Fearless Culture -A Strategy To Create A Culture Of Innovation
Most of the successful brands have one thing in common -They kept innovating in products/services, processes, facilities, customer acquisition, networking, and supply chain system. How could they do it? One of the determining factors — The company has an internal culture that inspires every employee to share his/her thoughts without fear. The employees know that their superiors will support their plans. They know that they have independence and access to resources to pursue their idea without interference from top leadership. — It was the result of the prevailing ‘fearless culture’ inside the organization.
Fearless Culture is the one that nurtures the psychologically safe environment, ensuring employees from any level, feel comfortable to offer ideas, share information, and report mistakes.
Research in neuroscience shows that fear often blocks analytical, logical, creative, and rational thinking. In short, it’s difficult for people to generate ideas in a culture of fear.
How to build a fearless culture?
Building a fearless culture begins with the leader. It is his/her responsibility to set an ecosystem that encourages everyone to share their ideas. He or she has to lead by example by following up/performing like whatever he/she preaches.
CARING FOR PEOPLE
We are not afraid of sharing our ideas with our family members because we know that we care for each other.
The first and foremost thing in building a fearless culture — The leader should care for his/her people.
Blackstone CEO, Steve Schwarzman says that people are the most important asset in a company. Their relationships are important. If you see a problem with any of your team members, you have to strategize it out -You want to be nice to everybody but you have to accomplish the objectives. So, sometimes it would take two years to do something that you know should happen in ten minutes. But if you did it in ten minutes, then you would break so much glass through the organization that you would threaten the institution or you would threaten the core people. And, there’s a way to work that out. You have to give people dignity. At the same time, you have to accomplish objectives. So, time is something you give up.
If a leader cares for his/her employees, they would automatically care for each other.
When Nelson Mandela was president, he remembered the likes, dislikes, interests of every person in his security team. Whenever he came back from a foreign trip, he brought them small presents based on their interests.
Building a Caring Community -The leader has to create an environment where employees would enjoy each other’s company both inside and outside of work. That’s how you build relationships and a caring community. The community ensures the continuation of a caring culture in the organization. It influences the future employee’s behavior. Eventually, employees will also start caring for their customers. It will help to develop a loyal customer base. And, it would create a sustainable competitive advantage for the business.
Caring for each other builds trust. The relationships get stronger between people. Genuine relationships will push each other to do great things.
In a caring environment, people don’t fear opening up and to share their ideas, opinions, and thoughts. It would help innovation to explode.
The first step to care for people is to respect people. Every leader and his employees should believe that people want to do a great job, irrespective of job titles & hierarchies. They also should firmly believe that every other individual in the organization is inherently valuable. So, everyone deserves respect.
A survey conducted by Georgetown University revealed that most workers ranked respect as the most influential leadership behavior in building trust. The employees added that they enjoyed the work when they feel respected in the workplace. Remember, happier people become loyal, take more responsibility, and create an environment that would benefit the company.
The people inside the organization should see each other as PEERS. Einstein respected every scientist irrespective of their age and experience. He equally valued Max Planck(elder to him) as well as Neil Bohr(Younger to him). He saw everyone as his peers.
How the leader respects and values people, working in the lower-level job, defines the expanse of Culture of Respect inside an organization.
Sam Walton considered people working in his stores, warehouses as partners & called them ‘associates’ rather than employees. He regarded them as someone of value and worth equal to him.
“Each person is important & each job is important” -Dave Packard.
Another critical element that would help in building a fearless culture is creating an environment of transparency.
A leader has to share all the business information with every employee -purchases, stocks, revenues, profits, inventory, plans, strategies, and other essentials.
The more comprehensive the information available in the community pool, the better the knowledge about the constraints, opportunities, and the more valuable the ideas.
Knowledge -Transparency has to be practiced by employees at every level inside an organization. Transparency in meetings would bring all the hidden problems, information, and insights from the work environment to the surface.
Transparency ensures the availability of additional information for open access. The shared data would help an individual to generate relevant and purposeful ideas. It is like Einstein building his photo-electric law on Lenard, Max Planck, and other’s theories. Imagine what would have happened if Einstein could not access those recent discoveries. Knowledge improves a person’s confidence in generating ideas.
Fairness -Transparency bars managers from showing favoritism to anyone. As every essential data was available for others to see, managers are forced to show fairness to every idea. An essential factor that would encourage people to generate ideas without fear.
Sharing Bad News is Not a Problem -Transparency encourages the sharing of both good news and bad news equally. The way the leader responds to a grave report sets the behavior pattern for his/her employees.
Employees are interested in knowing the leader’s reaction to the events around him/her than the event itself.
The leader’s response to the bad news would guide people to handle critical feedback. Encourage people to share bad news.
Visualize the Impact -Transparency allows a person to see the impact of his/her offering clearly in the entire business network. The best part is that other people also could see one’s contribution. That’ll act as an inspiration. He/She could be a star within the company if he sees an opportunity and seizes it.
Be Radically Transparent.
As we discussed earlier, a transparent culture has to start with the leader. He/She has to set the tone by being radically open about everything, including his mistakes and weaknesses.
Ray Dalio writes, “Being radically truthful and transparent with your colleagues and expecting your colleagues to do the same with you ensures that important issues are apparent instead of hidden. Learning is compounded and accelerated when everyone has the opportunity to hear what everyone else is thinking. It builds trust.”
Transparency ensures honest feedback about personal shortcomings. It results in improved self-awareness. The more we are aware of our own biases, mistakes, abilities, emotional states, the more we could evolve our concepts and make better decisions. Transparency provides an opportunity for personal learning, self-reflection, and improvement.
As employees make rapid strides in their personal development, they become happy at their work. Happier employees generate more valuable ideas and become loyal to the company.
Transparency builds a strong trust between a leader and his people -A critical factor in building a fearless culture.
We saw that Radical Transparency inside an organization would bring all critical issues into the open. It will accelerate learning and increase the overall knowledge of the organization.
Practicing honesty at all times is one of the ways to build transparency. Unfortunately, sometimes, brutal honesty hurts people. We don’t want to embarrass people. We don’t want people to lose confidence in themselves and ruin their lives. So, What’s the solution?
Ed Catmull, Pixar’s CEO, advises us to replace the word Honest with Candor. He writes, “Candor has a similar meaning with fewer moral connotations and obligations. It means forthrightness or frankness. It’s not so different from honesty, yet, in common usage, the word communicates not just truth-telling but a lack of reserve. Nobody thinks that being less than candid makes you a bad person.”
He further adds, “People who would feel obligated to be honest somehow feel freer when asked for their candor; they have a choice about whether to give it or not.”
The word places no pressure on people, unlike honesty.
Practice Candor inside the organization to build a fearless culture.
THE CULTURE OF PSYCHOLOGICAL SAFETY
It is essential for an employee to feel safe to open up and share his/her opinions, ideas, and knowledge freely. If he/she stays silent, then the organization would lose valuable inputs that would have helped in a company’s growth.
The solution is to create a psychologically safe place inside the organization for employees.
HUMAN’S BEHAVIOR IS UNINTENTIONAL
To begin with, the leader has to realize that many factors play a pivotal role in human behavior -The prenatal environment each person had before birth, their childhood environment, traumas, their genetics, their gene promoters, hormones, neural wiring, and the experiences they had in their life. Before quickly jumping to a conclusion about a person’s behavior, the leader has to take a step back and think that a person’s past and present environment could have played a role in the person’s reaction. This thought process will isolate the behavior from the person. It would help us to have a favorable opinion on an employee, changing the way we interact with the other person.
If the leader practices this attitude, it would soon spread to other employees.
CREATING AN ECOSYSTEM
It is a fact that the environment plays a critical role in a person’s behavior. So, a leader needs to set safeguards in the workplace environment to avoid people ridiculing or laughing at or punishing or ignoring somebody for their actions and ideas in the workplace environment.
A leader has to create an environment where people need not worry about protecting their image but focus on doing great work -Ray Dalio.
Focus On Content, Not People -At Pixar, in movie concept review meetings, Ed Catmull had made it clear that participants will only discuss the story and not on any personal agenda. No one is allowed to ridicule anyone for his/her idea. The people who would share their feedback on the concept earned no credits or rewards or favors from their supervisors.
Ray Dalio, CEO of Bridgewater Inc., says, “In our company, on hearing any information or idea, the first thought an employee would get was to ponder about the accuracy of the information.” It is a way to separate the content and the person.
Ray Dalio also adds, “In our office, people never say anything about someone that he/she wouldn’t say to them directly. Managers should not talk about people who work for them if they are not in the room.” Nobody is allowed to criticize privately.
“You only say things about fellow employees you say to their face.” -from Netflix’s Culture Deck.
FREEDOM and RESPONSIBILITY
AUTONOMY -Stephen Schwarzman, CEO of Blackstone, says, “Brilliant people do not like to work at a place where they have tight controls. There is no dignity if there is no autonomy”.
The leaders need to provide sufficient autonomy so that the employees could think that they are valued and have self-worth. The employees should feel that they have plenty of freedom to use their talents. Freedom encourages employees to take risks. It stimulates creativity and invigorates experimentation. It further helps an employee to grow professionally and personally. He or she would prefer to stay longer in the organization.
Stephen adds that incredible people like to be in charge of their destiny and would like to have ownership of their growth. A leader has to help them in their pursuit of growth.
Reed Hastings, Netflix’s Cofounder says, “The core of Netflix is about the incredible people who are working in the organization. Leaders need to set the context and let the incredible people run the system.”
At Netflix, setting the context, letting others take responsibility had led to a lot of service improvements and innovations in marketing, content, technology and user interface without the direct intervention of the director. In fact, Hastings takes very few decisions. Individuals or team does most. The leadership trust the employees and give them more freedom and sufficient autonomy.
Sam Walton, Founder of Walmart, called his employees as partners/associates. He gave his associates freedom, authority, and responsibility by involving them in every business decision, planning, and execution. Sam listened to the ideas of people working at lower levels. He wanted every one of his employees to be independent of their own. Many of his store employees had the freedom to conceptualize and implement their ideas of visual merchandising. They never had to wait for approval from the supervisor/manager. Some of those ideas were massively successful.
Creativity overflows when people have the freedom to make decisions within a given role, as opposed to somebody instructing them what to do precisely and demanding them to check with his/her superior before they recognize the need for any deviations.
“Without intellectual and individual freedom there would have been no Shakespeare, no Goethe, no Newton, no Faraday, no Pasteur, no Lister” -Einstein.
CULTURE OF ADMITTING MISTAKES
If leaders can openly talk about their mistakes, then the workplace environment will become safe for others to open up.
Ed Catmull says, “It’s futile to run from mistakes or pretend it doesn’t exist. This is why I make it a point of being open about our failures inside Pixar because they teach us something important: being open about problems is the first step toward learning from them.”
If you don’t mind being wrong on the way to being right you will learn a lot. If you can’t tolerate being wrong, you can’t grow -Ray Dalio.
In the early part of Jack Welch’s career(in GE), on one night, his chemical experiments blew up a three-story office. Fortunately, no one was injured. However, a significant part of the building collapsed and resulted in an immense loss. The next day, he had to go and explain to a corporate group executive, Charlie Reed. Jack was afraid and felt guilty. He found it difficult to summon his confidence. He acknowledged that the company had every right to fire him.
Anyhow, Jack went and met the executive. To his surprise, Charles Reed made him at ease, listened patiently to his side of the story & finally asked him, “Jack, so, what did you learn from the project?”
Jack replied, “I found a way to fix the reactor process so that we can avoid repeating the mistake”.
Reed responded, “Good. So, you would be happy to move forward with the project?”
Jack was pleasantly surprised. Reed did not show anger or any other emotion. He discussed the failure in logical terms and helped Jack to self-reflect on the problem and find solutions.
Whatever has happened is in the past. It holds nothing valuable except for some lessons -Author Unknown.
Self-Reflect and Learn -It’s natural for humans to make mistakes. However, successful people learn from them and never repeat it. Jack’s error caused him discomfort & he felt guilty. However, pain is an effective teacher. Jack deeply pondered over what happened. It forced him to find ways to prevent them in the future. Firing somebody who had experienced pain after a failure, would be a loss to the company.
Charlie Reed would have readily fired Jack to make a point that perfection alone matters, but then GE would have lost a good employee who went on to become GE’s leader(Jack Welch became CEO of GE in his later years & he transformed their business). Imagine the loss for the company if they had fired Jack Welch.
There would be other consequences too if they had fired Jack -it would have encouraged other employees to hide their mistakes. It would proliferate a dishonest culture. It would further paralyze the ability of employees to learn from mistakes and grow. Innovation would suffer.
Start from the Top -As usual, the leader has to set the tone by admitting his own mistakes and weaknesses publicly. He/She has to show that there’s nothing to feel bad about mistakes as they provide an opportunity to grow in one’s career.
Don’t worry about looking good in other’s eyes -Worry about achieving your goals -Ray Dalio.
A company reporting fewer mistakes means that people are not trying out diverse ideas. It also implies that people are not coming forward to admit their mistakes. It’s not a healthy environment. In that scenario, the company would be wasting an employee’s knowledge and talent.
A leader has to inspire people to acknowledge their mistakes in the workplace.
No mistakes mean no new ideas in the organization.
Questioning for Knowledge -Create a culture of open-mindedness by encouraging employees to learn by asking questions. Only by asking questions, the person could understand the reasons behind another person’s perspective -it would help him/her to think from other’s shoes. By asking questions, a person could realize how little he/she knows and how much he/she was wrong in conclusions. Questioning presents an opportunity to learn something.
While questioning, a person is not just asking to share the information, but also the responsibility. Eventually, It leads to the sharing of ideas and ownership of outcomes.
Start From the Leader -Once again, the leaders have to set an example -The questioning culture’s growth is dependent on the type of thought-provoking questions the leaders ask and the eagerness shown by them to learn things that they don’t know. The leaders should exhibit that not knowing something is not an embarrassment.
By questioning, critical thinking inside the organization would improve. People would begin to challenge each other to find the best answers. A company that asks the right questions frequently would launch regular innovations into the market.
The leader has to practice, encourage, and reward questioning culture.
Questioning for growth -Leaders should inspire every employee, irrespective of his/her hierarchy/job title, to challenge thoughts, traditions, decisions inside the organization without fear. Companies that encourage periodical questioning of the status quo would innovate and build a sustainable competitive advantage in the changing business environment.
Ted Thomas and James Thomas writes, “Questioning culture allows creativity to flow, innovative ideas to be presented as opportunities, and routines to be questioned and improved.”
As usual, the leader has to set the ball in motion. Ted Thomas writes, “A questioning culture is determined by the type of questions the leader asks and by the freedom with which their subordinates can ask questions to their leaders.” For the questioning culture to penetrate inside the organization, a person working at the lower-level should have the freedom to question even the top-most leader without any repercussions.
At Intel, Andy Grove created an environment where people can question the CEO’s decisions, ideas, and practices. John Doerr, who had worked with Andy, writes that the way to get Andy’s respect was to disagree and stand your ground and, ideally, show that you are right in the end.
FREEDOM TO EXPERIMENT
In the early 1970s, Intel was nearly a monopoly in manufacturing and supplying memory chips(DRAMs).
However, in the late 1970s, the entry of Japanese memory manufacturers wrecked Intel’s market, turning DRAMs into a commodity product. Intel was losing money rapidly. Intel’s CEO Andy Grove and Chairman Gordon Moore pondered various solutions to stem the loss as well as the future course of action.
Freedom to Experiment -Fortunately, Intel had one good thing -To develop a creative culture, Andy Grove had earlier encouraged his executives and shop-floor employees to experiment on their own. He had empowered them to make their own decisions. Mistakes were not condemned but critiqued by way of advice and learnings.
Because of this type of encouragement, many small teams within Intel kept experimenting on new technologies. One of them was working on microprocessors from the early 1970s. They went ahead and began selling in small quantities to some PC manufacturers. Intel’s CEO, Andy Grove, never interfered in their work but allowed them to do what they believed. The team approached IBM and sold some of the processors. Fortunately, IBM found the product very valuable and began to order in large quantities. Soon, IBM’s competitors approached Intel and started ordering microprocessors. The sales exploded. It got Andy Grove’s attention that motivated him to change the direction of Intel. The company began to sell microprocessors and soon became a leader.
“The most important and visible outcropping of the action bias in the excellent companies is their willingness to try things out, to experiment.” — From the book ‘In Search Of Excellence’.
Without experimentation, Intel would not have moved to manufacture microprocessors from memory chips.
REWARD EFFORTS, NOT RESULTS
It is inevitable that some ideas would fail, resulting in losses for the company. For a fearless culture to prevail, the leadership team has to reward the efforts rather than the results.
When Jack Welch was working as General Manager at GE, one of the teams under him developed ‘Harlac’ light bulb that lasted ten times longer than the typical light bulbs at a fraction of energy but expensive to buy. Unfortunately, consumers did not buy the light bulb & the project failed. GE lost more than $50 million.
Jack didn’t punish those people for the failure -That would have created a culture of fear and stifled people’s creativity. Then, nobody would try any new ideas. What did Jack Welch do? He celebrated the Harlac team’s exceptional efforts by handing out cash awards and promoted several of them to new jobs.
Why do we need to reward efforts? One of Daniel Kahneman’s research showed that we highly underestimate the impact that luck has in many situations, and we massively overestimate the effects of our actions. In many cases, some executives with a lesser effort got great results as luck went their way & many, even after wild attempts, could not reach their goal due to circumstances beyond their control. So, an idea’s failure could be due to reasons beyond the team or person’s control.
Jack noted how the Harlac team worked passionately and diligently to execute the project and how much personal improvement they had made. He reasoned that it would be extremely demotivating to those team members if they didn’t get recognition for their extra effort & at the same time, they had to witness their lesser competent colleagues receiving both cash awards and promotions.
Jack feels that leaders must focus more on the effort of employees than on just their results. That would encourage employees to be fearless in pursuing new ideas.
Lee Iacocca, Former CEO, Ford advises “When an employee is down or could not meet an objective or upset about his failure, do not be hard on him. If you criticize him, you not only run the risk of hurting him badly, you are taking away his motivation to improve and try again”.
Jack Welch, Former CEO, GE also says “When people make mistakes, the last thing they need is discipline. It’s time for encouragement and confidence-building measures. Our primary goal should be to restore their self-confidence. Piling on during a weak moment will make people lose their confidence. They would begin to panic and spiral downward into a hole of self-doubt”.
To sustain an innovative culture, leadership should encourage employees to think like entrepreneurs. The entrepreneurial mind makes employees fearless. Allow an employee to decide on continuing the new idea if he/she believed in it, even though the leadership team was against it. Empower them to find the resources inside or outside the organization without breaking any crucial practices. Don’t punish them even if the project fails unexpectedly. Encourage passion. It is a way to nurture ideas.
In the 1950s, Chuck House was one of the talented employees in the product development division of HP. He was working on a new display monitor and showed a prototype to Dave Packard(HP’s Co-founder). Dave studied the prototype and felt that it would not sell in the market. So, he asked Chuck to abandon the project. However, the employee was not ready to quit. He revised the product and went on to show the new prototypes to potential customers and gathered their feedback. He had freedom in his company to do that. He knew that the leadership would not reprimand him for trying his ideas. That’s the fearless environment a company needs to create.
In his meetings with customers, Chuck was pleasantly surprised to discover that customers loved the product. Their interest prompted him to continue working on the project even though the management asked him to discontinue. He somehow convinced his manager to rush the monitor into production. The result -HP sold more than seventeen thousand display monitors within a short time.
The above example shows how HP benefitted from creating a fearless environment for nurturing entrepreneurship spirit.
Continuous Innovation is essential to build a sustainable business. For that to happen, the organization should have a Fearless Culture. The leader has to lead by example. He/She has to care for people, admit mistakes, give autonomy to people, allow them to question him/her, encourage sharing of bad news, practice candor, support an entrepreneurial spirit, and reward efforts, not results.
References: Creativity, Inc. by Ed Catmull, Principles by Ray Dalio, Radical Candor by Kim Scott, Crucial Conversations by Patterson, Grenny, McMillan, Switzler, The HP Way by David Packard, Jack: Straight From The Gut by Jack Welch, Only the Paranoid Survive by Andrew S Grove, Iacocca: An Autobiography by Lee Iacocca, Stephen Schwarzman-Stanford Interviews, The Fearless Organisation: Interview by Amy C. Edmondson, Article on Questioning Culture by Ted Thomas and James Thomas, Made in America by Sam Walton, Invictus Movie.