The one thing leaders must do to fuel innovation

A few months ago, Boston Consulting Group’s annual report of the world’s most innovative companies put Alphabet/Google in the top spot for 2019. Alphabet took over #1 from Apple for the first time in the thirteen years of the report. Obviously both companies are innovative, and we can learn from them.

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Google shared the results of a two-year internal study on their teams so we can all learn about high-performance. After looking at more than 180 of their teams, one common trait stood out above all others: psychological safety.

It turns out, psychological safety matters more than the talent composition of the team. No matter how nice or talented teammates are, people will resist looking uninformed or ill-prepared with coworkers. Most also have an aversion to risk-taking when they fear their manager will dismiss their ideas.

They have reason to fear being overlooked. Just three in ten U.S. workers strongly agree that their opinions count at work, according to Gallup. Gallup’s research also says that by doubling that ratio to six in ten, organizations could realize a 27% reduction in turnover, a 40% reduction in safety incidents and a 12% increase in productivity. All factors that affect innovation.

Organization leaders need to move that ratio, but it will not move without psychological safety.

Harvard Business Review defines psychological safety as the belief that you won’t be punished when you make a mistake. Employees who are afraid of being punished, mocked, or ostracized for their idea or question will not speak up. They will not risk getting their head chopped off if they stick their neck out.

Would you?

Even the most clever big thinkers will stick their necks out only a few times before giving up.

Why bother being innovative, they will think, if it’s going to take fifty miles of red tape to get approval for a minor investment? Why bother bringing up an idea if someone else is going to get to work on it because they aren’t as busy? Why bother bringing up ideas if the execs are just going to shut down everything I offer? Why bother pointing out an issue when the last guy who did that got axed?

Leaders have to encourage innovation through psychological safety first. Here are five ways you can foster psychological safety:

  1.  Lead by example. Model behavior you desire to stimulate. Take risks yourself and adapt when they don’t work out, just as you want your colleagues to do. Be the safety net for your employees when they speak up or try something new, rather than someone they fear will demean them.

  2. Say “yes” first. Welcome new ways of thinking and encourage your direct reports to behave the same way. Challenge your team to say “yes” before “no.” Let encouragement be the first reaction and save rejection for after an idea is thought through. Literally, you might say, “Tell me more about that idea,” instead of, “That won’t work here.” Quick rejection stifles innovation.

  3. Learn fast. Encourage your employees to experiment with different solutions, learn what works or doesn’t, and share the results so others learn too. Celebrate the knowledge gained and build on it, rather than criticize or reprimand every time something doesn’t work.  

  4. Encourage feedback loops. Use internal and external feedback to create a better work environment, product, or service standard. When integrated into projects, and not a surprise, feedback loops are an important part of psychological safety because they help people understand what they are doing well and what can be improved. The loops can help you develop trust throughout the workplace. 

  5. Encourage curiosity. Inspire your team by encouraging exploration. When a solution to a problem is not readily available, encourage your team to seek solutions. Don’t tell people how to solve every problem but let them find their own way. People will learn even more through exploring their own ideas.

When you need to fuel innovation to give your company a competitive advantage, help retain highly skilled people, or solidify a leadership place in your market, start with psychological safety. Stop the psychological danger zone.

A peek behind the curtain of Tesla’s culture reveals it’s missing one key ingredient: warmth

Tesla CEO Elon Musk has given a glimpse into the company’s culture via several all-staff emails he has sent in the last three weeks (dates are links to articles):

  • June 12, 2018: Musk informed staff of an immediate reorg which would result in 9% of non-production staff losing their jobs.
  • June 18, 2018: Musk advised about an employee who conducted “extensive and damaging sabotage to our operations.”
  • July 1, 2018: Musk celebrated a production milestone of building 5,000 cars last week, the last week of its quarter.

The first email was shared on Business Insider in an article called, Ex-Tesla employees reveal the cryptic ways they learned they were getting laid off. “Cryptic”? An interesting word choice, which prompted further curiosity about Tesla’s culture. Tesla and Musk are often in the news for being innovative, for raising billions of dollars without ever being profitable, and for disrupting the automotive industry. Unlike Google, Tesla’s culture is not often in the news.

Since it's so innovative, wouldn’t its culture be innovative too?  

Musk’s emails, recent articles, Tesla’s website, high executive turnover, and recent job postings confirm only part of the assumption about Tesla’s culture is true. Tesla nails the modernization of equipment, systems, and processes. (Well, nails as far as production but not as far as profitability.)

It appears Tesla falls short on modern management and leadership. “Falls short” doesn’t mean they hit zero relevant needs of today’s employees. The missing ingredient is warmth. Or, call it compassion, authenticity, genuine connection, or caring. Whatever you call it, it’s missing.

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Tesla’s messaging appears to promise a workplace where you are expected to be the best and you could expect to work with other really smart people to solve big challenges. It does not appear to promise an environment where it cares about the whole person.

For example, on its website, Tesla’s career page describes its culture as, “Fast-paced, energetic, and innovative.” Its website does not, however, list its values.

Job postings include legal messaging about inclusion, along with the following, in the About Tesla section at the bottom: 

Our world-class teams operate with a non-conventional philosophy of inter-disciplinary collaboration. Each member of the team is expected to challenge and to be challenged, to create, and to innovate. We’re tackling the world’s most difficult and important problems—and we wouldn’t succeed without our shared passion for making the world a better place.

To Tesla's credit, it does not promise newcomers more than what they appear to be getting. It tells potential employees what is expected of them and does not say much about what it does for its people. 

When more companies, especially tech startups, are building cultures to encourage work-life balance and integration, Tesla is not focused on the human part its culture. It is focused only on its Mission.

So what, you might ask? Why does culture matter? Isn’t such focus on Mission admirable?

Yes! Focus on Mission is not only admirable, it is essential. The reason warmth is important is not the “why” of Tesla, its Mission. Warmth is important for the “how,” its execution. Tesla relies on people, and people want to be treated with respect, dignity, and value at work. Even smart people, like those who work for Tesla, have expectations of their leadership team and managers. No one wants to feel like their employer chews them up and spits them out. Burnout does not truly inspire or instill innovation or collaboration.

As long as it is doing mind-boggling work, Tesla will continue to attract top talent. Newcomers may be joining with the Andy Sachs attitude from Devil Wears Prada: just stick it out for a year and you can work anywhere. That attitude is not the same as someone who brings their A game to work every day, and its impact on company performance is not the same either. When a company wants people to bring their A game to work, it needs to show people they matter.

Paychecks get what someone has learned already, not continued learning and thinking. Paychecks get bodies, not minds and hearts. 

The good news is Tesla does not have to choose one way or the other. It can focus on its Mission AND its people. It can care about its people all the time, not just when it hits a production milestone. Tesla is so innovative with systems and processes, it surely could embrace more contemporary leadership practices.

The current culture has led to internal sabotage, high executive turnover, no profitability for fifteen years, and a round of layoffs of 9% of its staff. Perhaps it’s time to add the missing ingredient so its culture could propel Tesla forward, improve its chance for long-term sustainability, and help it accomplish its Mission.

Updated July 11, 2018 12:30pm
Just after calling out Elon Musk and Tesla for lacking warmth, they had the opportunity to aid the rescue of twelve boys and their soccer coach from a cave in Thailand. Musk and Tesla stepped up and worked with the rescue team to create a second option, which might be needed if the first strategy could not rescue the group. I may have called them out for lacking warmth (not entirely, mind you), but others were much more critical.

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Musk and Tesla were severely criticized for two things: helping only for publicity and for the improbability of their solution. Referring to their help, Musk says, "Something's messed up if this is not a good thing." Musk and his team stepped up to help. Whatever their personal motives, or however cynical or skeptical an onlooker is, it was indeed a good thing.  




One man, six photographers, astonishing results

Canon Australia set up an experiment to see whether photos of the same man would develop differently based on information provided about the man to the six different photographers.

Here’s how it turned out:

Very interesting, right? The obvious lesson is not to judge a book by its cover. But, let’s take it a little further. Let’s be more conscious of how information from others affects our perceptions. Think about how you act when someone else tells you their own perceptions of a colleague or customer.

I was reminded of this a few weeks ago when a friend’s fifth-grade daughter prepared to return to grade school after the Christmas break. Her teacher went on maternity leave, so she had a new teacher coming in at the break. The teacher was new to the class but had worked there for a few years. The little girl asked around to find out how other kids liked the teacher. Of course, some did not like the teacher.

The little girl became very upset and was not looking forward to returning to school after the break. It took my friend quite some time to calm her daughter so she could think clearly. Her mom warmly suggested she give the teacher a chance and make decisions based on her experiences. Mom’s magic motivation did the trick, and it worked out fine.

Once in a while we all might need to take a step back, give people a chance, and decide whether they are valuable teammates, wise advisers, or good friends based on our own experiences. We might even need to do that more than once with the same person. Holding on to mistakes clouds judgment sometimes. 

We might need to do the same when someone else opines on an innovative idea. We see it all the time, don't we? When a new idea is brought up, the first words often uttered to do with why it won't work or how we tried that ten years ago. Let's be better about seeing things in a new way, rather than how everyone else sees it. 

The sad part about this whole experiment is that we miss out on the greatness of other people or ideas because of how we perceive them. The good news is that we can control that ourselves and not miss out any more.