The Environment You Create Impacts The Candour In Your Business

0:00Teamwork isn't just nice to have in business, it's the undisputed competitive advantage. When your team members work as a unified force, your whole operation benefits through higher productivity, thriving creativity and unstoppable momentum. Welcome to the impactful Teamwork podcast where we share with you strategies and tactics to help you develop game-changing teams so that you and your business can make a real difference in the world. Somebody on your leadership team knows something that you need to know. They've known it for about three weeks now, but they've rehearsed how they would say it. They've chosen the meeting where they would say it and they've watched that meeting

1:03run maybe 10, 12 minutes late and quietly decided today is not the day. You'll hear about it eventually of course, probably in a time that isn't great and when it becomes very expensive for you. And here is the part that most leaders resist and I really want to say this plainly before we go any further. So this team member is not lacking courage, they're not disengaged, they're not being difficult and they've not failed some cultural tests that a training course could have helped them pass. What they have actually done is they have read the environment that you the leader have built. And they've read it accurately, typically and they have responded to it correctly because in their view, silence was the rational choice.

2:04Now we've spent the better part of a decade telling leaders to build psychological safety as though it's something that you could go out and purchase and schedule it and tick it off a list. It's not. Political safety means reading the people and taking care of the environment that they're standing in and taking care of it continuously, mostly without knowing that you're doing it. In this week's edition of impactful teamwork, I'm not going to ask you to become a safer leader. I'm actually going to ask you to look at the field that your team is standing in. I'm Julia Fountain and I am the host of here, impactful team work. And this is the podcast for leaders who've worked out that the most expensive underperforming system in their business is the team sitting at the top of it.

3:05And as inspired to record this particular episode because of some data that will share with me this week and it's from the leadership development group. And when you first hear this statement, you might think it sounds a little bit blah and non-descript, but it isn't because what they said was this. Leadership isn't about having all of the answers. It's about creating an environment where your team isn't afraid to bring you the problems. And I think probably when we listen and read that sentence, we're like everyone agrees that leaders nowadays can't have all the answers. We often talk on this podcast about the fact that the world is moving at a crazy fast pace and there's no way that leaders can know everything. Maybe in the days of pre-Google that was possible, but not in today's environment. And so most of us are coming to understand that the leader can't know everything and therefore

4:09there's this real imperative for leaders to start thinking about shared leadership. But it's that second sentence. It's about creating the environment where your team isn't afraid to bring you the problems. I think that really sticks for most leaders. Because in all of the work that I've done and in the books that I've written, one area that I've never really found addressed very well is the fact that the environment plays such an important part in everything. And I think it's really important that we actually need to create an environment. So the environment is actually something that you as a leader build, whether you intend to or not. And the environment that you create comes about from the ordinary transactions in each and every single day of your week. And you're always constructing a set of conditions that your team then reads. And the irony is that they read it far more carefully than perhaps even the value statements on the walls of your building.

5:17So the question I think for us to ponder as leaders is not whether we've created an environment because you've always created it. It's whether you have consciously created the environment that you want to have. And importantly, would you recognise it? If somebody described it back to you. Many of you will probably know that last week I interviewed Rachel Franco on the podcast and we were talking about failure and the way that teams can recover from it. And I made the argument then that people's reluctance to try something new is often a rational response to how their leader has historically reacted. And I totally believe that because what we really see is people could be encouraged to speak up. But if the response they get from their leaders behaviour or their facial expressions make somebody immediately think that wasn't a great idea.

6:19Why did I ever say that? Then people will never speak up. And it makes me think about a situation I personally experienced very early on in my career. And I was at a dinner with my then partner who's in the hospitality industry and we were having dinner with a very influential gentleman called Chak Fini who founded the duty free shops. And Chak offered my partner at the time the opportunity to go and work for him in Spain. And I had just started a brand new job as deputy front of House manager at Clare Nghil's hotel. And the last thing I wanted to do was move to Spain with my partner. And I'll never forget the look that came over my face was just complete shock and a horror that we would even start considering this. And as a result of my reaction, Chak Fini never pursued that conversation with my partner or gave him that opportunity to go and work with him in Spain.

7:25So it's just being so aware that in the moment how we respond can really change the course of a conversation. So I want to share with you some research and some thinking and it's from 1936. And it's a piece of research about the environment that I rarely see cited in any type of leadership work. And it's from a gentleman called Kurt Lewin who's a social psychologist. And what he created was an equation and the equation is this behavior is a function of the person and their environment. So let me say that again, behavior is a function of the person and their environment. So that means if you observe somebody behaving in a way that puzzles you, you've got two variables available to you, haven't you? And most of us only interrogate one, we assess the person, we profile them, we appraise them, we maybe send them on a course, maybe we even have a difficult conversation with them.

8:33And occasionally we might replace them. But rarely do we look at the environment. And the behavior that happened in it and asked was the environment rewarding? Was it encouraging the behavior we wanted? Or was it encouraging the behavior that we didn't want? And Amy Edmondson, the Harvard professor who did more really to define psychological safety than anyone else. She arrived at this whole concept of the importance of the environment, actually quite by accident. She was doing some research and she didn't get the result that she wanted. And she went into two hospitals really expecting to find that better nursing teams made fewer medical errors. Because that is what had been indicated by some previous work she'd done in the aviation industry. And she was really shocked that actually the data showed something completely different.

9:37And what the data showed was that better teams appeared to have higher error rates, not lower ones. So she was curious and she went back and she looked at the research. And what she uncovered was that better teams weren't making more mistakes. They were just being more candid about reporting them because they had built an environment in which admitting an error was survivable. And so people were encouraged to surface errors and be honest when things didn't go to plan. Because what that meant was then things could be caught and corrected before anything tragic happened. So let's just sit with that thought for a moment and the commercial implications of that. Because what that would indicate is if you are in a business unit that's got a clean error log. That actually is very dangerous because actually what it means is there's not an evidence of performance.

10:43There's possibly an evidence of suppression when nobody is actually reporting what is going wrong. So you might want to just think in your own business. If there is a particular business unit that's reporting no problems, maybe say for three consecutive months, what's your instinct? Because many leaders might actually feel quietly reassured. But perhaps a better response would be curiosity. Because that team is either exceptional at their operation or we're looking at an environment where nobody's calculated that telling you is worth it. And I just want to share with you now something that my colleague at Teaching Horse, James Hemingway Moore, shared with me recently and she wrote something and shared it with me and I've not been able to put it down. This was her observation because horses don't hide the bad news.

11:47They don't worry about hierarchy. They don't protect there. You go. They don't wait for a convenient moment to tell us that something's not working. If our direction is unclear, if our energy is in appropriate, if our attention is somewhere else. Or if what we're projecting does not match what we're actually feeling, the horse response, the horse response is immediately. And as Jane puts it so succinctly, there's no blame in that response and no judgment is just information. And I've spent more than 15 years watching this out in the field and I'd have one thing to her observation. Because it's the thing that really triggered me recording this episode for you. The horse often isn't responding to your behaviour. The horse is responding to the environment that your behaviour is in. And I think that distinction matters commercially as well.

12:53So let me share some examples with you. Some of you might be familiar with my little mare, Bracken, who is my expert boundary teacher within the herd. And she does this by rather subtly sidering up to you and then beginning to barge and push into your space. And so you have to have absolutely clarity with her about what you want. Otherwise, she is going to occupy your space. And she's going to keep doing that until you correct her. And so she's not reading your gestures. What she's reading is the absence of a decision because a lot of people, Bracken's very sweet, she's very charming. And people are like, oh, she's so sweet, I want her to come up to me. So of course energetically, they haven't set a boundary with her. So she keeps coming and then she barges into people. Not in a malicious way, but just in a way of all I want to be close to you. Whereas Toby was the co-founder with me of Business Horsepower.

13:57And he taught me more about energy, but he had a much simpler method, Toby, because he was often selected for the team events. And if a team's energy was misaligned, he just left. He didn't signal it, he didn't escalate anything. He didn't put it on the agenda for next week. He just walked away in the middle of the exercise and gave the most honest exit interview that any of us will ever receive. So if we translate that into a business context, our senior teams do exactly the same thing. Only slower or more expensively. They probably don't walk out of the building in the moment. But energetically, they walk out of the conversation. They might stop volunteering for things that they had been doing, say, 18 months earlier. And they focus their energy in the parts of the business where the environment is more predictable.

14:59And the way that you'll see this show up in a business situation is a competent person who becomes unusually quiet in meetings. And the danger is that you might tell yourself, oh, they've got a lot on. But actually, they are beginning to not feel comfortable in speaking up for whatever reason. And the Institute of Leadership Management attribute 86% of business failures to this silo mentality and poor collaboration. And we've got to remember that silos aren't built by bad intentions. They're built by capable people making a series of entirely rational decisions about where it's safe to spend their effort. So I want to share with you another commercial example and commercial evidence that the environment beats individual capability. And the best study I know of this is Nokia Research.

16:00And Timo Viura and Quihu published it in the administrative science quarterly all the way back in 2016. And the article examined why Nokia lost the smartphone battle between 2005 and 2010. Because let's face it, Nokia wasn't a company short on engineers or short of capital or short of warning. Nokia had extraordinary technical capability. Many of us had that Nokia smartphone for the longest time. And it had great many people within the organization that could see precisely what was coming. But what the researchers found was that there was a level of fear unevenly distributed throughout the organization. And it was this uneven distribution of fear that actually created the mechanism for Nokia to fail. Because what happened was top managers were afraid of the

17:02external competitive threats of appall of concerns of the shareholders. Whereas the middle managers were afraid of something entirely different, which was their own superiors and peers. So the senior team applied enormous pressure without fully disclosing the external threat that was driving it. And the middle managers reading the environment accurately read the negative information that would have made them a target. So I think that result should really keep us all awake at night because senior leadership at Nokia ended up with an over optimistic assessment of their own technological capability. And they made investment decisions on the basis of it. And so they chose short-term product responses over long-term innovation. And it wasn't because they were complacent and not because nobody knew. It's because the environment

18:06have made accurate information of career risk. And enough people made the correct individual calculation. So everybody was rational, nobody was incompetent. But it's just for me a really interesting frightening case study of what I see happening in modern leadership today. And it's why I have very little patience with organizations that don't focus on culture and environment because it really makes such a big difference between what's actually happening in the organization and what the board and the senior leadership actually think is happening. So if the environment is a design problem, what's it made up of? I think there's four components that we need to look at. And the first component is this. What happens in the three seconds

19:07after some bad news happens? Because it's not what you say, because I'm pretty sure you're going to say the right thing, but it's what your face and your body language conveys about the problem or who is responsible for it. Because remember our team members pick up on everything. And the leader who says all the right words was pulling your face, has communicated the real policy very clearly. And the horses read this instantly, which is why congruence is the single most useful thing that working with the horses teaches us. Because our team reads it too. They're just much plighter about the timing. They don't give you the timing in the moment that your lack of congruence, that the horses give you about your lack of congruence. The second is what happens to the information offer it reaches you. If problems go up and nothing ever comes back down, people stop bothering, right? And they stop quite quickly. People don't

20:14raise issues. And team members know that not every issue they raise can be acted on, but they want to know that the issue has been heard. And even if it can't be acted on, they want to know that somebody has at least heard them. And what I've seen is team members stop speaking up when they feel that they're not being heard. The third thing that causes a design problem is the reward structure within the business. And I think this is one that leaders often want to skip because it requires changing something cultural and structural rather than something personal. Because let's just think about this. If every team member is compensated on the current model and how it's performing, then you've bought yourself effectively a team of defenders. They want to defend how the current model is performing because that's how people are renumerated.

21:15So people stop trying to try and we stop rewarding the try and experimenting within the organization because people know that if they do what they've always done, they're going to continue to get rewarded. So that level of experimentation and creativity and innovation that we need within the organization gets styled. And the fourth thing that I want you to think about is what happened to the last person who told you something you didn't want to hear. And I think if I think about organizations and teams I've worked in, everyone knows the answer to this. And most of us can name that person. And if that person ends up being quietly moved sideways, then the entire business has already drawn its conclusion and you don't have to say a word. They've already realised that if you speak up it might be dangerous.

22:19So these four behaviours, they sit underneath something that I call the four cultural zones that I work with. And they run from toxic through turbulence, tuned in and turbocharged. And what determines where a team lands is not how nice its leader is. It is the leadership mode operating in the environment. And the modes run from controlling through coaching, through connecting and co-creating. And a controlling environment is run by generally warm and well-intentioned people. But it can still produce that silence because the conditions are doing the work and the warmth is a bit of a decoration on top. And I think it's really important that when we're talking about this and we're also talking and linking culture and psychological safety doesn't mean lowering the standards and it's not about an absence of accountability. And my colleague Jane Hemingway Moore makes that same point.

23:20It means creating conditions in which somebody can say that something's not working early enough for you to do something about it. The standard stays exactly where it was. What changes is how quickly you find out about it and therefore how quickly you can create a solution to that problem. And I want to leave you with a story and some of you I've shared this before about how the environment changes rather than the people. And this is the story of this chief executive Steve. We were working together on an event and he went away and I was discussed with him and his team that how we were going to go and catch cafe who was a horse at the end of the arena. And Steve just walked off with no equipment and went and did his own thing without consulting his team and his team said he does that all the time. But what's been really interesting is now

24:22that when Steve does that and he goes off on these jaunts of trying to find new products or new things and failing to breathe the rest of his leadership team about what he's doing. They turn around and telling me's having a cafe moment. And it's way for his team to give him feedback without it being threatening and without anyone having to feel brave because the team has got this shared framework and reference about what's happening. And they've been able to carry that back into the work environment and it's still working years after the events. Because nobody on that team went on a course about speaking truth to power. What happened is the conditions changed in the behavior followed. And that is the entire argument of this episode in one sentence. So here's my challenge to you this week. It's got two parts. The first part is think about a time

25:22a member of your team brought you a problem a mistake or something you didn't want to hear. Not what you said because I'm confident you said the right thing. What did they experience from you in the three seconds before you said what you did? What were your facial expressions like? What was your body language like? And the second thing, what did your response teach other people in the room in that moment? Because it speaks exactly to the point about would it be safe for somebody to come and share something with you next time? Or are they going to feel that if they come and share it with you, they're going to get in to trouble. Because the environment is not built in the moments you're trying to build it. It's built in the moments when you're not paying attention to what comes next. So if this episode landed really well for you, I'd encourage you to go and check out episode 127 with Rachel Franco on failure and recovery because these two topics sit

26:28side inside together and she's got a lot of data that we talked about on that episode about psychological safety and how it impacts productivity and profitability. And I invite you to go and take the entrenched team dynamics diagnostic. You can find the link on my LinkedIn page, Julia Fountain. Also follow me at Julia Fountain so that you can know about when every single episode is being delivered. And you can also see all my other thoughts about how do we help get improved team dynamics and help leaders to mitigate the entrenched team dynamics that comes with scaling businesses. Because one thing is for sure what got you to where you are won't get you to where you're going. And this is why teamwork is a competitive superpower. But we've got to be able to harness it in the right direction for it to be effective. So until next week,

27:29have an amazing time. Bye bye. Thanks for listening to the impactful teamwork podcast. Please stay tuned for future episodes and do subscribe wherever you get your podcast. If you've enjoyed this episode, please leave a rating on your favourite platform. Recommendations are essential for attracting new listeners. Please follow us on social media at at Julia Fountain and at business horse power. And if there are any topics you'd like us to cover on future episodes, please do let me know. Remember, you and your team are always making an impact. What impact will you make today?