Their whole motto is "we're a professional sports team" so if you can't play ball (or there's no longer a ball for you to play with) then you're cut from the team. This was different from the family viewpoint where a company takes an employee and tries to grow them or find new work for them.
They're not really referring to "culture" fit, team compatibility, or even cutting assholes, just whether or not you can provide value to Netflix at that moment.
One usually must spend a decent amount of time/energy tracking and making the case for their own productivity, which of course, lowers their actual productivity.
But in my own experience, I've worked at one specific place that was very very good about identifying people who plainly didn't help and letting them go. It helped immensely over time: the culture was really good (people were really invested in their job, and loved working as a team) and the retention rate was about 6x higher than most places in the same field.
They didn't use bogus metrics or anything, it was always a "feeling" kind of thing. If several people said someone was not helping, they were most likely right. It was arbitrary I admit, but rarely wrong.
There's books about it (e.g. https://www.amazon.com/Asshole-Rule-Civilized-Workplace-Surv...) but personally haven't read them yet.
I actually think this is important. Working with an asshole is a big problem, and I fully admire leaders who know when it's time to let someone go because the situation cannot improve. It certainly beats working in a caustic environment because people are afraid to fire someone.