Welcome to Grit & Growth’s masterclass on psychological safety and how it can empower employees to speak up, fail fast, and fail smart — with accountability but not retribution. Sarah Soule, Stanford Graduate School of Business professor in organizational behavior, has tips and tricks for leaders to help build a culture that encourages healthy debate and out-of-the-box thinking.
Failure happens… whether you like it or not. Yet, almost every entrepreneur would agree that learning the right way to fail is what enables businesses to succeed. But how do you create an environment where people aren’t afraid to fail? According to Professor Soule, it all starts with building an environment of psychological safety: a climate where people feel comfortable sharing their ideas and concerns and speaking up when needed without being judged or viewed negatively by the leaders when they do.
Soule encourages leaders to remember that all humans make mistakes. And in some types of work, failure is actually part of the process. However, failure is not a luxury every organization has — especially in health care — so she recommends simulating failure instead. The key, she explains, is that when we make mistakes, we learn from them and don’t hide them. Otherwise, they’re likely to snowball into bigger mistakes. “One of the elements of psychological safety is that people on a team don’t hide their mistakes. They also feel comfortable and safe to challenge their superiors, to challenge their colleagues, when they see something is about to go amiss,” she says.
Five Masterclass Takeaways
1. Not all mistakes are the same.
Soule encourages everyone to “distinguish between mistakes that are made that should have been preventable — because somebody has been inattentive or has been sloppy or has just been going rogue — versus smart failure.”
2. Try to learn from failure.
“When and if we do fail or fall short of what we hoped, we can learn from it. That can only happen if the team feels like it is okay to bring forward these possibilities without you judging them or firing them because they’re challenging you. It’s not who failed. No blaming. But why did we fail? And what can we learn from that?” she says.
3. Walk the walk. Talk the talk.
Soule advises leaders to align their actions and values. “I think one of the things that’s very important, particularly for a new leader in an established organization, is to come in right away and express what the values and expectations of the culture are going to be, and then to continually repeat them, and demonstrate that it’s what the leader believes.”
4. Strike a balance between acceptance and accountability.
Soule says, “Leaders actually really need to distinguish between those two and not just celebrate all failure. There’s got to be some accountability, right? When we have made mistakes that should have been preventable, we do need to hold people accountable for that.”
5. Pre-mortems can be a safe way to simulate failure.
“Pre-mortems are a structured but simple way to bring the whole team together to pretend that something has failed massively,” Soule explains. “Think very hard about what were the reasons for this failure and then brainstorm ways that those reasons could be averted as a way to prevent the failure from happening.”
Listen to Sarah Soule’s evidence, advice, and strategies for how to leverage psychological safety to increase team performance, productivity, and innovation by failing in the right way.
Full Transcript
Sarah Soule: What’s important about that is that the team feels like it is okay to bring forward these possibilities without you judging them, without you firing them, without you deciding that they really can’t be part of the team because they’re challenging you.
Darius Teter: How can failure lead to success?
Sarah Soule: That, while it seems like it can be easy, is one of the most difficult things, I think, for leaders to do.
Darius Teter: Welcome to Grit & Growth from Stanford Seed, the podcast where Africa and South Asia’s intrepid entrepreneurs share their trials and triumphs, with insights from Stanford faculty and global experts on how to tackle challenges and grow your business. I’m going to talk about skateboarding for a second. I promise it’ll make sense in a minute. If you’ve ever watched professional skateboarders, you probably notice something interesting. They fall down — like, a lot. These are some of the best skateboarders in the world. Why are they falling so much? Well, pro skateboarders are constantly pushing the boundaries, creating new combinations, doing more flips or spins or whatever those tricks are called. And in doing so they fail. But that failure is key to their future success. Without the falls, there wouldn’t be a 720 or a 1080 or a, I don’t know, a kickflip or something. Failure has become a bit of a buzzword in the start-up world. You’ll hear entrepreneurs talk about failing fast or failing forward, but clearly failure itself isn’t the goal. So how do you fail the right way? What does that mean? And what if failure isn’t an option?
Sarah Soule: I think that if we have not created a sense of psychological safety on our teams and in our organizations, we can’t expect people to embrace a learning or growth mindset.
Darius Teter: Observant listeners will recognize that voice.
Sarah Soule: I’m Sarah Soule, and I’m a professor of organizational behavior here at the Graduate School of Business.
Darius Teter: When Sarah talks about a growth mindset, she’s referring to a way that people think about themselves. Those with a growth mindset believe that they can improve their skills with hard work and input from others, as opposed to people who think their abilities are set in stone, that they’re innate. Failure is key to developing a growth mindset,
Sarah Soule: And I think that that’s really important, because oftentimes, particularly here in Silicon Valley, we talk about the importance of a growth mindset, and if we’re going to fail, fail fast, learn from that. But of course, we know that failure is difficult.
Darius Teter: My daughter attended a high school that lived this philosophy. Bombed your exam? Hey, take it again. In fact, keep taking the exam until you believe you’ve done as well as you can do. My son, in contrast, went to a large public school where every exam was one and done. And now I think about my kids today and my daughter takes much more joy and pleasure out of learning and the challenge of learning than my son, who is sometimes resentful and often really stressed out. So how does that translate into your workplace where you may not get to take that exam over and over again? How do you make failure productive? To learn the right way to fail, you first have to recognize that there are in fact different ways of failing. That’s been the focus of researchers like Professor Amy Edmondson, who pioneered the study of psychological safety. There’s mistakes and there’s mistakes, right? There’s the, I overslept and missed the marketing call. Then we lost our biggest client. Sorry.
Sarah Soule: I think that’s a great question, and I think some of Amy Edmondson’s latest work begins to get at this. So she’s recently published a book on the science of failure and the right way to fail. And some of the things that she points out in that work, I think, are very important to this question, because we need to distinguish between mistakes that are made that should have been preventable. And these are made because somebody has been inattentive or has been sloppy or has just been going rogue for some reason or something, versus smart failure.
Darius Teter: It’s important to have a plan for this kind of failure, because it’s bound to happen eventually. Everybody makes mistakes. As I myself was reminded during this interview, I did not hit “record.”
Sarah Soule: Oh, but we have it here.
Darius Teter: We have it here. I’m going to start now. I’m so sorry.
Sarah Soule: That’s okay.
Darius Teter: I broke the first rule of podcasting. I forgot to hit the record button. Now, don’t worry. Everything turned out fine because I had backups and because Sarah is incredibly patient. It was embarrassing, but ultimately fixable. But imagine if there was an intern in charge of recording. They might panic and try to fix it without telling us, and we would lose more of the interview in the process. It’s easy to see how small mistakes can become big ones. It reminds me of, I don’t remember the details of the story very well, but I think it was a commodities futures trading company in Germany, and one of the traders was making big bets on future commodity prices. And I think, whether he was going long or going short on these things, but he was wrong. He hid it all, didn’t tell anyone. He kept making bigger and bigger bets hoping that he could recover all of the previous losses. He brought down the entire firm, it’s like a 100-year-old firm, and this 26-year-old kid brought it down to its knees, bankrupt, because he could never just say, okay, I messed up. I lost $10 million. And instead he lost the whole firm. Encouraging a growth mindset with your team may not prevent technical mistakes. But if everyone is honest about what went wrong, it keeps those mistakes from snowballing into disasters.
Sarah Soule: When we think about the mistakes — and we all make mistakes, all humans make mistakes — but what we hope is that when we have made mistakes that should have been preventable, we do need to hold people accountable for that. And we also need to make sure that they are willing to report those mistakes. Because a tendency of humans when we make mistakes is to try to hide them. And one of the elements of psychological safety is that people on a team don’t hide their mistakes. They also feel comfortable and safe to challenge their superiors, to challenge their colleagues when they see something is about to go amiss. So if I make a mistake on the team, rather than hiding it, I have a discussion with the team. I admit the mistake, and, importantly, the team tries to not point their fingers at me and blame me, but talk about what went wrong in the team and what went wrong with the processes on the team that led to that mistake.
Darius Teter: Leaders play a huge role in creating an environment where it’s okay to admit your mistakes.
Sarah Soule A few things I think that are really important: one is establishing right away the trust of the team and the right kind of culture on the team. When a new leader comes into a situation, often the instinct is to sort of suggest, here are my values, here is the culture of this organization, and then to immediately demonstrate the exact opposite with one’s actions. And so, for example, I’ll give you an example: saying one of the things that I think is most important in this organization is safety. And then when — say, a machine is down — to come charging in and saying, when is that going to be back up? Even if it means that that would violate the principle of safety. And I think that that’s one of the things that’s very important, particularly for a new leader in an established organization, to come in right away, express what the values, what the elements of the culture are going to be, the expectations are, and then to continually repeat, but also demonstrate, that that is what the leader believes.
Darius Teter: Sarah practiced what she preached. Listen to how she reassured me. I’m so sorry.
Sarah Soule: That’s okay.
Darius Teter: It just kills me that I came in here with two backups and still screwed this one up. Last time …
Sarah Soule: Too many devices, too many …
Darius Teter: Too many buttons. Okay, giving a calm and measured response to failure can be just as hard as admitting a mistake. Sarah has an exercise that lets your team practice.
Sarah Soule: Both these exercises come from the world of improv. But if you’re going to do these with your team, pro tip, don’t use the word improv because it scares people. Just say, we’re going to try this. It’s a nice group team-building exercise. Okay? The “oh, good” game is, you think about all the times that somebody gives you something, and you have a response, which might be, “oh, good,” not so great. What you want people to do in this exercise is first, no matter what it is that they give you, and it’s imaginary, you’re in a group or in a pair, whatever it is that they give, you have to say, oh, good. And tell them how you’re going to use it. So I could say to you, Darius, here’s a pillow. And you would have to say, oh, good, I’m going to have a pillow fight this weekend, something like that, or I’m needing to take a nap.
Darius Teter: Can people try to mess you up by saying, oh, look, here’s a six-foot-long, slimy banana slug?
Sarah Soule: And that’s what you do in the second round. So the first round, it can be neutral. The second round is, you give something to somebody that maybe isn’t so great or, well, in my humble opinion …
Darius Teter: Look, here’s a parking ticket.
Sarah Soule: Yes. Oh, look, here’s a parking ticket. And they still have to say, oh, good. And they might say something like, oh, good, I’ve been needing to write a check and I haven’t done it in three years.
Darius Teter: Finally, I get to go to court.
Sarah Soule: Yes, sir. Oh, good. I’ve wanted to go to court. Or here’s a six-foot-long or a six-inch-long banana slug. Oh, good. I’ve heard that they make great pets. So that’s another way. And what that one gets people to do is to be optimistic, to be a little outrageous, and it can kind of lower some of the barriers that we have on teams. And it also allows a leader of a team to demonstrate that they too can be sort of fun. And it kind of levels some of the hierarchical nature of a team.
Darius Teter: That actually strikes me as super important because I’m always fixated on cultural diversity because so many of our companies are working across multiple regions, language groups, castes, and religion, and they often have U.S. or European staff or operations or sales teams. And then similarly in sub-Saharan Africa, multi-country teams and businesses, and breaking down the hierarchies that are established in those cultures, I think, and especially in castes, could be really important.
Sarah Soule: Yes.
Darius Teter: While occasional mistakes are inevitable, a culture of mistakes shouldn’t be. You need to strike a balance between acceptance and accountability. There’s this saying that if you really want people to give you the hard truth, you need to celebrate the messenger. Now, what if the messenger was the one who totally screwed up? And at the end of the day, you have to decide who gets promoted, who gets a bonus. There is accountability. If you’re not holding people accountable for their mistakes, your business is not going to really thrive. So how do you celebrate the messenger but also hold the people accountable who are not performing?
Sarah Soule: Again, I think it’s important to note that what Amy Edmondson means is that psychological safety is a characteristic of teams or organizations, and that refers to a climate or a culture or environment on that team. It’s different than creating safe space for people to uncover at work, which is also something that might be important in some organizations. So I think it’s important to sort of disambiguate those kinds of concepts.
Darius Teter: So the concept of psychological safety could actually lead to poor outcomes if it’s not also linked to accountability. And that’s another framework that Amy Edmondson talks about. If you have low motivation and low accountability and high psychological safety, then everyone’s in a comfort zone that may not necessarily be good for business or innovation or risk taking or dealing with uncertainty.
Sarah Soule: I think what’s clear to me, at least in her work, is that leaders actually really need to distinguish between those two and not just sort of celebrate all failure. There’s got to be some accountability, right?
Darius Teter: Psychological safety can keep one mistake from becoming many, but where it really shines is when you and your team are trying to tackle what we call adaptive challenges. Unlike technical challenges, these don’t have a clear answer. Solving adaptive challenges requires brainstorming, an open and creative process that benefits from a growth mindset.
Sarah Soule: There’s something else that the more recent research on psychological safety is striving to do, and that is to look at the situations in which this really works and the situations in which it doesn’t. So I think one finding in that literature that’s important is that psychological safety — we get stronger effects in these studies when the work itself is not prescribed. So, knowledge work. When the work is more ambiguous and requires a lot of collaboration to solve problems, psychological safety ought to be a more important predictor of success when we’re tackling those kinds of adaptive problems.
Darius Teter: As opposed to, okay, you’re the sales team, here’s your sales targets, here’s your list of potential customers, go out and produce.
Sarah Soule: Absolutely. Exactly. And I think, increasingly, a lot of our work does fall into the category of these more adaptive challenges, and so we ought to be thinking pretty seriously in those situations of how we can promote psychological safety
Darius Teter: In adaptive challenges, failure isn’t accidental. It’s part of the process.
Sarah Soule: I think part of that is about making sure that when we are making smaller or larger bets, when we’re building new strategy, when we’re thinking about a product launch, what we need to be thinking about there is all of the work that’s been done to build the hypotheses that this thing could actually work and to mitigate some of the risks. And that, as we think about smart failure, if you’ve done all of that and you try this and it fails, at least at that point, you can have an open discussion about what you’ve learned. So there’s got to be both error reporting and accountability for the preventable mistakes, a lot of work done to really think through the consequences of our big, new innovative ideas so that when and if we do fail or fall short of what we hoped, we can learn from that. And what’s important about that is that the team feels like it is okay to bring forward these possibilities without you judging them, without you firing them, without you deciding that they really can’t be part of the team because they’re challenging you. That, while it seems like it can be easy, is one of the most difficult things, I think, for leaders to do.
Darius Teter: The other thing I was thinking is that — and I’m just reflecting on my own experience here — the important debates are about an unknowable future. So psychological safety seems extremely important in cases of great uncertainty, but also where business decisions have a lot of interdependency. So you need everyone on board. Everyone needs to understand why we’re doing this, why we’re going that way, and the person who runs the factory floor needs to give their input. Great idea, but guess what? That doesn’t work on your timeline. And you need everyone who — every interdependent leader needs to be involved in that decision. Failure is hard to deal with, period, let alone in front of your bosses and coworkers. So if your team isn’t prepared to fail, Sarah has an exercise to get them comfortable with being uncomfortable. It’s called the shared fake memory.
Sarah Soule: And what you do with the group shared fake memory is that you begin, one person begins, and you can do this in groups of three, four, five, and essentially one person might start and they will say, “Hey, do you remember that time we rode dinosaurs?” Whatever they want to say. And in the first round, you instruct, everybody’s got to be part of this, and you instruct people to simply say things like, well, no, actually we didn’t go to the library, we went to the coffee shop. And then somebody else may say, well, no, actually it wasn’t the coffee shop that we went to, we actually went to a bar. And then maybe somebody will say yes, and at that bar we ate chicken wings, and somebody else says, no, it wasn’t chicken wings we ate, it was spare ribs or something like that. And the point in the first round is that they’re trying to create a story about a shared fake memory, but they’ve got to kind of disagree on some of the details.
And then you bring them back and have a little debrief on that exercise. And what they find is that maybe they created a story about a fake memory that they had together, but more often than not, they kind of stalled out and they didn’t get very far. Then you send them back together, but with a different prompt. And that is: don’t disagree on the details. What I want you to do this time is you have to agree on whatever the person said and build on it. And then also at the same time, if you have a chance, try to make the person who’s the protagonist of this story look good. Just try to do that. So the next time they go in, they create as a group their shared fake memory. Then it’s, well, hey Darius, do you remember that time that we decided to go to Santa Cruz to the Boardwalk? And then you build on that.
Darius Teter: I can’t believe you decided to rent unicycles while we were there. That was so cool.
Sarah Soule: And aren’t unicycles fun? And do you remember when we borrowed that guy’s parrot and put him on our shoulders? And it went back and forth between us?
Darius Teter: Little did I know that there would be a film crew there filming the whole thing for nightly news. Wow!
Sarah Soule: Wasn’t that awesome? The point of the second one is that they get a much more creative group fake memory, and they bond over that, and it’s kind of exciting and interesting.
Darius Teter: So translate that into team dynamics in the workplace.
Sarah Soule: Yes. So one of the things that happens there is you’re building on each other. You’re saying yes to somebody’s idea. You are being creative and trying to amp up creativity on the team, and also generally making people laugh and have fun, and that can be a great kind of exercise.
Darius Teter: Experimentation is essential to solving adaptive challenges, but it’s not a luxury that everybody has. So let’s translate that then into a team in a medium-sized business in sub-Saharan Africa, and the team is faced with a challenge, a new competitor is coming in, it looks like their offering might be superior. So this is what we would call an adaptive challenge, not a technical challenge. How does growth mindset play out on a team that’s trying to rethink their strategy? And I’d like to link that back to what psychological safety means or how it underpins or promotes. I don’t quite … I want to understand the link between the two concepts.
Sarah Soule: So I would say that … and let me start with psychological safety. The first thing that I think is really important to underscore is that in many companies, and I’ll say that many of the companies that I’ve had the honor of working with in sub-Saharan Africa, many of them say, well, this seems like it would never work here because we don’t have the mindset to be able to just experiment widely and fail a lot and learn from failure, and we also don’t have the resources to do that often.
Darius Teter: So let’s start with mindset. Are they saying it’s a cultural attribute of being in a specific environment in Kenya or Tanzania or India or something that’s inculcated through family values from childhood? The reason I bring it up is, I used to work on a program to promote entrepreneurship in Guatemala. We were encouraging entrepreneurs to take risks, and the feedback we got was, if you fail your first business attempt to Guatemala, you’re kind of ostracized by your family. No one’s going … and it’s all family and friends funding anyway. It’s not like there’s a bunch of bank funding for entrepreneurship in rural Guatemala. So once you fail, you’re done. And so “fail fast” is not like a great attribute of a business test, right?
Sarah Soule: Yes. I think that’s a great question because I’ve heard a couple of things. I have heard something akin to that. It has to do with resources, but it also has to do with the way in which people have been brought up. So that’s part of it. But I think the other thing is that many of the companies, at least that I’ve spoken with about this, are in industries where failure actually could mean that human beings die.
Darius Teter: So how do you fail smart if failure is not really an option?
Sarah Soule: One of the things that I think is really crucial to understand is that in the kinds of industries that Amy Edmondson studied, and you mentioned airlines and you also mentioned hospitals, right? It’s similarly the case, but one of the things that happens in these kinds of organizations is that people are allowed to fail in simulations or simulators. So airline pilots, for example, have a lot of training in a simulator, and so they’re allowed to fail there and learn from the failure in a way that isn’t going to harm human beings. And similarly, with most of our doctors and nurses, there’s a lot of simulations that they go through, through their training, which allow them to fail, but with a safety net. And part of why I think that that’s important is that it has led in many industries such as those two to have discussions openly about failure in a safe environment. The other thing —
Darius Teter: Not who failed, but why did we fail?
Sarah Soule: Exactly. Not who failed, no blaming, but why did we fail and what can we learn from that so that when we are in these high stakes situations, the incident of failure will be lower. And so I think that that is something that some of our companies, some of the SEED companies, can learn from. First, understanding and studying and having some very good hypotheses about what might lead to failure. And then, secondly, having simulated safe experiences so that one can learn from that.
Darius Teter: Another way to fail safely is through a pre-mortem exercise. We fear getting it wrong because we fear the unintended consequences. So imagine the very worst case scenario from your decision and think through what actually went wrong.
Sarah Soule: Pre-mortems are a very, actually, structured but simple way of understanding when you’re about to make a decision to, say, launch a new product, bringing the whole team together to pretend that this has failed massively. It’s two years from now, and it was a terrible mistake. And then to really think very hard about what were the reasons for this failure, and then brainstorm ways that those reasons could be averted as a way to prevent the failure from happening. So even if you’re not in the airline industry or have the resources to have a safety net of failure, one can do this through some pretty, I think, effective team processes, like the pre-mortem.
Darius Teter: Yeah, I find the pre-mortem is fascinating. At Stanford SEED we’re contemplating expanding to a new geography, and so I took that idea of a pre-mortem and we said, okay, what could go wrong? And we categorize those as risks, and we assign to them a probability, but also an impact weight, and it allows us to focus. First of all, there are a lot of things that go wrong that I couldn’t have thought of. One came from our general counsel, one came from our director of finance. Those are not my specialties, but actually that’s where the greatest risk is, right? It’s on legal and finance. But we ranked all those risks, and that gave us an opportunity to say, okay, let’s focus on these four. These four things have to be true, or this project fails. Now, it still might fail, but at least we’ll go in there with our eyes open, knowing what we need to test.
Sarah Soule: And there’s something about the pre-mortem exercise which allows you to, in a safe way, test those assumptions before you make those big bets.
Darius Teter: Just don’t forget to also imagine success. First of all, it was kind of depressing. I will admit it, because you’re coming up with all the things that could go wrong. So one piece of advice I have is, if you do a pre-mortem, end with something like a conversation about what happens if it goes right, have a reason —
Sarah Soule: Great idea.
Darius Teter: — have a reason to want to continue, right?
Sarah Soule: Yes, great idea.
Darius Teter: Every organization will encounter failure, whether it’s through simple everyday mistakes or tackling unknowable adaptive challenges. A growth mindset removes the stigma from failure. It allows employees to think outside the box and keeps small mistakes from becoming big ones. But smart failure is hard. Leaders have to pave the way. Create an environment where experimentation is celebrated, build on people’s ideas instead of shooting them down, and praise the messenger. Otherwise, employees will never give you bad news. Also, don’t abandon accountability. Consequences still exist within a growth mindset. They ensure that you learn from mistakes instead of just getting into bad habits. If you don’t have the luxury to fail fast, find a safe way of simulating failure, like a pre-mortem exercise. Just remember to focus also on the positives, not just the negatives, because learning to fail can, ironically, lead to success.
Sarah Soule: And with all of those kinds of great benefits, what we see is that team performance increases, that creativity increases, that resilience increases, and we get higher levels of innovation.
Darius Teter: I’d like to thank Sarah Soule for her expertise and her insights, and most of all for being patient when I failed. This has been Grit & Growth from the Stanford Graduate School of Business. I’m your host, Darius Teter. If you like this episode, follow us and leave a review on your favorite podcast app. Erika Amoako-Agyei and VeAnne Virgin researched and developed content for this episode. Kendra Gladych is our production coordinator, and our executive producer is Tiffany Steeves, with writing and production from Andrew Ganem and sound design and mixing by Alex Bennett at Lower Street Media. Thanks for joining us. We’ll be back soon with another episode.
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