Category Archives: Leadership

The Shareholder Value Myth

GUEST POST from Greg Satell

The Business Roundtable, an influential group of almost 200 CEOs of America’s largest companies, a few years ago issued a statement that discarded the old notion that the sole purpose of a business is to provide value to shareholders. Instead, it advocated serving a diverse group of stakeholders including customers, employees, suppliers and communities.

The idea is not a new one. In fact, Jack Welch once called shareholder value the dumbest idea in the world. Nevertheless, The Wall Street Journal opinion page immediately pounced, suggesting that the move was just an attempt to “appease the socialists” and that it would undermine financial accountability.

It’s hard to see how acknowledging accountability to stakeholders other than investors would undermine accountability to investors. Shareholders, after all, have the power to fire CEOs. Even more importantly though, the notion that performance can be reduced down to a single metric is foolhardy and dangerous. Managing a business is simply tougher than that.

The Principal-Agent Problem

Every business seeks to make a profit. Ones that do not achieve that basic requirement do not stay in business for long. However, that doesn’t mean that the only reason a business exists is to make money. Clearly, in order to earn a profit over the long term, you need to provide value for others. Anybody who has ever run a business knows this.

Yet a large corporation is very different from an ordinary business in that there is what’s known as a principal-agent problem. The shareholders are a dispersed group that have relatively little information, while the managers of the business are a small group with an asymmetric informational advantage.

So you can see how the concept of shareholder value can be attractive. If you can reduce performance down to a single metric, such as stock performance, then the principal-agent problem is solved. Shareholders, as principal owners of the company, can hold managers, as their agents, accountable.

Yet this is a fantasy. There are many things that a manager can do, such as reducing investment or making a lot of sexy acquisitions, that can increase short-term financial performance, but hurt performance in the long run. So the concept of shareholder value has always been a murky one.

From Value Chains To Ecosystems

For decades, the dominant view of strategy was based on Michael Porter’s ideas about competitive advantage. In essence, he argued that the key to long-term success was to dominate the value chain by maximizing bargaining power among suppliers, customers, new market entrants and substitute goods.

Yet there was a fatal flaw in the notion that wasn’t always obvious. In an industrial economy, where technology is relatively static, value chains are stable. However, in a fast moving information economy, firms increasingly depend on ecosystems to compete. That drastically changes the game.

Ecosystems are nonlinear and complex. Power emanates from the center instead of at the top of a value chain. You move to the center by connecting out. So while an industry giant may possess significant bargaining power, exercising that bargaining power can be problematic, because it can weaken links to other nodes in the ecosystem.

So the increased emphasis on stakeholders is not merely some newfound socialistic altruism, but a realistic strategic shift. In a networked-driven world you need to continually widen and deepen links to other stakeholders within the ecosystem. That’s how you gain access to resources like talent, technology and information.
Building Power Through Gaining Trust

In a famous 1937 paper, Nobel Prize winning economist Ronald Coase argued that the function of a firm was to minimize transaction costs, especially information costs. For example, it makes sense to keep employees on staff, even if you might not need them today, so that you don’t need to search for people tomorrow when a job comes in.

Another way to minimize transaction costs is through building trustful relationships. If the stakeholders within ecosystems that you operate trust you, you gain greater access to information and decrease the amount of resources you need to spend on enforcing formal and informal norms. In fact, a study from Accenture Strategy recently found that building trust with stakeholders is increasingly becoming a competitive advantage.

In The Good Jobs Strategy MIT’s Zeynep Ton found that investing more in well-trained employees can actually lower costs and drive sales in the low-cost retail industry. While the sector is often thought of as highly transactional, her research indicates that a dedicated and skilled workforce results in less turnover, better customer service and greater efficiency.

For example, when the recession hit in 2008, Mercadona, Spain’s leading discount retailer, needed to cut costs. But rather than cutting wages or reducing staff, it asked its employees to contribute ideas. The result was that it managed to reduce prices by 10% and increased its market share from 15% in 2008 to 20% in 2012.

In other cases, competitors collaborate to improve their industrial ecosystems for customers. So it is should not be surprising that firms are increasingly investing in structures that are focused on ecosystems, such as Internet of Things Consortium, Partnership on AI and the Manufacturing Institutes. Again, power in an ecosystem resides at the center, not at the top, so to compete you have to connect.

Clearly, it could be argued that by investing in these partnerships, business are increasing shareholder value. However, to do so would be to essentially argue that investing in stakeholder ecosystems and pursuing shareholder value are equivalent, which reduces the debate to one of semantics rather than substance.

Manage For Mission, Not For Metrics

Perhaps one of the most interesting lines in the Business Roundtable statement was the assertion that “each of our individual companies serves its own corporate purpose,” because it acknowledges that the notion of purpose can’t be reduced to a single concept or metric.

Historically, the lines between industries were fairly clear-cut. Ford competed with GM and Chrysler. Later, foreign competition became more important, but the basic logic of the industry remained fairly stable: you produced cars and sold them to the public through a network of dealers.

Today, however, industry lines have blurred considerably. A company like Amazon competes with Walmart in retail, Microsoft, IBM and Google in cloud computing, and Netflix and Warner Media in entertainment. The company itself is much more than simply a bundle of operations competing in different value chains, but a platform for accessing a variety of ecosystems of talent, technology and information.

In much the same way, automobile manufacturers are making investments to transform themselves into mobility companies. To do so, they are building ecosystems made up of technology giants, startups and others. They are not seeking to “maximize bargaining power,” but rather to prepare for a future that hasn’t taken shape yet.

That’s why today, business leaders need to manage for mission, not for metrics. Building trustful relationships among a diverse set of stakeholders may not be as simple or as clear cut as “maximizing shareholder value,” but it’s increasing what profit-seeking businesses need to do to compete.

— Article courtesy of the Digital Tonto blog
— Image credit: Pixabay

Sign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.

Why Great Teams Embrace Failure

Leave a reply

And How to Do Failure Properly

Why Great Teams Embrace Failure

GUEST POST from David Burkus

Failure is feedback. And that maxim is nowhere more true than on teams. When individual team members or the whole team experiences a failure, how they respond can be the difference between a team that continuously improves and enhances performance, and a team that falls apart.

And research backs this up. One of the first studies of psychological safety focused on how teams responded to failure. Amy Edmondson examined the teams of nurses on various wards of a hospital and found that the teams with the highest rated leaders had a higher than average rate of reported medical errors. It wasn’t until looking further that she found the medical error rates were actually the same as other wards…but lower rated leaders who punished failures scared nurses away from reporting them. In other words, the great teams with great leaders embraced failure. And in doing so, they made it easier for everyone on the team to learn from mistakes and get better.

In this article, we’ll review three ways many teams embrace failure on individual, team, and system-wide levels in order to learn, grow, and better perform.

Learning Moments

The first way great teams embrace failure is through learning moments. A learning moment is a positive or negative outcome of any situation that is openly and freely shared to benefit all. And learning moments aren’t strictly a euphemism for failures. A learning moment happens whenever a team member experiences a personal failure and shares that failure with the team along with what they’re learned as a result. The idea is to grant amnesty over the occasional screw-up so long as the person brings a lesson as well. Over time, learning moments become opportunities to discuss how to change one’s approach or put systems in place to reduce failures in the future. But most importantly, learning moments destigmatize failures and move them from being something to be denied at all costs to something that increases performance. Failure is a great teacher—and when team member’s share learning moments they’re reducing the tuition for everyone else on the team by saving them from their own failures.

Post-Mortems

The second way great teams embrace failure is through post-mortems. A post-mortem is exactly what it sounds like…it’s a meeting to discuss a project after it has died. It’s meant to diagnosis teamwide failures (though many high performing teams also conduct post-mortems after the completion of successful projects as well). The purpose of the meeting is not to find someone to blame, or someone to give all the credit. The goal is to extract lessons from the project about where the team is strong and where they need improvement. When people are open and honest about their weaknesses and contributions to failure, teams celebrate the vulnerability that was just signaled.

Many teams can conduct an effective post-mortem with just five simple questions:

What was our intended result?
What was the actual result?
Why were they different?
What will we do the same next time?
What will we do differently next time?

These five answers help identify the parts of the project that teams need to improve, while keeping them focused on the future and not on blaming people for actions in the past.

Failure Funerals

The third way great teams embrace failure is through failure funerals. As if a post-mortem didn’t sound morbid enough, failure funerals are useful rituals to reflect on failures that happened due to situations outside of the team’s control. Sometimes failures just happen. The environment changes, unforeseen regulations are created, or clients inexplicably decide to part ways. When that happens, it’s important to create moments for teams mourn the loss—but also extract some learning. This can be a short as a 15- or 30-minute meeting where team members share their feelings about the project that failed—and pivot toward what they appreciated about serving on the project and what they learned. Some teams even observe a moment of silence or a toast to the project gone wrong. These types of celebrations not only focus the team on lessons learned, but they encourage future risk-taking and keep teams motivated even when those chances of failure are high. Failure is inevitable—learning is a choice. And the purpose of a failure funeral is to make the deliberate choice to learn.

In fact, each of these three rituals represent a deliberate choice toward learning. Great teams embrace failure because doing so embraces learning. Those extra lessons help them improve over time—and trust each other more over time—and eventually become a team where everyone feels they can do their best work ever.

Image credit: David Burkus

Originally published at https://davidburkus.com on May 1, 2023.

Sign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.

CEOs Should Get Out of the C Suite

Leave a reply

Starbucks Shows the Way

CEOs Should Get Out of the C Suite

GUEST POST from Shep Hyken

There is a gap between the C-Suite and reality. Many leaders make decisions from their office, mistakenly believing that they understand what their company’s customers want and expect. One way to close that gap is to leave the C-Suite and take a trip to the front line. And not just once, but on a regular basis.

More than 30 years ago, I wrote my first book, Moments of Magic: Be a Star With Your Customers and Keep Them Forever. There is a chapter in the book titled Understand Your Customer. In this chapter, I shared an example from Anheuser-Busch. Back then, the world’s largest brewer had a program called “All Aboard,” in which executives went out with delivery drivers and salespeople to restaurants, taverns, liquor stores, grocery stores and anywhere else that sold beer. The goal was to hear firsthand from their customers. This put the executives in touch with reality and helped them make better customer-focused decisions.

In my most recent book, I’ll Be Back: How to Get Customers to Come Back Again and Again, I included a similar story. It was back in November 1989 when Microsoft co-founder Bill Gates, already a billionaire, was touring the product support department’s new building. Gates asked a manager, “Do you mind if I take a customer call?” According to the story, he took the phone and answered, “Hello, this is Microsoft Product Support, William speaking. How may I help you?” Of course, the call went well. So well, in fact, that the customer called back and specifically asked for “the nice man named William who straightened it (her problem) all out.”

When was the last time you heard of a billionaire CEO taking customer support calls? When have you heard of the CEO of any large company spending time on the phones in a contact center or venturing out of the office to work on the front line? That’s the reason I love the concept behind the reality TV show Undercover Boss. The CEO or president of a company does exactly what the executives at Anheuser-Busch and Bill Gates did. They just do it covertly, and it’s amazing what they learn.

Recently, I read an article in RetailWire about the new Starbucks CEO, Laxman Narasimhan, who plans to work a half shift once a month as a barista at a Starbucks café. His goal is to “promote a better connection and engagement between leadership and workers.” He wrote a letter to employees that characterized the “health” of the company as needing to be stronger despite the brand’s already strong performance.

That’s a wonderful example of a modern leader taking the time to understand what’s happening on the front line, not just with customers, but also with employees. My only suggestion is that he require his fellow C-suite leaders and VPs to do the same. Imagine how powerful a monthly meeting to compare notes from fellow executives spending time on the front lines could be!

Mark Ryski, founder and CEO of HeadCount Corporation, commented on the RetailWire article. He said, “This must be more than for ‘show’—Mr. Narasimhan sends a strong message that frontline workers and their work are important, but now he needs to live up to that commitment. Having executives get first-hand experience by working a shift is not new, but it never goes out of style. All executives should commit to spending some time working the front lines so that they can truly understand the employees’ and customers’ experience.”

So, when I’m suggesting the C-suite get out of the C-suite, it’s not to fire or replace them. It’s to get them out of their offices to move around and get to know what’s really going on with the company. If you care about your customers and employees—and I know you do—then get out of the C-suite!

This article originally appeared on Forbes.com

Image Credit: Shep Hyken

Sign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.

Accountability and Empowerment in Team Dynamics

3 Replies

Accountability and Empowerment in Team Dynamics

GUEST POST from Stefan Lindegaard

A winning mindset is crucial for team leaders and teams striving to achieve their goals. Empowerment and accountability are two key elements that contribute to a mindset of success in team dynamics.

When team members feel empowered to make decisions and take the initiative, they are more engaged and motivated to excel.

Coupled with accountability, which ensures team members are responsible for their actions and outcomes, these two elements form a powerful mindset that can unlock your team’s full potential.

The Value of Empowerment and Accountability:

Empowerment fosters an environment where team members are encouraged to use their unique skills and expertise to contribute to the team’s success. This sense of autonomy can boost creativity and innovation, as team members feel they have the freedom and support to explore new ideas and take calculated risks.

Accountability, on the other hand, establishes a culture where team members are held responsible for their actions and the results they produce. When team members are accountable for their work, they are more likely to take ownership of their tasks and strive for high-quality outcomes. By embracing a mindset of empowerment and accountability, teams can achieve a synergistic effect that leads to improved performance, collaboration, and overall success.

Action Suggestions for Team Leaders and Teams:

# 1 – Set Clear Expectations: Ensure that team members understand their roles, responsibilities, and performance expectations. This clarity will help them feel more confident in taking ownership of their work and being accountable for their outcomes.

# 2 – Cultivate a Growth Mindset and Psychological Safety: Encourage team members to view challenges as opportunities for growth and learning while fostering an environment where they feel safe to take risks, express opinions, and ask for help. This combination will help them embrace empowerment and accountability as essential aspects of their development.

# 3 – Encourage Open Communication and Feedback: Create an environment where team members feel comfortable discussing their successes and challenges openly. Encourage them to give and receive constructive feedback, helping each other grow and improve.

# 4 – Celebrate Success and Learn from Mistakes: Acknowledge and reward team members for their contributions and achievements. At the same time, use setbacks as learning opportunities to reinforce the importance of taking ownership and being accountable for their work.

Your team’s success is a direct reflection of the mindset you cultivate within it. As a team leader or member, you have the power to ignite the potential of your team by embracing a growth mindset, psychological safety, empowerment, and accountability.

Now is the time to challenge the status quo, defy mediocrity, and strive for excellence. Make the conscious choice to create a team culture that dares to empower, holds each other accountable, and thrives in the face of adversity. The success of your team lies in your hands.

Are you ready to unleash it?

Image Credit: Pixabay

Sign up here to get Human-Centered Change & Innovation Weekly delivered to your inbox every week.

Innovation Is Driving Away Your Top Talent

Leave a reply

Innovation Is Driving Away Your Top Talent

GUEST POST from Robyn Bolton

You want and need the best, most brilliant, most awesome-est people at your company. But with unemployment at a record low, the battle for top talent is fierce.

So, you vow not to enter the battle and invest in keeping your best people and building a reputation that attracts other extraordinary talents.

You offer high salaries, great benefits, flexible work arrangements, the prestige of working for your company, and the promise of rapid career progression. All things easily matched or beaten by other companies, so you get creative.

INNOVATION!

Your best people are full of ideas and have the confidence and energy to make things happen. So, you unleash them. You host hackathons and shark tanks. You install idea collection software and run contests. You offer training on how to be more innovative. You encourage employees to spend 20% of their time on passion projects.

And they quit.

They quit participating in all the opportunities you offer.

They quit sharing ideas.

They quit your company,

Not because they are ungrateful.

Or because they don’t want to innovate.

Or because they don’t have ideas.

They quit because they realize one of the following “truths”

They’re not “Innovators”

High performers believe they need to work on an innovation project to progress (because management explicitly or implicitly communicates this). But when they finally get their chance, they struggle. The project falls behind schedule, struggles to meet objectives, and is quietly canceled. They see this as a failure. They believe they failed.

But they didn’t fail. They learned something very uncomfortable – they’re not good at everything.

Innovation is different than Operation. When you’re operating, you’re working in a world full of knowledge, where cause and effect are predictable and “better” is easily defined. When you’re innovating, you’re working in a world full of assumptions, where things are unpredictable, patterns emerge slowly, and few things are defined. Most people are great at operating. Some people are great at innovating. Extraordinarily few are great at both.

Innovation is a hobby, not an imperative

The problem with innovation efforts like hackathons, shark tanks, and “20% Time” is that people pour their hearts and souls into them and get nothing in return. Sure, an award, a photo with the CEO, and bragging rights motivate them for a few weeks. But when their hard work isn’t nurtured, developed, and brought to a conclusion (either launched or shelved), they realize it was all a ruse.

They are disappointed but hope the next time will be different. It isn’t.

They stop participating to spend time on “more important” things (their “real” work). But they still care, so they keep tabs on other people’s efforts, quietly hoping this time will be different. It isn’t.

They grow cynical.

They choose to stay and accept that innovation isn’t valued or resign and go somewhere it is.

Their potential is bigger than your box

“I felt like Dorothy in the Wizard of Oz. Before the training, the world was black and white. After, it was full color. I don’t want to go back to black and white.”

For this person, the training had gone wonderfully awry.

The training built their innovation skills but motivated them to find another job because it opened their eyes. They realized that while they loved the uncertainty and creativity of innovation, their place in the organization wouldn’t allow them to innovate. They were in a box on an org chart. They no longer wanted to be in that box, but the company expected them to stay.

But are these “truths” true?

As Mom always said, actions speak louder than words.

Who does your company value more – innovators or operators? The answer lies in who you promote.
Is innovation a strategic priority? The answer lies in where and how you allocate resources (people, money, and time).
Do you want to retain the person or the resource? The answer lies in your willingness to support the person’s growth.

Speak the truth early and often

If a top performer struggles in an innovation role, don’t wait until the project “fails” to reassure them that operators are as (or more) important and loved as innovators. Connect them with senior execs who faced the same challenges. Make sure their next role is as desirable as their current one.

(Or, if innovators are truly valued more than operators, tell them that, too.)

If innovation is an imperative, commit as much time and effort to planning what happens after the event as you do planning the event itself. Have answers to how people will be freed up to continue to work on their projects, money will be allocated, and decisions will be made.

(Or, if innovation really is a corporate hobby, follow the model of top universities and let people participate f they want and give everyone else time off to pursue their hobbies).

If you want to retain the person more than the resource, work with them to plot a path to the next role. Be honest about the time and challenge of moving between boxes and the effects on their career. And if they still want to break out of the box, help them.

(Or, if you want them to stay in the box, tell them that, too.)

Don’t let Innovation! drive away your top talent. Use honesty to keep them.

Image credits: Pixabay

Sign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.

What I Learned Solving a Business Crisis

Leave a reply

What I Learned Solving a Business Crisis

GUEST POST from Greg Satell

By 2006 we knew we had a serious problem. Our company’s onetime flagship product, called Afisha, was in a steady decline and it was becoming all too clear that something had to be done. What had once been a market leader that generated huge profits, which fueled the growth of our company had slowly, but surely, lost its market position.

It was clear that the business was in crisis, but nobody was exactly sure what to do about it. Operationally, nothing had really changed. We still believed in our product and our people. Nevertheless, the marketplace had evolved and our business model, which once had seemed bulletproof, was no longer viable.

We didn’t know it at the time, but Afisha’s brightest days were still ahead. We were able to reimagine the business model, strengthen the brand and return to profitability. What we learned is that solving a crisis is not a straightforward linear process, but a journey of discovery. You never know what you’ll find so you need to be willing to experiment.

Acknowledging The Problem

As I explained in Mapping Innovation, when Afisha came out in 2000, it was an immediate hit. At its core, it was simply a guide to restaurants, nightlife and other entertainment, somewhat similar to Timeout. Its restaurant, music and movie columnists quickly became tastemakers in Kyiv, while its sex advice column, achieved a cult-level status. Ad dollars soon came rolling in

In 2006, all of those elements that had made Afisha successful were still in place, but the business environment had changed significantly. The ad market, which had been worth less than $100 million dollars in 2000, was now quickly approaching a billion dollars. Strong multinational publishers like Hearst, Hachette and Rodale had begun investing heavily into Ukrainian versions of top international titles like Cosmopolitan, Elle and Men’s Health.

What we had to accept was that Afisha, although still popular with readers, was no longer a dominant brand. At the same time, the free distribution model which it had once depended on to quickly achieve wide readership was now seen as a liability among advertisers. That diminished our ability to command top ad rates while, at the same time, the booming media market sent our editorial costs through the roof.

None of this happened all at once, so it was easy to believe that Afisha was just going through a temporary downturn. It was only when we were able to acknowledge that our once-successful model had become fundamentally broken that we were able to start moving forward.

Assembling A Broad-Based Team

Once we had acknowledged the problem we assembled a meeting to come up with a strategy to move forward. This included the publisher and editor-in-chief of Afisha, several of the key staff, our company founder, me (as CEO) as well as several company leaders outside of Afisha who had specific knowledge and skills and who were widely respected.

The composition of the meeting was important. Clearly, the Afisha team had to be deeply involved in the process. Having the company founder and me there made it clear that the business had the full backing of the executive leadership. However, in many ways, it was those outside the core Afisha team who had critical impacts.

For the Afisha team and the executive leadership, the business model was so familiar it seemed almost like second-hand. Bringing in other leaders from around the company helped us look at the business in new ways. They asked questions that challenged us, made observations that we hadn’t seen and suggested things that wouldn’t have occurred to us.

Identifying Issues And Developing Options

As the working group met and got down to business, we began to identify problems. First, as noted above, the competitive landscape had shifted dramatically and, although Afisha remained a beloved brand, international titles had taken away significant market share. Second, the free distribution model was no longer financially viable.

As we discussed options, we were able to quickly build consensus on two actions. We would redesign the magazine and the website to beef up the editorial content and better compete with the international titles. We would also look for partners to license Afisha to other cities in Ukraine and create a more national brand.

We also came up with a third option that was considerably more speculative. For years, we had been giving paid subscribers Afisha cards to receive discounts at local merchants. We thought that we could add value to the card by creating an event calendar that was exclusive to Afisha card holders.

Our reasoning was that if we could increase subscribers through upgrading the Afisha card, we could reduce our reliance on free distribution and improve the economics of the business. It seemed like a longshot, but it was also low risk. All we had to do was sign up some partners for events and publish an event calendar in the magazine and on the website.

Finding The Unexpected

The editorial and licensing strategies, which seemed like no brainers, were, at best, mildly successful. Readers seemed to like the new design and expanded editorial content, but then again they liked the old Afisha too. We were able to set up licenses for five major Ukrainian cities, giving up close to national coverage, but the licensees struggled to earn a profit.

The Afisha card strategy, on the other hand, was an unexpected hit. We had hoped to be able to do one event a week, but were soon so deluged with partners that we had to limit events to one per day. From happy hours and shopping nights to club openings and movie festivals, it seemed like everybody wanted to work with us.

Before we knew it, we were able to upgrade events from a promotional activity to a seriously profitable business. We organized a nationwide Frisbee contest for a beer launch, a French movie festival for an upscale coffee brand and organized party trips with sponsors. To our amazement, the business just grew and grew.

What we learned from the experience is that you can’t plan your way out of a crisis. If we were able to plan effectively, we wouldn’t have been in the crisis in the first place. Our success wasn’t the product of our own brilliance, but our willingness to experiment. That’s how we came across the “happy accident” that led to the events business.

The truth is that it takes some bad luck to get into a crisis and it takes some good luck to get out of one. Sound management can help stem the bleeding, but if you are ever going to rebuild a successful business, you have to experiment and allow for the unexpected.

— Article courtesy of the Digital Tonto blog
— Image credit: Pixabay

Sign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.

Questions Asked But Not Always Answered

Leave a reply

Questions Asked But Not Always Answered

GUEST POST from Mike Shipulski

This seems like a repeat of the last time we set a project launch date without regard for the work content. Do you see it that way?

This person certainly looks the part and went to the right school, but they have not done this work before. Why do you think we should hire them even though they don’t have the experience?

The last time we ran a project like this it took two years to complete. Why do you think this one will take six months?

If it didn’t work last time, why do you think it will work this time?

Why do you think we can do twice the work we did last year while reducing our headcount?

The work content, timeline, and budget are intimately linked. Why do you think it’s possible to increase the work content, pull in the timeline, and reduce the budget?

Seven out of thirteen people have left the team. How many people have to leave before you think we have a problem?

Yes, we’ve had great success with that approach over the last decade, but our most recent effort demonstrated that our returns are diminishing. Why do you want to do that again?

If you think it’s such a good idea, why don’t you do it?

Why do you think it’s okay to add another project when we’re behind on all our existing projects?

Customers are buying the competitive technology. Why don’t you believe that they’re now better than we are?

This work is critical to our success, yet we don’t have the skills sets, capacity, or budget to hire it out. Why are you telling us you will get it done?

This problem seems to fit squarely within your span of responsibility. Why do you expect other teams to fix it for you?

I know a resource gap of this magnitude seems unbelievable but is what the capacity model shows. Why don’t you believe the capacity model?

We have no one to do that work. Why do you think it’s okay to ask the team to sign up for something they can’t pull off?

Based on the survey results, the culture is declining. Why don’t you want to acknowledge that?

Image credit: Pixabay

Sign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.

A Global Perspective on Psychological Safety

1 Reply

A Global Perspective on Psychological Safety

GUEST POST from Stefan Lindegaard

Professor Amy C. Edmondson defines psychological safety as “a belief that one will not be punished or humiliated for speaking up with ideas, questions, concerns, or mistakes.” Achieving psychological safety is essential for fostering innovation and maintaining a competitive edge in today’s rapidly changing business landscape.

In this article, I will share my personal perspectives on psychological safety across different regions around the world, based on my extensive travel and interactions with leaders and organizations over many years. Please note that these observations are not exhaustive but serve as a reflection of my experiences in these regions.

Northern Europe – high psychological safety today

Northern European countries, including the Nordic region and countries like the Netherlands and Germany, are known for their high levels of psychological safety. Leaders in these countries often adopt a more participative and collaborative approach to decision-making, promoting open communication and employee empowerment. Flat organizational structures are more common, allowing for reduced power distance between employees and managers.

For example, in Sweden, the practice of “fika” – regular coffee breaks where employees gather and engage in informal conversations – encourages open dialogue and builds trust among team members. In the Netherlands, the “polder model” of consensus-based decision-making fosters a cooperative atmosphere where diverse opinions are valued and considered.

Southern Europe, Middle East, and parts of Asia – potential for growth through proper implementation

In Southern European countries like Italy, Spain, and Greece, as well as Middle Eastern and other countries such as Turkey and China, top-down and hierarchical leadership styles are more prevalent. Cultural norms and values that emphasize deference to authority can make it challenging to establish psychological safety in these contexts. However, there is significant potential for growth if organizations can adopt more inclusive leadership styles and promote open communication.

In some companies in these regions, forward-thinking leaders are beginning to recognize the value of psychological safety and are implementing practices such as regular feedback sessions, team-building activities, and mentorship programs to foster a more supportive and inclusive work environment.

Psychological Safety Graphic by Stefan Lindegaard

Southeast Asia – an emerging tipping point

Countries in Southeast Asia, including Thailand, Indonesia, and Malaysia, are witnessing a shift in leadership styles, driven by a younger generation and visionary veterans who are blending Eastern and Western approaches. While these countries may currently lag in innovation, their appetite for learning and desire to transform organizational cultures could lead to rapid advancements in psychological safety.

In Southeast Asia, several organizations are embracing the concept of a growth mindset, encouraging employees to take risks, learn from mistakes, and continuously improve. By adopting more inclusive leadership styles and creating spaces for open communication, these countries have the potential to foster psychological safety and drive innovation.

North America – a tale of two realities

In innovation hotspots in the United States and Canada, psychological safety is already well-established. The war for talent in these areas has led organizations to prioritize employee well-being and create inclusive environments. However, other parts of North America may not share the same level of psychological safety, and it’s essential to differentiate between these diverse contexts.

Innovation-driven companies in North America often prioritize transparency and openness, with leaders who actively seek employee input and promote a culture of collaboration. By empowering employees to take initiative, express their ideas, and challenge conventional thinking, these organizations create a psychologically safe environment that fuels creativity and innovation.

Latin America and Africa – unique challenges and opportunities

In Latin American and African countries, cultural norms, economic conditions, and political contexts can vary widely, leading to diverse approaches to psychological safety. While some organizations may struggle with hierarchical leadership styles and limited resources, others are embracing more inclusive practices and leveraging local talent.

Recognizing the unique challenges and opportunities in these regions is crucial for fostering psychological safety and driving innovation. For example, in countries like Brazil and South Africa, companies are increasingly focusing on employee development and well-being, investing in leadership training, and promoting open communication.

Conclusion

Psychological safety is a critical component of successful organizations across the globe. While the degree of psychological safety may vary from region to region, leaders in all contexts can benefit from fostering a supportive, inclusive, and open environment that encourages employees to speak up and share their ideas.

As a global community, we can learn from one another’s experiences and perspectives to advance the development and implementation of psychological safety in organizations worldwide. I encourage readers to share their own insights and experiences with psychological safety in different regions and explore how we can collectively promote a more psychologically safe and innovative world.

So, what are your thoughts on psychological safety from a global perspective?

Feel free to share your comments, perspectives, and questions.

Let’s learn together.

Image Credit: Pixabay

Sign up here to get Human-Centered Change & Innovation Weekly delivered to your inbox every week.

Instant Revenue

1 Reply

Instant Revenue

GUEST POST from Mike Shipulski

If you want to grow the top line right now, create a hard constraint – the product cannot change – and force the team to look for growth outside the product. Since all the easy changes to the product have been made, without a breakthrough the small improvements bring diminishing returns. There’s nothing left here. Make them look elsewhere.

If you want to grow the top line without changing the product, make it easier for customers to buy the products you already have.

If you want to make it easier for customers to buy what you have, eliminate all things that make buying difficult. Though this sounds obvious and trivial, it’s neither. It’s exceptionally difficult to see the waste in your processes from the customers’ perspective. The blackbelts know how to eliminate waste from the company’s perspective, but they’ve not been taught to see waste from the customers’ perspective. Don’t believe me? Look at the last three improvements you made to the customers’ buying process and ask yourself who benefitted from those changes. Odds are, the changes you made reduced the number of people you need to process the transactions by pushing the work back into the customers’ laps. This is the opposite of making it easier for your customers to buy.

Have you ever run a project to make it easier for customers to buy from you?

If you want to make it easier for customers to buy the products you have, pretend you are a customer and map their buying process. What you’ll likely learn is that it’s not easy to buy from you.

1. How can you make it easier for the customer to choose the right product to buy?

Please don’t confuse this with eliminating the knowledgeable people who talk on the phone with customers. And, fight the urge to display all your products all at once. Minimize their choices, don’t maximize them.

2. How can you make it easier for customers to buy what they bought last time?

A hint: when an existing customer hits your website, the first thing they should see is what they bought last time. Or, maybe, a big button that says – click here to buy [whatever they bought last time]. This, of course, assumes you can recognize them and can quickly match them to their buying history.

3. How can you make it easier for customers to pay for your product?

Here’s a rule to live by: if they don’t pay, you don’t sell. And here’s another: you get no partial credit when a customer almost pays.

As you make these improvements, customers will buy more. You can use the incremental profits to fund the breakthrough work to obsolete your best products.

Image credit: Pixabay

Sign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.

3 Examples of Why Innovation is a Leadership Problem

6 Replies

Through the Looking Glass

3 Examples of Why Innovation is a Leadership Problem

GUEST POST from Robyn Bolton

Do you sometimes feel like you’re living in an alternate reality?

If so, you’re not alone. Most innovators feel that way at some point.

After all, you see things that others don’t.

Question things that seem inevitable and true.

Make connections where others only see differences.

Do things that seem impossible.

It’s easy to believe that you’re the crazy one, the Mad Hatter and permanent resident of Wonderland.

But what if you’re not the crazy one?

What if you’re Alice?

And you’re stepping through the looking glass every time you go to work?

In Lewis Carroll’s book, the other side of the looking glass is a chessboard, and all its inhabitants are chess pieces that move in defined and prescribed ways, follow specific rules, and achieve defined goals. Sound familiar?

Here are a few other things that may sound familiar, too

“The rule is, jam tomorrow and jam yesterday – but never jam today.” – The White Queen

In this scene, the White Queen offers to hire Alice as her lady’s maid and pay her “twopence a week and jam every other day.” When Alice explains that she doesn’t want the job, doesn’t like jam, and certainly doesn’t want jam today, the queen scoffs and explains the rule.

The problem, Alice points out, is that it’s always today, and that means there’s never jam.

Replace “jam” with “innovation,” and this hits a little too close to home for most innovators.

How often do you hear about the “good old days” when the company was more entrepreneurial, willing to experiment and take risks, and encouraged everyone to innovate?

Innovation yesterday.

How often do you hear that the company will invest in innovation, restart its radical innovation efforts, and disrupt itself as soon as the economy rebounds, business improves, and things settle down a bit? Innovation tomorrow.

But never innovation today. After all, “it’s [innovation] every other day: today isn’t any other day, you know.”

“When I use a word, it means just what I choose it to mean – neither more, not less.” – Humpty Dumpty

In this scene, poor Alice tries to converse with Humpty Dumpty, but he keeps using the “wrong” words. Except they’re not the wrong words because they mean exactly what he chooses them to mean.

Even worse, when Alice asks Humpty to define confusing terms, he gets angry, speaks in a “scornful tone,” and smiles “contemptuously” before “wagging his head gravely from side to side.

We all know what the words we use mean, but we too often think others share our definitions. We use “innovation” and “growth,” assuming people know what we mean. But they don’t. They know what the words mean to them. And that may or may not be what we mean.

When managers encourage people to share ideas, challenge the status quo, and take risks, things get even trickier. People listen, share ideas, challenge the status quo, and take risks. Then they are confused when management doesn’t acknowledge their efforts. No one realizes that those requests meant one thing to the managers who gave them and a different thing to the people who did them.

“It takes all the running you can do, to keep in the same place. If you want to go somewhere else, you must run at least twice as fast as that!” – The Red Queen

In this scene, the Red Queen introduces life on the other side of the looking glass and explains Alice’s new role as a pawn. Of course, the explanation comes after a long sprint that seems to get them nowhere and only confuses Alice more.

When “tomorrow” finally comes, and it’s time for innovation, it often comes with a mandate to “act with urgency” to avoid falling behind. I’ve seen managers set goals of creating and launching a business with $250M revenue in 3 years and leadership teams scrambling to develop a portfolio of businesses that would generate $16B in 10 years.

Yes, the world is moving faster, so companies need to increase the pace at which they operate and innovate. But if you’re doing all you can, you can’t do twice as much. You need help – more people and more funding, not more meetings or oversight.

“Life, what is it but a dream?”

Managers and executives, like the kings and queens, have roles to play. They live in a defined space, an org chart rather than a chessboard, and they do their best to navigate it following rules set by tradition, culture, and HR.

But you are like Alice. You see things differently. You question what’s taken as given. And, every now and then, you probably want to shake someone until they grow “shorter – and fatter – and softer – and rounder – and…[into] a kitten, after all.”

So how do you get back to reality and bring everyone with you? You talk to people. You ask questions and listen to the answers. You seek to understand their point of view and then share yours.

Some will choose to stay where they are.

Some will choose to follow you back through the looking glass.

They will be the ones who transform a leadership problem into a leadership triumph.

Image credits: Pixabay

Sign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.