Why top founders can struggle to build innovative teams

All the brainstorming sessions in the world won't work without the right leadership

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I just saw that Mindful Magazine just released our latest collaboration, an examination of finding purpose in the present moment (and not only in some future state). It was first published on this newsletter, but as is always the case Mindful’s editors made it even better. Grateful to those guys.

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This issue of Second Mountain Startup explores one of the pieces most often missed when leaders endeavor to build a culture of innovation: the leader themselves.

Hope you enjoy.

Building a culture of innovation

I was working with a group of entrepreneurs in a T-group when one of them brought up a problem he was having. Although he’d intentionally empowered his employees to own the company’s mission and their work within it, and felt that he and the company in general were reaping significant rewards as a result, he was frustrated. He wanted to build a culture of innovation, but he felt that he still seemed to be the source of most of the good ideas.

The entrepreneur, we'll call him Sam, led a fast-growing company of around 150 people, and during the time we'd worked together he’d gracefully navigated his company through a significant shift in focus. Given his nearly 20-years in the CEO seat and his natural leadership abilities, he played a mentor role to the other entrepreneurs in the group. He was calm in stressful situations, and no matter how boisterous the group, the other founders listened when he spoke. I’d long been impressed with his work and his presence, but this latest comment gave me pause. 

The other entrepreneurs dove into a tactical discussion of possible solutions to Sam’s issue. But knowing Sam, my instinct was that if what he'd told us had been the real problem, it would have already been solved. In other words, in spite of all his experience and expertise, Sam was missing something critical.

"Where do you see this issue? Is it mostly VPs and Directors, or do you see it with your senior leadership team as well?" I probed.

He paused. "No, it's really just me. My leadership team is amazing at driving results, and amazing at operating, to be honest, but even they don't instigate. Pretty much all the strategic ideas we're operating against were my idea. I’m not that smart, so I really feel it’s limiting us."

In coaching dozens of founders from top companies across all industries, I've found that when a founder describes a problem that exists throughout his or her company, 99.9% of the time it isn’t an issue with the company. It’s the founder. While I saw that Sam was likely causing his own problem, I still couldn't pinpoint exactly how.  

"What happened the last time someone brought up a new idea?" I asked.

"We implemented it," he said, recounting a story from last year in which everything seemed to be working great.

"What about when someone brought up an idea that didn't get implemented?" I pressed.

He paused.

"That's actually an interesting question, Ryan," he chuckled, making the connection without my having to say it. "I see what you're pointing to."

The group watched intently as he thought.

"Honestly, I think that when people bring me ideas, I'm not the type of pound-my-fist-on-the-table guy who will ream them for it,” he said, seeming to have evaluated and then dismissed the connection he’d made before continuing. “I just want to make sure they've done their homework."

I saw one of the other founder’s eyes light up. I knew I needed to frame this intentionally, so I asked Sam's permission to reflect my experience of him. He granted it.

"Sam, my experience of you is of someone who is incredibly competent. When I work with this group, I find myself so impressed by your experiences it's a bit intimidating. I find myself wanting to really do a good job, to match the level at which you're operating." He thanked me, graciously. I mustered up the courage to continue with the hard part.

"But for me, part of wanting to step up my game is because I also find myself anxious about looking stupid in front of you," I said, watching his eyes widen. "And you don't even control my paycheck."

He leaned back in his chair, smiling sheepishly. "That's really something," he said. "Walking into the room with me and my COO -- he's a former Goldman exec, former McKinsey -- I'd want to make sure I was buttoned up too. That's a tough room."

"I'd definitely want to make sure I did my homework," I said.

He laughed. "I’m not even sure we have a real definition of what it means to do the homework. That's probably the place to start."

The risk of innovation

Amidst all the hustle, experimentation, technique and smarts, the act of innovating requires someone to take a very specific risk. To innovate, a person must take the risk that maybe, if things don't go according to plan, they're going to look stupid.To create a culture of innovation, leaders must make people feel safe in taking that risk. 

Intuitively, the greater the innovation, the greater that risk.

Counterintuitively, the greater the founder (as perceived by his or her team), the greater that risk.

By default, most founders are impressive people. By the time they’ve built a company, have employees and investors, and have practiced the kind of polished pitching that wins investors, most founders have polished that impressiveness to a high shine. In front of some audiences, that's important and gets results. But in the same way a founder's presence attracts investors to partner with them, that same presence demands those who work with that founder to match it. Employees at every level see just how successful the founder is (even if the founder goes to bed at night feeling anything but), and alongside their day jobs take on the second job of proving how competent they are.

From Robert Kegan & Lisa Laskow Lahey, in their book “An Everyone Culture”:

In businesses large and small; in government agencies, schools, and hospitals; in for-profits and nonprofits, and in any country in the world, most people are spending time and energy covering up their weaknesses, managing other people’s impressions of them, showing themselves to their best advantage, playing politics, hiding their inadequacies, hiding their uncertainties, hiding their limitations. Hiding. We regard this as the single biggest loss of resources that organizations suffer every day.

We talk about Google's 20% time, hackathons, brainstorming sessions and other tactics designed to create a culture of innovation. And they're all useful as far as they go, but none of them go far enough on their own. For any of these tactics to work, they must occur within the context of a culture of innovation. A culture that both encourages people to risk looking stupid in exchange for the chance of creating something new and useful, and, critically, supports them if and when they fail. Patrick Lencioni has dubbed the foundational element of this type of culture "vulnerability-level trust," which he contends is the primary ingredient in all effective teams. Vulnerability-level trust is when I am comfortable looking stupid in front of you, because I know I won't be looked down upon, demoted, ostracized or otherwise punished. It’s an incredibly high bar. 

To create that deep sense of vulnerability-level trust, that psychological safety required to innovate, it matters an awful lot how we deal with failure in our companies. Do we shove it under the rug? Do we spin it into a good thing, or tapdance around it? Do we head it off at the pass, grilling our employees about their new ideas before they have time to fully form?

Or do we embrace it? Not chase it, but talk about it openly, learn from it, and celebrate the person who took the risk?

The role of the founder

For accomplished founders like Sam, there’s an (culturally reinforced) instinct to lean into the impression they make of polished, competent leaders. The unspoken fear behind this is that if they were to show up as who they really are, the people who count on them to lead would stop following. That it’s their ability to at least appear as if they have everything under control that earns them the right to lead. So founders endeavor to appear like the perfect CEOs, glossing over their own failures and leaning into their ample successes. This approach is so pervasive Sam didn’t even realize how automatically he and his team were doing it. (I’ve covered the fallacy of this type of “successful & certain” approach before, and offered an alternative, what I call vulnerable and committed leadership.)

But leaving aside overall leadership efficacy, successful and certain leadership directly stifles innovation because a company’s culture is always a direct reflection of its leader’s behavior. And successful and certain leaders breed cultures in which everyone must be successful, and everyone must at least appear certain. My guess is this is what Sam meant by “making sure people did their homework.” 

The issue here, of course, is that innovation is by definition uncertain. Trying something bold, audacious, and new requires wrestling with the risk of failure, and choosing to proceed anyway. A culture in which everyone around you seems successful and certain makes it incredibly dangerous for a person to make this choice. 

To create a culture of innovation, a leader must show his or her team that s/he is fallible and vulnerable, but (importantly) is also courageous and resilient in the face of it. That’s already who Sam was, underneath; you don’t get to this phase of the founder’s journey without those characteristics. For Sam and founders like him, creating a culture of innovation requires that they drop the mask of spit-shined perfection and show their team their humanity, warts and all. By removing the polish and taking their CEO seat as themselves, their success becomes an example not of perfection, but of courage and resilience in the face of failure and uncertainty. 

And that’s the foundation of innovation. 

(HT: Julie Mosow, Katherine Canniff, Christine Cauthen and Foster for editing)


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Who is Ryan Vaughn? 

I’m an executive coach for startup founders, a role in which I get to help high-performing founders design a more conscious life and expand into extraordinary leaders. I’m a 3x Founder/CEO who’s raised $20m+ in VC and built a market-changing company, as well as two other companies that taught me things. I’m an avid writer, meditator (decade+ practice), reader, athlete, father, husband, amateur physicist, student of leadership, and adventurer. I’m also none of those things. But I am glad that you’re here.  If that’s not enough, here’s a more detailed bio.


THINGS I READ THIS WEEK

One: The Future of Work; what historical disruptions can teach us about WFH vs hybrid vs HQ (Steven Sinofsky)

This is one of my favorite Twitter threads in the last 90 days. Important historical context for those wrestling with whether to continue to work from home, or go hybrid, or demand everyone returns to the office.

TL/DR: be careful you’re not using WalMart’s eCommerce strategy to combat a growing Amazon.

LINK >>

Two: The Satirical Origins of the Meritocracy (Kottke.org)

This week I learned that the word “meritocracy,” which I usually hear describing an almost idyllic standard to which we, business folks, ought to aspire to transition democracy, was initially intended as satire at the expense of the business elite.

LINK >>

Three: Once Upon an OKR (Christina Wodtke)

As a longtime advocate of OKRs (ever since we used them to un-break our company), I found this article by OKR savant Christina Wodtke enlightening.

Two primary lessons I took away:

  1. What was initially designed as a means of empowering your best employees to find their own path to the objective has been bastardized to the point at which it’s more often a high-level project management tool.

  2. Leaders really struggle letting go of control.

If you’d like to learn how OKRs were REALLY meant to work, read on.

LINK >>

Four: The most precious resource is agency (The Map is Mostly Water)

As a father of two young boys, I’m thinking plenty about how to set them up for a life of experimentation, adventure, success and contentment. My first principle toward this end is that my role is not to remove obstacles, but rather to build people who can, and desire to, remove their own obstacles (parenting being very similar, in my estimation, to the role of a leader).

This article, by Simon Sarris of The Map is Mostly Water, made me think about just how antithetical our education system, not to mention the current culture in the US, is to that approach.

LINK >>

FIVE: Walt Whitman’s advice on living a vibrant and rewarding life (Brain Pickings)

If it’s been a while since you experienced Whitman, let this article be a reminder of how magical the mundane objects and forces of life appear through his eyes.

And remember what Einstein said: “There are two ways to live your life: one is as though nothing is a miracle, and the other is as though everything is.

Let us always remember that experiencing miracles like those described by Whitman here is our gift and our choice.

LINK >>


WANT TO DIVE DEEPER?

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