Culture eats strategy for breakfast ...

My Leadership Trilogy - Part three «Psychological Safety»

My credo is based on the principle that good leadership is not rocket science, despite the variety of valuable approaches and advice about leadership styles. At the end of the day, basically «just» three aspects need to be fulfilled in order to be successful. Sure, there's a lot more to it, but if this «framework» is in place, nothing can really go wrong:

  1. A common goal (purpose, mission, positioning) with which everyone in the management team identifies and for which it is worthwhile to work.  
  2. Diversity in the team, firstly in terms of core competencies and skills, secondly personality and character traits and thirdly in terms of external characteristics such as gender, age, nationality, etc. And all of this embedded in the company’s context to build the basis for a truly sustainable approach.
  3. Psychological safety, meaning a cultural environment in which everyone can be themselves, contribute, openly express their opinions, know themselves and their team, where «the masks have fallen» and people take each other as they are.

The first part of my leadership trilogy was about a common sustainable goal, the second about diversity in the team, the leadership tool that forms the basis for true sustainability, and the third here I dedicate to «psychological safety», which should more than ever be in focus, especially in the context of digitalization and the future of work.

Peter Drucker on the «culture that eats strategy for breakfast»

«Culture eats strategy for breakfast» is a perfect title on the subject of psychological safety and is furthermore attributed to Peter Drucker, one of the most important and equally independent and original business thinkers of the 20th century. I use it even though the Drucker Institute, which he founded, and which perpetuates his ideas and ideals, calls this «perhaps his most enduring misquote», which «catchily echoes his warning to managers about the permanence of culture», but which he never made that way. He had believed that culture was essential to sustaining organizational and societal values but had never unconditionally asserted that it would defeat any attempt to change it. Quoted correctly, he had said «culture - no matter how it is defined - is uniquely intractable».

Be that as it may, the core message is clear: a strategy that does not reflect and is not embedded in the corporate culture will fail. Or, to put it positively, a strong corporate culture has the power to nip a wrong strategy in the bud. I worked for 30 years in a company that was strongly characterized by the culture of its founder, and I can fully confirm this. I have seen some managers come and go who wanted to slaughter so-called «sacred cows» and failed grandly. Unknowingly, I myself once ran up against such a «sacred cow», but that's not what this is about.

Psychological safety is a cultural soft factor

When we talk about «psychological safety», the first thing to note is that it is a soft factor, something that may or may not be part of the corporate culture. It is not a measurable quantity and not something that can be ordered. Accordingly, it is difficult to introduce and important to maintain, sustain and protect against its misuse. Here, I will not go into how to achieve psychological safety. There are sound books, most notably «The fearless Organization» by Harvard professor Amy C. Edmondson and «The 4 Stages of Psychological Safety» by Timothy R. Clark, founder and CEO of LeaderFactor, furthermore numerous coaches and consultants, and also the Internet is full of guides and tips. My point is what it is, what it means, and why it is of such critical importance, especially in this time of digital revolution.

About the safety of being able to say what you think  

«An environment where everyone dares to contribute and do their best» is how Amy Edmondson defines psychological safety. Timothy Clark calls it «the ability to share ideas, questions, and concerns without fear of personal repercussions». In my humble view, these are rather minimal versions. Even better would be to not only being able to say what you think, but to be encouraged to do so, and not limit it to the verbal level but to strive for an environment where everyone can «be who they are». This would be the champions league level, so to say. But from a leadership point of view, it is certainly first and foremost about breaking down the barriers that prevent fearless communication. According to Timothy Clark, this involves these four aspects, to which I add to my own "champions league" definition:

  1. Integration - «making team members feel unconditionally included from the start». My champions league definition of this: The masks have fallen, people in the team know each other's strengths and weaknesses, and they accept each other for who they are.
  2. Learning - «creating an environment where mistakes are not only accepted, but also rewarded». My champions league definition of this: A mistake is not only acknowledged, but shared along with the awareness of having figured out something that doesn't work.
  3. Employees - «getting to know your team and encouraging your colleagues to think beyond their role». My champions league definition of this: Everyone in the leadership team performs two roles. First, they lead their area and second, they conscientiously contribute to the big picture.
  4. Challengers - «support them and thus strengthen the democratization of innovation». My champions league definition on this: Challengers are not combated but brought on board early because they obviously have energy and therefore interest and knowledge on the topic.

Psychological safety, digitalization and the future of work

Digitalization and the technology-driven transformation of the future of work is structural and has been progressing for years. AI, artificial intelligence, has ushered into a next phase and the metaverse is abundantly clear on the horizon. Large-scale, long-term studies by the World Economic Forum about the «Future of Work» show, among others, the following trends:

  • The proportion of tasks performed by machine is growing significantly from year to year.
  • New technologies are the biggest driver of both job creation and displacement, with a net positive effect.
  • Most of the growing sectors are technology-related, while the most affected ones are office and secretarial occupations.
  • Local skill shortages, the inability to attract talent and regulatory frameworks are the biggest barriers to transforming the economy.
  • Companies are investing in on-the-job training, accelerating automation, and retraining existing staff from declining to growing fields.  

Two things are clear: first, companies will both reskill their existing employees and, if it's a large international company, move to places where the talent they need is available. And second, the structural transformation of the future of work is not leveling off; on the contrary, it is intensifying. All in all, this is a huge upheaval that needs to be mastered and shaped, with all its opportunities and threats.

Amy Edmondson demonstrates that at the current pace of change, it's no longer just about creating effective teams, but about effective teamwork. And she proves that teams whose work requires innovative, out-of-the-box thinking perform better with psychological safety than teams where fear of rejection is common. The reason for this lies in communication, where psychological safety is essential to achieve the necessary openness. When teams can not only share their thoughts openly, but also work on them together, they are much better prepared to meet any challenges that come their way.

The question at hand

While psychological safety has fundamentally helped to separate the wheat from the chaff of good leadership in the past, the question is whether it will become decisive and, in some areas, even essential for survival in order to master the challenges of the future. Will culture not only eat strategy for breakfast, but also devour digital transformation for lunch and master new work with dinner?

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PS Let the future be your guide - the best in life is yet to come.