TIP187: THE CULTURE CODE

W/ DANIEL COYLE

21 April 2018

On today’s show, we talk to the New York Times Best Selling author, Daniel Coyle. Daniel is a leading expert in the development of peak performing cultures. In his new book, The Culture Code, Daniel interviews people like billionaire Tony Hsieh, Pixar’s Ed Catmull, and many more. If you ever wanted to know what it takes to build a top performing team, you’ll definitely want to hear what Daniel has to say.

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IN THIS EPISODE, YOU’LL LEARN:

  • How you create the strongest culture in your organization regardless of your rank.
  • How high performing cultures communicate with each other.
  • Why the San Antonio Spurs are winning significantly more games than they are supposed to on a consistent basis.
  • Why the most important 4 words a leader can say is “I Screwed That Up!”

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

Preston Pysh  0:02  

One of the things that Stig and I have noticed about billionaire founders and operators is that they typically put a lot of emphasis on their corporate culture. We could use Tony Hsieh, Sergey Brin, Larry Page or even Warren Buffett as examples of this. 

Since this is so important, we’ve gone out and found the leading expert, Daniel Coyle, to talk about some of the groundbreaking research he’s done on this topic. Dan is a New York Times’ best-selling author. We’re going to be talking about his new book called “The Culture Code.”

Not only is Dan a great storyteller, but some of his insights about culture are really unique. While he was writing this book, he had the awesome opportunity to interview people like billionaire Tony Hsieh. He’s interviewed Pixar’s Ed Catmull and so many more that he incorporated into the book. 

I think you’re really going to enjoy some of these firsthand accounts and these incredible stories from thought leaders. Without further delay, here’s our interview with the thoughtful Daniel Coyle.

Intro  1:00  

You are listening to The Investor’s Podcast where we study the financial markets and read the books that influenced self-made billionaires the most. We keep you informed and prepared for the unexpected.

Preston Pysh  1:21  

Like we said in the introduction, we’re really excited to have Daniel Coyle here with us.

Dan, the one thing that I captured and really took away from this book is you quantified what I felt was unquantifiable. I’m really excited to talk to you today. Thank you so much for writing such an incredible book and welcome to The Investor’s Podcast.

Daniel Coyle  1:47  

Thanks so much for having me, Preston. It’s nice to be here with you.

Preston Pysh  1:50  

My first question for you is really just what motivated you to write this book because one of the things that Stig and I have done is we’ve written some books. I’ll tell you, it is not an easy undertaking. It requires just an enormous amount of time and effort. 

What made you think about writing a book about a culture that was going to take up so much of your time when before you wrote this?

Daniel Coyle  2:11  

That’s right. It requires an addiction, actually, to keep it going and get addicted to the mystery and to the quest. I guess I kind of fell in love with the mystery.  

I’ve written about high performance for a long time now. I have this job where I was sort of traveling around and looking at people who are really good at their individual skills and try to figure out what makes them tick. 

I have books about that and exploring that in many ways. I kept bumping into this same feeling which you’d go into a room and it might be filled with tennis players. It might be filled with chess players. It might be a business, it might be a restaurant, but there’ll be a vibe and a feeling in that room of connection and cohesion. It was like these groups were just one single animal almost. 

I guess it really came to life for me when I was in Russia. I was at a tennis court. I was at this club that produced all these champions. I was there on a day where a new player showed up, a new girl. She was about eight years old and she showed up for her first lesson. 

There’s this interaction that took like five seconds, but it was this amazing interaction where she showed up, the first day the door opened. She’s standing there with her new tennis racquet and a plastic grocery bag nervous for her first day. 

This lead coach, probably the most famous tennis coach in Russia goes over to this girl and says, “Hey, I’m glad you’re here. I want you to do something for me.”

The coach has a lot of tennis balls and he said, “I want you to catch this.”

She tossed the girl the ball and the girl caught it. In that second, that girl went from being an outsider to being connected in some way to being a part of this group. 

I just got kind of fascinated obsessed with what’s that made of? How did they make that girl go from being outside the inside, from being sort of a stranger to being on this team?

And so, I started traveling around looking at really high-performing groups such as Pixar, Navy SEAL, San Antonio Spurs, and Zappos. I looked at the sort of tennis balls they throw or those moments where they create that magic and that connection. 

We all are familiar with that feeling of, “God, there’s just something about that restaurant, there’s something about that school, or there’s something about that family, and it feels like magic.” 

However, what I found out visiting the groups and in looking at the science underneath is that it’s not magic. It’s a set of interactions that creates what we call culture.

I got kind of obsessed with that mystery. It took me about five years to visit all the places and write books. It was so fun. I didn’t want it to stop. 

Actually, it was kind of funny. I was having so much fun reporting it but yes, it ended up that culture feels like magic, but it’s not. 

Stig Brodersen  4:44  

That is a fascinating story. I have to say it’s so evident when you’re reading through the book with all these amazing stories that it’s just so clear how much you enjoyed the process of writing, which is just something I want to put out there. It’s definitely a joy going through your book. 

One of the best stories that you do have in your book is the story about the kids and the spaghetti tower. Could you please share that story with the audience?

Daniel Coyle  5:16  

There’s a guy named Peter Skillman and he got obsessed with the question of what makes certain groups perform better than others.

We all know that certain groups add up to be more than the sum of their parts and certain groups don’t. And so, what’s that made up? 

He devised a way of exploring it through a contest and the contest was really simple. Who can build the tallest tower with the following materials: 20 pieces of raw spaghetti, a yard of tape, and a single standard size Marshmallow? The only rule is the marshmallow has to go on the top. 

The teams he got to do were kind of interesting. He had teams of four: a team of CEOs, MBAs, lawyers, and kindergarteners. Ready, set, go, everybody starts building.

When they begin, all the adult groups start out in the same way. They talk. They talk about what they’re going to do and they make a plan. They decide on ideas and they hone those ideas. They divvy up the roles and they start working. 

It looks gorgeous. It looks perfect. Very cooperative and smooth. Kindergarteners don’t do that exactly. They just sort of start eating a bunch of marshmallows and it’s very chaotic. 

If you had to bet your life savings on which group is going to win, most of us would bet on one of the adult groups, because that’s our mental model of cooperation. We focus on what we can see. When we see the verbal, experienced intelligent individuals interacting in such a smooth way, we think, “Well, that’s going to add up into an intelligent, smooth group. It’s going to add up to the performance.” That’s our mental model. 

However, we actually look at who wins, the kindergarteners win. They win every single time and the reason is really simple because our mental model of group performance is wrong. It doesn’t include the two most important factors. It doesn’t include status management and it doesn’t include safety. 

The adult groups all look like they’re being smooth, but in fact, their interactions are being hindered by status management. There’s a little whisper in the back of their minds, “Where do I fit in here? Is it okay to say that? Who’s in charge?” And so, that hinders cooperation, ideation, iteration, and innovation. 

The kindergarteners don’t have any problem with that. They’re not worried about status. They’re just doing stuff together. 

If they see a problem, they reach in, grab it and fix it. There’s no better feedback than having your tower fall down. That gives you really, really good feedback on what to build. They’re safe. They don’t worry about status. And because they don’t worry about status, they consistently built taller and better results. They got a better tower. 

When we think about groups, we normally don’t value safety. We think safety is sort of like the icing on the cupcake. We think it’s like this extra thing that you get. It’s everything. It’s massive. 

If you can create safety in your group, if you can create this sense of belonging and safety, it gets rid of status management, then you can have a group that truly adds up to more than the sum of its parts. 

It gives us a lens. That story is powerful because it uses the lens to look at our own lives and our own groups and say, “Okay, where are we managing status? Where are we in the group, like the CEOs, MBAs, and the lawyers? Where are we behaving like the kindergarteners where we’re just all shoulder to shoulder solving problems together, and not worrying about who’s in charge and what people think of us?”

So that story, which I use to sort of beginning the book, I saw that same pattern when you watch a Navy SEAL Team solve a problem together. When you watch the San Antonio Spurs play when you watch Pixar build a movie together, what you see looks like the kindergartners actually. It looks kind of chaotic. You can’t tell who’s in charge because no one is in charge. They’re working together, solving problems. 

One person is a lead for a second. Then they trade leadership and someone else solves that problem. Someone else chimes in a little bit, and they’re adding up to more than the sum of their parts. 

It’s a real distinct feeling. If you can start to tune into it, it’s one of the most powerful things that you can get in terms of building culture. When are we managing status and when are we truly safe?

Read More

Preston Pysh  9:15  

Can you talk a little bit more about the safety factor? Because I think somebody would hear that would say, “Well, I don’t want to create a team where everyone feels like they can just do anything and it’s just complete free rein.” So how do you respond to that kind of argument that a person might say back?

Daniel Coyle  9:29  

That’s right. The real world isn’t like kindergarten eating a marshmallow. The real world is more complicated. 

The answer is that safety is created in these moments, where we deliver what are called belonging cues. Belonging cues are really short, simple signals and behavioral signals that are sent to say, “Hey, we share a future. I see you as a person. I see you’re a whole person. We are connected in some deep way.”

Actually, there is a kind of a cool story about belonging cues and safety  that involves a company called Wipro. Wipro is a call center and like a lot of call centers, they struggled with retention, like it’s hard to get people to work at a call center, because working in a call center kind of sucks. It’s a hard place to work. 

Every year, 50% of their people would leave and they tried to fix it. They tried to improve the perks. They tried to improve the campus. They tried to improve the work. None of it worked, except for this one hour experiment that they did.

The one hour experiment was really simple. They took two groups of new hires. The first group, let’s call them Group A. They got this presentation for an hour on how great it was to work at Wipro. They met a star performer. They learned about the history of that company. They got a tour and that was it for one hour. 

The second, Group B, they got a very different experience. Basically, they flipped it. Instead of being a presentation about Wipro. They started asking the new hires questions like, “Hey, tell me about what happens on your best day. Tell me about what happens on your worst day. If we were on a desert island, what skills would you bring to our survival?”

At the end of it, they got a shirt, but the shirt said their name on it. That didn’t say Wipro. It said their name. Then seven months later, they tracked. The retention in those two groups. The retention in the second group went up 270%, a massive boost because  belonging happens in these moments where we get a crystal clear signal: we’re connected. I see you. We’re not managing status at that moment. We’re actually expressing a social connection through our behavior. 

The teams and groups that are good at that take that Wipro idea and they apply it especially to threshold moments, the moment you enter a group is by far the most important moment you have in that group. 

Pixar does a beautiful job with this actually. When you’re hired at Pixar, whether you’re a barista in the cafe or a director, you get the exact same experience. You go into the auditorium. You sit in the fifth row, because that’s apparently where directors like to sit. The fifth row is the best seat. I didn’t realize that.

You sit in a fifth row and the President of Pixar comes out his name is Ed Catmull. He says the following sentence, “Whatever you did before, you’re a movie maker now. We need you to help make our films better.”

Then every day they have a whole group meeting. It’s called a “Daily” where they review the footage in animation. You only make a few seconds of footage each day. The whole company gets an opportunity to review the footage of the previous day and offer suggestions. 

You could have a barista making a suggestion on some plot point in a Pixar movie. That is a behavior that is a belonging cue. The smart groups flood the zone with belonging cues. They’re constantly sending the signal over and over again: we are connected, we share a future. I see you. I’m interested in what you have to say.

That sounds like such a simple and soft thing, but in fact, it’s really one of the smartest, clearest things that any group can do to send this signal of connection, because that’s how our brains are built. 

Our brains are built to worry about connection all the time. Our brains are built to  question our connection to groups, even when we know logically, we’re well connected. 

These groups have kind of mastered the communication to the deep brain, the deep parts of our brain that are constantly worried about our connection to that group. They’re sending that signal over and over again that we’re connected. These are belonging cues.

Stig Brodersen  13:33  

It really reminds me of your story about meeting Tony Hsieh, the founder of Zappos and someone who we’ve been following really closely. We also read his book, “Delivering Happiness.” It’s a very inspiring book that also really understands culture. 

You met with Tony Hsieh face to face. He has this very special technique of connecting people all the time. Could you tell us that story and also how you experienced just hanging out with him?

Daniel Coyle  14:07  

It’s a bit ironic, because he’s quite a low key person. For running Zappos, you wouldn’t imagine him being quite as low key as he is. Though, he’s always focused on something he calls collisions. 

Collisions are literally how many times during a day you bump into somebody in your group. What Tony does is when you walk around with him, he’s constantly alert to where you are in the ecosystem and interesting people that you might want to bump into. 

All he wants to do is have you have a conversation with them. He doesn’t care what it’s about. He doesn’t care when it happens, but he wants to connect people who actually had somebody who invited them out to sort of explore the idea of working at Zappos. 

That person, he sent them an email beforehand and he said, “Okay, welcome. Here’s a list of 15 people I’d like you to talk to. let me know after you talk to them and I’ll give you another list.” 

That was basically all the instructions she got. She thought it was kind of a joke, but that’s how much they value, that kind of connection, that kind of repeated collision. 

There’s this crazy new science called socio metrics, which is sort of like Moneyball for the office. It’s based on capturing the data of normal social interaction. It’s captured through, you wear these, it’s kind of Big Brother… You wear these little things around your neck and it’ll capture the energy in your voice. It’ll capture whether you’re face to face with someone. It’ll capture your location in space. 

What is interesting about this is… We’re all not all going to be wearing these things. However, the insights that it reveals is that all great high performing groups have kind of the same sociometric fingerprint.

For instance, everyone talks to everyone. You can actually see a diagram of this. Whether it’s the SEAL or Pixar. At Zappos, this is what Tony Hsieh is doing. He knows that great performing cultures, everyone talks to everyone. There’s not silos. There’s not one person who’s sort of floating off by themselves. Everyone is constantly colliding with each other, almost like noodles in a pot in a boiling pot, where everyone’s sort of circling around bumping and circling. 

That sort of sociometric truth is really how he sees himself as a leader. He’s the burner underneath the pot that is constantly sending these noodles in circles to where they can bump into each other and create something. 

That idea of collisions is really at the core of what these good cultures are. It also brings up some challenges for our world where we’re not always in the same location. 

Preston Pysh  16:31  

I’m curious, what else did you take away from Tony that was maybe surprising, like something that you just didn’t expect before you met him?

Daniel Coyle  16:38  

I was sort of surprised at how laid back he was. I have to say kind of really at home and letting whatever the collision was, let it happen. He describes it in a really interesting way. 

If you think of Zappos as like a greenhouse, right? He’s trying to grow this culture there. The way he described it, he goes, “Look, I’m not the plant that everyone wants to be like. My job is not to be the ideal Zappos person. I’m the architect of the greenhouse. I need to put the sunlight in the soil on the water and just let whatever is going to happen happen.”

With the way he saw himself so clearly as a designer of social interaction was really powerful for me. He’s not trying to embody… In a lot of groups, the head person embodies the qualities that he wants the culture to have. He didn’t have any of those illusions. He wasn’t trying to be the best as that podium that exists. He was just trying to think like a designer: how can I bring in more collisions? How can I sort of bring light, water and warmth and help people grow?

Preston Pysh  17:41  

Very interesting. There’s another character in your book that I also found really fascinating. That’s the coach of the San Antonio Spurs, Gregg Popovich. His team has performed extremely well. It’s not because they have the most money among their peers. 

Instead, Popovich has a unique technique for connecting with his players, which you’ve been talking about. Could you tell us how he communicates with his players and why this makes the difference?

Daniel Coyle  18:08  

Yeah, I was fascinated by the San Antonio Spurs, just because they have been able to create such a strong culture without drafting at the top. They’re not getting the best players. They have to add up to be more than the sum of their parts. 

They’ve been so consistent, but most of all, because they are something that I think we’re all trying to do. We’re all trying to be excellent. Our goal in running a business is not just to have everybody feel warm and cozy, right? It’s to perform. 

So how do you have that sense of cohesion with this bar of excellence where, look, we’ve got to perform at a certain level or we’re not going to succeed. He really captured that for me, because going into it, we all know sports fans know and basketball fans know that Popovich is probably the grouchiest coaching in sports. He is red in the face all the time. He is yelling at his players a lot. 

However, what I saw up close, I visited for a few days. The first day I got there, it was a day right after they lost. The first thing that happened was that there was a video session and I thought that they were going to go to watch the game tape. They go in and they start to play the tape. 

But it wasn’t a game tape. Actually, it was a CNN documentary about the history of the Civil Rights Act. It was the anniversary of the Civil Rights Voting Act and they watched that.

Then Popovich starts asking questions like, “Okay, what would you have done? What would you guys have done? What did your parents do? Tell me about that.” 

Genuinely curious, just like the Wipro, right? It’s the same belonging cue. It’s like what would you do if we were marooned on a desert island? Tell me about you. 

That interaction, he’s not just telling them they need to go left or right, shoot more or  shoot less. That is just that intense curiosity that he has about the group that he’s in and his ability to connect. 

Then the other thing they did, which was really terrific, was the way that he uses food. Every human being has to eat and Popovich is keenly aware of this. And so, they use food as the core vehicle for connection. The team eats together more often than most families. I mean, they have different size dinners for different groups. The coaches all go to dinner before every game. 

At the end of the season, they get an album with the menu of all the places they’ve eaten and the labels of the wines that they enjoyed together. It is phenomenal to see actually the best comeback that the Spurs have ever made took place in a restaurant. They had this devastating loss in the finals of the NBA. In game six, they were about to win then lost.

Popovich, rather than have everybody sulk in the locker room… and people were destroyed. They really had the title locked up and they lost it.

Afterwards, he has everyone go right to the restaurant and circle up as a team. He spends the whole time, almost like the father of a bride at a wedding, greeting everybody, spending time, making sure that their plates are full, bringing in their families, having conversations, hugging. Everyone is reconnecting. 

He calls it filling their cups. It was this astonishing act of connection that really helped the team recover from that and go on and win. 

So the way that he connects and he’s giving them very tough feedback, because one of the coaches said, “Pop, will do two things: he’ll tell you the truth and he’ll love you to death.”

For me that really captures what great leadership does. He doesn’t hold back on the feedback. It’s not like you have to choose between excellence and belonging. He gives them both. He gives them the absolute toughest feedback. It can be very difficult at times when he’s yelling at the team, but he’s given them the absolute peak moment of caring, connection and love. Those are the words that he uses. He talks about them a lot. He talks about filling their cups, hugging them and holding them. 

That kind of combination, I think is revelatory, because we typically see those two things as a trade off. Either I’m going to really tell you the truth or I’m going to be really nice to you, ut that’s a false dichotomy. The truth is you can do both. You can tell people the truth because you love them to death.

Stig Brodersen  21:57  

It’s interesting. You’re talking about this computer program that is looking at the player stats and how many games they’re supposed to win. It actually tells a very interesting story about the importance of the coach, and really what he’s achieved with this team. Why is this so surprising for the San Antonio Spurs?

Daniel Coyle  22:20  

Yeah, you can look up like with any team. Especially with sports, you can add up the before the individual performers and make a pretty reasonable forecast about how many games they should win. 

They do that with coaches, based on the talent that a coach has, how many games should they have won. When you graph all the history of the NBA, Popovich is out there like bars. You’ve got all the other coaches grouped up and then you’ve got Popovich winning way more games than he should have. His teams are literally adding up to more than the sum of their parts. 

They’re more selfless. In basketball as in life, there are these moments where you have to make a decision, am I going to support my teammate? Or am I going to focus on myself and try to score for myself? Because Popovich has created such a culture of connection and selflessness that shows up. It shows up on the scoreboard and it shows up on his own record, that these twin signals of telling the truth and loving them to death actually helps unlock the group’s potential.

Preston Pysh  23:17  

Dan, the most successful teams perform best in a high purpose kind of environment. However, building purpose is not as simple as writing a mission statement or hanging some posters up in the hallway or writing some corporate values and just posting them around the headquarters. 

How do we build a high purpose environment and how is the process different, if you’re an executive, or you’re an employee with very little authority? Talk to us about that idea?

Daniel Coyle  23:43  

Yeah, so funny purpose and values. If you were to look at sort of a company’s senses and group’s senses of values and purpose and write them down, we have a typical convention that those purposes sort of descend from on high, right? That we get a group sense of purpose from our hearts. 

When you look at really good groups, however, what you see is they’re not sort of digging them out of their hearts. They’re not emanating those senses of purpose. They’re sort of unearthing them. They’re digging them from beneath. 

When I visited a lot of these places, it actually was kind of funny, because when I’d first go within some of these groups, I decided to visit them based on them being the top 1% of performance in their domain with sustained success. And so, I found myself okay, I’m visiting Pixar, Navy SEAL Team Six, and the Spurs. 

When you first visit those places, they feel and this sounds funny to say, but they feel a little bit cheesy, because the people are kind of repeating these mantras. You’ll hear the same mantras over and over again, if you’re in Pixar or Navy SEAL Team Six. Even at Team Six, they have mantras. They’ll say things like, “We’re the quiet professionals. We shoot, move and communicate. The only easy day was yesterday.”

They keep sort of repeating those mantras over and over again so when you first get there, it feels a little like you’re at summer camp. I began to see that and at first I thought, “Oh my god, I’m in the wrong place.” 

But then you realize, “No, wait a minute, the fact that everybody is sharing these really clear mental models, everybody’s sharing these really clear monitors, it’s almost like a map. It’s almost like they’re building this windshield of purpose that is made up of these smaller things, these smaller metaphors and stories that they tell each other.” 

The San Antonio Spurs are a perfect example. Popovich came across this book and it told a story. It was an old sort of parable, it told a story of a stone cutter and the stone cutter is pounding away with his sledgehammer on this rock. The pastor asks,  “Why are you doing that?” And the stone cutter replies, “Because when the rock breaks, I will not know if it is that blow or the 100 that came before that broke it.” Nice story. 

Popovich captures that story. He thinks of something about it. He has it echoed throughout the organization, when you walk in their practice facility, you see an actual rock and an actual hammer. The mantra that he’s created is pound the rock. 

When you go into their locker room, there’s about five different languages spoken on the Spurs, that quote from the stone cutter, that little parable, is written in each of those languages, all around the locker room. He talks about pounding the rock all the time. The players talk about pounding the rock all the time.

What they’ve done is that they’ve used that mantra sort of to create a North Star for them. This is who we are, this is what we do. The purpose didn’t sort of descend on them. They dug it out of the ground. They found something that really resonated and that story resonated for them. 

It’s the act of creating it and sharing it that makes it powerful. It’s not just putting a poster on the wall. It’s constantly living that and sharing that in every possible way. They’re sort of flooding the zone with this story and this purpose. 

So purpose is something that sort of is more of an architectural question like, okay, we can’t just pick something random. We actually have to pick something that matters. We actually have to pick something that resonates with us. We have to pick the right language and pick the right story. 

The places that I visited, the cultures were very smart about doing that. They spent a ton of time thinking about sort of building what you might think of as a mantra map, the handful of sayings, metaphors, symbols, that really make sense for them, and that they broadcast. They fill the windshield that works kind of like emotional GPS. 

When you bump into a problem, and you’re and you’re on the Spurs, what comes into your head? Pound the rock.

It’s this sort of a design process, really. 

I think that’s what people miss about purpose. They sort of think, “Oh, it’s just going to be this halo that we get and we’re just going to be able to do it.” But no, it actually takes a lot of effort and intent. One of the best things you can do is really study how other groups do it. 

Preston Pysh  27:47  

That’s such a good example. I love that it was fantastic. 

All right, so let’s talk about this idea of vulnerability. A little bit back we interviewed former founder of Marquis Jet, Jesse Itzler. 

We asked him what advice he would have given himself if he could go back in time 20 years and have a conversation with himself. His response really surprised Stig and myself. He said he wished he would have allowed himself to be vulnerable much sooner. 

We were just kind of like, “Wow, that’s an interesting thing to say.” That’s just not something you hear every day. So let me ask you this, Dan. Why should we show vulnerability? 

Daniel Coyle  28:26  

That’s a great question. I love his response. Why should we show vulnerability? Groups that hide weaknesses from themselves will never be strong. Groups that share weaknesses are strong because of it. 

When I visited these top top performing cultures, I was continually surprised by this pattern. The pattern was that leaders would be extremely open about their mistakes, extremely open. 

In fact, the Navy SEAL commander that I spent time with, Dave Cooper, who trained the troops that got Bin Laden, put it this way: the most important four words a leader can say are I screwed that up.

Just incredible to think about. We think about how the SEAL is bulletproof and confident to know with certainty about where they’re going. But actually, that model of the leader is the authoritarian holder of the knowledge, that’s worked for a while, like that’s a pretty good model. It can work when problems are really simple. 

However, we live in a world no matter what business you’re in, where problems are really complex. Problems are really fast moving and the idea that one person can be certain about what to do is increasingly ridiculous. The idea that one person can hold in their head, that one army commander can be back at headquarters and have in their head what the team should do, rather than that team on the ground making decisions. The idea that one business owner can know what all his people should do rather than that team on the ground reacting in real time…

I mean, there’s a metaphor that kept coming into mind while I was writing the book and it is, “a full flock of birds navigating through a forest all as one,” and they’re solving problems in real time. 

They’re not getting radio information back from headquarters of a weather station where they should turn left here and turn right here. They’re solving problems in real time. That is really the landscape we live in now. It’s moving faster and faster than ever. 

And so, this idea of vulnerability of saying, “Look, I’m going to be the CEO, but I don’t know what you should do. I have made mistakes in the past. These are the mistakes I’ve made in the past,” it ends up being really the most powerful way that an organization can ignite the sharing of information. 

Vulnerability isn’t about mushy emotions. It is about sharing information. If you are open about the mistakes you make, and the weaknesses you have, you can perform better. You can share a mental model. 

The cool part that I saw were the organizations that had refined this into an organizational habit, they weren’t just doing kind of free range vulnerability. These vulnerability habits that operated almost like calisthenics. 

With the SEALs, they do something called an AAR, an after action review. They do it after every training mission and after every mission. The team comes off the helicopter, they circle up and they start talking about what went wrong, what went right, and what they’re going to do differently next time. 

The thing that really stands out is that they’re awkward and they’re hard. It’s really hard after you try your best at something to come back and say, “You know, I screwed that up and I think you might have screwed that up too.” 

They end up being these sort of painful, emotional, difficult meetings, and they are by far the most important powerful meetings that the SEALs have. 

At Pixar, they have the same meetings. It is called a brain trust. Every movie is brain-trusted several times through its development. They watch a draft of the movie and then some of the best storytellers at Pixar circle up, get together and start taking it apart. 

It’s not pretty, it’s really hard to see someone who’s a director who’s bringing them this precious thing that they’ve spent months and years building then the people just kind of almost kind of mercilessly say, “This doesn’t work and that doesn’t work.”

It’s really hard. It’s really powerful and important. The AAR and the brain trust are the calisthenic that lets the group be strong.

In our bodies, we know physical exercise makes you strong: no pain, no gain. To actually have to experience that pain is what gives you the gain. The same is true with group life. The same is true in our groups. 

That awkward, difficult, “I screwed that up, and you screwed that up. What happened? Let’s talk about it.”That awkwardness is actually what fuels improvement, because it lets you share real information and accurate information. It lets you build a shared mental model of what you’re trying to do.

Stig Brodersen  32:36  

Fascinating. It really reminds me of this story you’re talking about with the birds where it doesn’t really have a leader, it changes all the time and everything seems to be up in the air. Still, in a way it’s very organized and extremely efficient. 

It also reminds me of the story you have about MIT and this balloon contest that just a very surprising take on that. Would you mind sharing that story to the audience, Daniel?

Daniel Coyle  33:02  

Yeah, there’s this governmental outfit called DARPA. They do research on impossible projects. They did this one where they were trying to figure out how to get information quickly, almost as if mimicking kind of a virus outbreak. How do we find out what’s happening when we don’t know what’s happening? 

They did it by and it’s a really fascinating contest. They released 10 large balloons tethered to the ground at unknown locations across America. They gave people about a month. They said assemble a team to find out the precise location of these 10 balloons. 

And so, of course, it was like catnip to every geek in America. They started assembling these teams with all of this GPS data, social media sharing and satellites. All these organizations came together because there was a $40,000 Prize. 

However, there was one team from MIT that didn’t do any of that. They actually didn’t find out about the contest until like five days beforehand. So all they did was send an email and the email said, “Hey, we’re doing this crazy balloon hunting contest. If you’re on a chain of people who have found these balloons, if you or anybody you send this email to anyone who finds a balloon, you get to share in the reward.”

It was a really simple signal. It had vulnerability in it, because they were sharing the reward with the people they worked with. The other people weren’t. They were just sort of saying let’s build a team and everybody on the team will get the reward.

However, they sent out this signal, this email, and the contest begins and the government initially thinks that this is going to take weeks for people to look at these 10 balloons in random locations across the entire continent. 

The MIT team succeeds in nine hours with a completely makeshift team, who none of whom know each other. All of whom are united by this simple signal of vulnerability to say, “Hey, we’re doing this crazy project. If we win, we all win.”

That sense of having some skin in the game and having people who are genuinely invested defeated all the other efforts. That’s sort of the killer app of connection. It sent the signal of a really clear vulnerability that made people want to be a part of it and made people want to give effort. That motivated cohesion that great teams have. It doesn’t come out of nowhere. Itt comes out of sending really clear signals that, “Hey, we’re in this together.”

Stig Brodersen  35:17  

I really love how you keep talking about communication. Regardless, with the balloon contest, the Navy SEALs or San Antonio Spurs, it seems like you really need to have that type of communication where you can challenge authorities on one hand, but also be truthful, because communication is not useful if it’s not true one way or the other. 

How do we go about that? Because on the other hand, we don’t want to start alienating people, because that’s never the intention. Could you give us some pointers of how to go about that in any organization, whether you’re high or low?

Daniel Coyle  35:57  

You put your finger on a super interesting nuance here. There’s a certain reaction where it’s like, “Okay, we’ve got to be open and vulnerable. We’ve got to be brutally honest. I’m just going to lay it out there.”

There’s a certain person that reacts to this by just saying, “I’m going to let you have it. We’re going to be brutally honest here.”

But when you’re brutally honest, you’re actually creating a culture of brutality. That’s the real signal you’re sending. You’re sending a signal of brutality and the successful way to go is to avoid brutal honesty. Instead, strive for warm candor. 

Warm candor sends two signals. It sends a signal of connection along with the truth. You don’t just send the truth in a brutal way. You always have that tethered to a signal of connection and the most beautiful example I saw that, beyond Popovich, whom we’ve already talked about, it happened at a restaurant called Gramercy Tavern, which is run by Danny Meyer. 

Danny Meyer runs about 20 restaurants, all of them are sort of like Pixar in the restaurant world. If you have eaten at any of Danny Meyer’s restaurants, you will probably remember it because the service is so incredible. The teams are so well trained, and the experience is so marvelous.  

I studied Danny Meyer for the book. I was there when a new server, who had been training for six months, had her first day at the front of the house. It’s sort of the first day in the big leagues after months and months of training. 

I saw her manager lean over to her just before the people were about to walk in. It’s about her moment to shine. Her manager leans over and says something to her. I’m wondering, what’s he going to say? Is he going to say something really supportive? 

What he said was, “Hey, Whitney, if you don’t ask me for help 10 times today, it’ll be a disaster.” That is a hell of a thing to say, really, right? That’s pretty canderous like it’s going to be a disaster, but think more deeply about what he said there: Ask for help. Look for me 10 times today. If there’s a problem, we’re here to help. We’re connected to you. You’re not alone. 

It’s a signal of warm candor. That’s real candor. You really need to look. If you try to do this without any help, it’s going to be a disaster, but I’m here for you. 

So that’s the kind of message that can be sent in these kinds of good feedback conversations: I’m giving you this signal, because you’re part of this group. We have high standards here. I believe you can make those standards.

That feedback is powerful, because it doesn’t just deliver brutal honesty. It delivers connection.

Preston Pysh  38:30  

Dan, if you had only one minute to describe and whittle down everything you know about reading great culture, what would that one minute sound like?

Daniel Coyle  38:40  

I’d take the first 30 seconds and I would just show a video of a flock of birds moving together, because I think that captures better than anything else. 

Google the word murmuration, these starlings, these small birds, that they’re amazing at flocking together. They come apart and they come together. They look like these intelligent clouds. They’re beautiful to watch. That’s what good culture is. 

That happens not because of some magical chemistry. Their brains are as big as a grain of rice, right? It happens because they send really clear signals about where they are and where they’re going. That’s what good cultures do. 

Good culture is not about some mysterious chemistry. It’s about clarity. It’s about sending really clear signals. We’re connected. Belonging cues, really clear signals. We share information.

Vulnerability loops, they’re called. You have a loop of vulnerability and really clear signals and purpose. We’re going here. We’re going to pound the rock. That’s what’s important. We’re not going over there. We’re going here.

Preston Pysh  39:41  

That’s awesome. I wasn’t expecting you to say that. That’s pretty awesome. 

What we’ll do is we’ll try to find a video in our show notes so if people don’t want to have to hunt around and we’ll put that in their show notes for you.

Stig Brodersen  39:53  

Dan, you’re obviously a very intelligent person and you have achieved a lot. Do you have any book or resource that has really laid the foundation for where you’ve been going?

Daniel Coyle  40:06  

I’d say the work of Adam Grant has been really powerful. I’m sure some of your readers know his work. He’s a very creative and forward thinking professor who studies organizational dynamics at Penn and has written several books like “Give and Take”, “Originals” and he wrote a book called “Option B” with Sheryl Sandberg.

Just the creativity and energy that he brings to every project. Every discussion is inspiring. 

The other person I’d say is my brother Morris, who is really good at thinking through these concepts and helping me a lot of this stuff is simple, but it ain’t easy to be simple. Seeing the deeper landscapes in these things that are right in front of our noses, like culture and groups, are super useful. 

Preston Pysh  40:51  

Well, then we can’t thank you enough for coming on the show. For people listening to this, the name of Dan’s book is “The Culture Code: The secrets to highly successful groups.”

Dan, where else can people find out more about you?

Daniel Coyle  41:06  

I’ve got a website: DanielCoyle.com. I’m on Twitter, Facebook and some of the other usual places.

Preston Pysh  41:15  

We’ll have links in the show notes to your feeds to your website so if people want to learn more about you, they can go there and check you out. 

Dan, thank you so much for your time today.

Daniel Coyle  41:25  

Thanks very much, Preston. I enjoyed the conversation.

Stig Brodersen  41:27  

Alright, guys, that was all that Preston and I had for this week’s episode of The Investor’s Podcast. We will see each other again next week.

Outro 42:00

Thanks for listening to TIP. To access the show notes, courses or forums, go to theinvestorspodcast.com. To get your questions played on the show, go to asktheinvestors.com and win a free subscription to any of our courses on TIP Academy. This show is for entertainment purposes only. Before making investment decisions, consult a professional. This show is copyrighted by the TIP Network. Written permission must be granted before syndication or rebroadcasting.

IN THIS EPISODE, YOU’LL LEARN:

  • How you create the strongest culture in your organization regardless of your rank
  • How high performing cultures communicate with each other
  • Why the San Antonio Spurs are winning significantly more games than they are supposed to on a consistent basis
  • Why the most important 4 words a leader can say is “I Screwed That Up!”

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