union says Nordstrom owes clerks millions of dollars in back pay, November 6, 1989 (as quoted by Word Spy)
  6. Nordstrom, The Nordy Pod: The Truth About Nordstrom's Legendary Tire Story, August 1, 2022
  7. Nordstrom, Code of Conduct & Ethics, 2025
  8. Netflix, Netflix Culture: Freedom & Responsibility (culture deck, 2009, uploaded by Reed Hastings to SlideShare)
  9. Netflix, Netflix Culture Memo
  10. Allan Lee, Sara Willis, Amy Wei Tian, Empowering leadership: A meta-analytic examination of incremental contribution, mediation, and moderation, Journal of Organizational Behavior 39(3), 2018
  11. Anthropic, Prompting best practices (Claude documentation)
  12. Anthropic, Claude's Constitution, January 2026
  13. Anthropic, Claude's new constitution, January 22, 2026
  14. Ashley Lutz, Nordstrom's Employee Handbook Has Only One Rule, Business Insider, October 13, 2014
  15. Seattle Times, A good fit?: At 100, Nordstrom looks ahead, May 29, 2001
  16. Seattle Times, '60 Minutes' To Feature Nordstrom Story Tonight, May 6, 1990
  17. Seattle Times, To Shop Or Not To Shop, Hometown Opinions Run Deep On Nordstrom's Hassle, February 22, 1990
  18. Seattle Times, Success came a step at a time for Nordstrom, May 29, 2001
  19. Patty McCord, How Netflix Reinvented HR, Harvard Business Review, January 2014
  20. Nancy Hass, Is Netflix the Next HBO?, GQ, January 29, 2013