Psychological Safety: Sam Overcomes Stalling Growth

Stalling Growth

Sam leads a vertical products group for a multinational business that operates on five continents. He has worked tirelessly to build his product line from £100M to £500M in the last 7 years. Over recent years, he’s managed a 25% CAGR. But last year, his division lost its way. It looked like it had expanded to the limit, and everyone was under pressure to deliver the new 3-year plan. Alongside this was the fact that although revenue growth was impressive, the margin wasn’t improving. He couldn’t get the economies of scale he thought he should have, which some of his more advanced competitors had already achieved. The heat was on, and he felt under intense scrutiny.

Renegotiation of his targets wasn’t an option because the company relied on the free cash flow generated to invest in other product lines and new territories – the CEO had been very clear on this. Sam could see more stress ahead. He needed a way out that would be a success for everyone.

At his annual strategy day with his team, the most important agenda item was growth. It had a sense of déjà vu.  Last year, they were faced with the same problem. In response, they’d reorganised to focus on the winning products and remove the middle management clutter that just didn’t add value. They thought that this would make the difference they needed. Clearer lines of communication, more straightforward propositions and less overhead should have done the trick. But despite the talk of significant progress, he could tell there was little substance to it. No substantial progress has been made.

In fact, with clearer lines of communication, he could see more problems, but Sam now had fewer people to deal with them. Why weren’t his teams delivering the growth? What really was happening behind the scenes in his business that was stalling performance? Sam began to wonder whether his team was outstanding in good times but didn’t have the resilience, expertise or creativity for difficult times. For that matter, was he equipped to steer the team through challenging times?

A Ray of Hope

Despite these challenges, Sam’s division had a small ray of sunshine. The Customer Services team in one of the product lines was receiving great press due to their exceptional performance. Led by Masoud, the team consistently maintained high metrics regardless of the customer, product, or implementation. What was Masoud’s team doing differently to achieve such remarkable results compared to the other teams?

Masoud had been recruited for his domain expertise. His manager, Freja, had several teams reporting to her, but his team stood out. Freja and her peer group of managers thought Masoud’s success was down to his domain knowledge and had tried to replicate this in other teams. This strategy wasn’t successful, but Freja felt that the situation was OK since her overall results were similar to her peers. It was better not to invite inspection from above. 

Sam felt confused. He mentioned this to his executive team. They responded with silence or reiterated the usual mantra of good news. Eventually, he asked whether they should investigate the reason behind Masoud’s success. Everyone agreed. Several weeks passed, and with the pace of the business, Sam forgot about it until Masoud’s name was raised on a visit to a key customer that Masoud’s team managed. They said customer service was the sole reason they chose to stay with Sam’s product line and expand every year. Back in the office, Sam looked at the customer’s financials and saw they really did buck the trend. Retention and expansions were way beyond the average; “share of wallet” was much higher than expected, and customer service requests were an order of magnitude lower. 

What was Sam to do? The investigation he commissioned had not provided any useful insight, and time was running out. 

A Chance Encounter

This really bugged Sam. A few days later, he met Jo, a friend from a business networking group who had been growing her division well. He decided to confide in her about his problems. Jo thought for a moment and asked a few questions: “Sam, what happens when you engage with your executive team and ask them to do tasks?” Sam knew this instantly: “They either agree to do something that then gets lost in the frenetic pace of the business, or they remain silent.”

“Hmm, how do they present bad news to you?”

“Well, honestly, when I think about it, they generally don’t or hide it in some good news. When it’s hidden, it is only apparent when it becomes a crisis nobody can ignore.”

“And what happens as a result of your crisis management?”

“We solve the problem and move on, normally, to the next high-profile issue.”

“Do you know what your Execs’ direct reports think of their leadership?”

“Well, they either mimic the Exec’s behaviour or get intensely frustrated with the lack of decisions, clarity and progress. Some stay because it’s a happy place to work; some make their own decisions in isolation to at least make some progress, and some leave. More and more people are leaving, and staff turnover is an issue. This makes matters worse because we’re always in a state of onboarding and equipping joiners rather than being productive. It’s all becoming a nightmare I can’t escape.”

“I felt exactly the same. My division grew to a size I was proud of but couldn’t develop it further. I was in danger of burnout, and my personal relationships were continuously strained. It was then that I discovered you can’t keep increasing performance by doing more of the same. Focusing on results and assuming that everyone felt and behaved like me was causing more harm than good. I needed to create the right environment where we could deal with the important, strategic challenges rather than solely focus on the urgent, tactical issues. 

“My Exec and I had to re-orient ourselves so we didn’t focus entirely on results, solely driving the business with our personality and authority. Specifically, I had to change the way I led. I had to realise that mine wasn’t the only way. To get the best from everyone, they must be engaged, working to their strengths. I only truly understood our team’s potential when I recognised that each member, with their unique talents and qualities, plays a crucial role in our joint success. This reignited my love for what we’re doing and the people I lead. It is now growing as I hoped, and I do it with less stress and more joy.

“Now, Sam, I’m being brief here because there is a lot of detail waiting for you to discover. But I would have foundered had I not realised that you need two very specific ingredients. The good news is that you’ve probably got one already; it’s likely just hidden. Your people need the technical and functional skills to get the job done. You’ve recruited good people with good skills who just aren’t able to do great things.  

Psychological Safety: The Single Biggest Contributor to Team Performance

This is why the second ingredient is so essential – much more than the first. After much investigation, I discovered this thing called Psychological Safety. Now, because of my character, I was drawn to something that sounded scientific, but the name is a bit confusing. To cut a long story short, people only give their best if they feel safe to do so!”

“But Jo, we’re pretty safe. Stress levels aren’t unusually high, and our health and safety track record is good.”

“Yes, I understand, but it’s really not about traditional safety but whether we can question how things get done, be creative, voice opinion, call out bad behaviour or give bad news, all without fear of recrimination or castigation.”

“But how do you know that this is what is happening in my business?”

“Well, I can’t be sure, but you mentioned two classic symptoms of poor psychological safety. These were that people always agreed with you or were silent. People always agree because they’re scared and want to placate you rather than challenge you. They are silent because they don’t want to feel exposed or be seen to fail. These symptoms become learned behaviours throughout a business. In my experience, the lack of psychological safety has nothing to do with whether a corporate leader or entrepreneur is in charge. It is widespread in companies of any size. And you’re paying a lot of people a lot of money for them to be disengaged and so perform below their best. When engaged, they become trusted and want to be accountable to move the business forward and increase performance. They do this because they’re equipped and psychologically safe.

“In a psychologically safe environment, people are encouraged to speak up and are rewarded for it. Collaboration and decision-making become very effective. The team’s output increases. You know I do my homework, and research shows that psychological safety is the single biggest contributor to team success – more so than skills and talent.”

“So, how do we get started on this? It seems so counter-intuitive not to focus on results but on psychological safety instead.”

“Yes, it is. I don’t think I would have had the courage to do this without a clear stage-by-stage plan to achieve it, using outside help to create a safe environment, acting as our guides, and having clear, early successes to celebrate. We found that once the Executive Team had begun the programme, there was enormous demand from the rest of the business because its impact was so evident. And more surprisingly, the Board of Directors has also started for precisely the same reasons. Success really does breed success.

“One of our frustrations was that although we had pockets where great teams performed, we simply couldn’t replicate them throughout the business. We missed the systematic approach and relied too much on hope and wishful thinking. We wasted a lot of time on this. That’s another reason why having outside, objective and skilled help is fundamental to success.

Embracing Capability Change with Psychological Safety

“Beyond Psychological Safety, if your team doesn’t have all the required skills, you can build their learning and development right into the Psychological Safety programme, so they both work together. This is what we did. A simple diagnostic identified the missing skills and where we should obtain them as part of our Psychological Safety acquisition. If you do it this way, you’ll know that your team has created the best learning environment and will support each other throughout the process. It’s definitely a win-win. I only wish I’d known about this earlier.”

The Journey Starts

“Gosh, the light really is dawning now, Jo, thank you. I can see that we’ve not properly functioned as an executive team, and part of that is down to the way I’ve been leading. But I didn’t know any other way. It’s what I was taught and have always done. It’s had an impact throughout my product line.”

Back at the office, Sam thought about his conversation with Jo for a long time. He had an inkling that there was someone in his organisation he could ask to confirm this approach. “Hi, is that Masoud? Great. I’d like to come and visit you with Freja. I have some questions, including why you think your team is so successful.”