Michael Wong is an Emeritus Board Member of the Harvard Business School Healthcare Alumni Association.

Michael Wong

In this installment of the Harvard Business School Healthcare Alumni Association (HBSHAA) Q&A series, Michael Wong talks to Harvard Business School Professor Amy C. Edmondson about achieving psychological safety in the workplace.

Michael Wong: From global warming to the pandemic and now with Russia’s invasion into the Ukraine, what might be the role of fearless organizations to help turn around these seemingly endless waves of incoming challenges?

With the magnitude these pain points represent in today’s world, people need to have the courage and confidence to work together to solve these challenges. Still, it is extremely difficult to feel fearless; we’ve long known that individuals may lack the psychological safety to speak up within their organizations and these external factors probably contribute to a general sense of fear. Now more than ever, we need psychological safety, so people are enabled to uncover new ideas with a learning, innovation, and growth mindset.

Still, psychological safety in the workplace takes effort. The default model for nearly everyone is to go with the flow and not challenge the status quo, especially in a hierarchy. This reflex dates back to the industrial age when a command-and-control system gave managers authority to issue orders and employees followed them. While most people recognize that the workplace has evolved over time, the habits of mind from the industrial era endure, and many employees spontaneously value self-protection over self-expression contribution. After all, what is the benefit for an individual to speak up? If the idea is accepted, the benefit might accrue, longer term, to the company but not necessarily as directly to the employee. On the other hand, by speaking up, the risk of angering supervisors leads to a potential cost that is immediate. Smarter c-suite executives understand this asymmetry and flip the calculus by creating a supportive environment, and by asking questions in such a way that employees feel compelled to respond, without fear of retaliation. As a starting point, c-suite executives need to make sure that their hybrid workplace strategy supports a safety mindset.

Well, while most c-suite executives have the financial wherewithal to walk away from their jobs, the majority of employees do not. And so, with the traditional culture of fitting in and getting along at many firms; what might be some practical strategies for companies to help employees become fearless in their daily activities?

In my 25 years of research, teaching, and engaging with c-suite executives, psychological safety and high-performance are tightly coupled. For example, Google conducted an extensive study of teams, examining more than a hundred factors and discovered that psychological safety was the single most important driver of team performance. Three common themes which successful companies have deployed include the following.

First, the company needs to explore the link between psychological safety and high performance. Having this analysis is crucial to explain why limited resources and time should be invested in this area, versus other competing options.

Second, the firm needs to craft a culture where it is “safe” to express ideas, ask questions, and admit mistakes. Importantly, the c-suite needs to hold itself accountable that these executives’ actions support their words in order to establish the trust that is the foundation for any company’s culture and norms.

Finally, the c-suite must nurture the level of engagement and candor required in today’s knowledge economy. They need to model behaviors that their direct reports can emulate and in turn be replicated through the other layers of the organization.

These three steps will likely evoke initial uncomfortable feelings in the short-term. After all, people are hardwired to seek comfort in the immediate term. Still, thoughtful employees across the entire organization will realize the potential larger value that comes with overriding one’s desire for comfort in the short term; and engaging to create ideas that have long-term sustainability. Leading through crisis is attainable for each of us if we have the right mindset and commitment.

Dr. Amy C. Edmondson is the Novartis Professor of Leadership and Management at the Harvard Business School. Professor Edmondson has been recognized by the biannual Thinkers50 global ranking of management thinkers since 2011, and most recently was ranked #1 in 2021. Professor Edmondson received her PhD in organizational behavior, AM in psychology, and AB in engineering and design from Harvard University.

Michael Wong is an emeritus board member of the Harvard Business School Healthcare Alumni Association.

1. Edmondson, Amy C. and Mortensen, Mark, “What Psychological Safety Looks Like in a Hybrid Workplace” Harvard Business Review, April 19, 2021.

2. Edmondson, Amy C., “The Fearless Organization: Creating Psychological Safety in the Workplace for Learning, Innovation, and Growth,” Wiley, November 2018.

3. Edmondson, Amy C., “How to lead in a crisis | The Way We Work, a TED series,” November 2020, 

https://www.youtube.com/watch?v=Cxf_SRCcaGo

Articles

Harvard Business School Professor Amy C. Edmondson talks about achieving psychological safety in the workplace.

The Role of Fearless Organizations in Global Crises

Despite well-intended transformation strategies, academic and business leaders recognize that 70% failure rates are the norm.

Moreover, with nearly 70% of digital transformations failing to achieve their ROI targets,

 the coming months could be filled with candid conversations with chief financial officers (CFOs). To help uncover practical playbooks that increase companies’ success rate, Pharma Commerce is pleased to announce a Business Transformation Q&A series in which Michael Wong, Emeritus Board Member of the Harvard Business School Healthcare Alumni Association (HBSHAA), will interview and secure forward-thinking intellectual capital from leading academic and business leaders.

In this, the first of the HBSHAA Business Transformation Q&A series, Michael talks to Harvard Business School’s Robert S. Kaplan, co-inventor of the Balanced Scorecard. For those who have M&A as part of their job description, Kaplan offers three guiding principles of execution excellence.

Michael Wong: As 2021 marked a record year for M&A with more than $5 trillion in global volume and 2022 expected to be another strong period,

 how should smarter C-suites, investment bankers and private equity leaders avoid the value destruction that often occurs, with some estimates ranging from 60% to 90% failure rates?

 when Dave Norton and I introduced a management tool called the Balanced Scorecard (BSC), I have stressed how this instrument provides a framework for a holistic view of the company’s strategy. It enables leaders to communicate the strategy to employees. Employees are then motivated and able to take actions that will support a firm’s strategic imperatives. The BSC displays how an organization’s performance can be measured not only with financial key performance indicators, but also with metrics about clients, internal processes, innovation, employees, information technology, and culture. Importantly, the BSC expands a C-suite’s view from backward-looking financial metrics to include forward-looking measures that predict future performance including satisfied and loyal clients, high-quality processes, innovation, as well as motivated and skilled employees. The beauty of the BSC is that it can provide a single source of truth for data across a global enterprise, while also enabling flexibility and customization for general managers of local business units who face their unique market conditions. With the huge global challenges including fighting in Ukraine, the pandemic, and the Great Resignation; C-suites should consider how a BSC might steer their respective organizations’ efforts.

In terms of execution excellence for deploying BSCs, what top three ideas do you have for the readership?

First, C-suites need to have a clear understanding that the BSC is not just a new and more complex reporting system. It will be most effective and have the greatest impact when leaders understand and learn how to use it to communicate and implement their strategies. This is the biggest pain point for many companies. The BSC addresses a key barrier for successful strategy execution. In most organizations, less than 10% of employees can describe their company’s strategy. And if they don’t know what the strategy is, they can’t help to implement it. 

Second, a CEO cannot delegate the deployment of their BSCs to the CFO or the chief strategy officer. The entire C-suite needs to be engaged since this is an enterprise-wide initiative. The C-suite should meet regularly, perhaps monthly, to review the data on their BSC to learn what is working, what is not working, and what needs to be done differently to keep the company on a trajectory for successful strategy execution. Annually, the entire C-Suite should meet, perhaps offsite, for a forward-looking planning session to determine any major mid-course corrections to the strategy, based on the data and experiences of the previous 12 months, plus the new opportunities and threats that have shown up.

Finally, C-suites need to provide support so that a BSC can be planned, deployed, and improved over time. The five stages of support include:

 Begin with strategy development, which springs from a company's mission, vision, and value statements, and from an assessment of its strengths and weaknesses, and a competitive strategy analysis.

 Translate the strategy into objectives and initiatives with strategy maps, which organize objectives by themes.

 Create an operational plan to accomplish the objectives and initiatives; it includes targeting process improvements and preparing sales, resource, and capacity plans as well as dynamic budgets.

 Put plans into action and monitor their effectiveness. Review operational, environmental, and competitive data; assess progress; and identify barriers to execution.

Test the strategy; analyzing cost, profitability, and correlations between strategy and performance. If their underlying assumptions appear faulty; update the strategy, beginning another loop.

The key is to leverage the BSC and other supporting means,

 which can help drive execution excellence to achieve your client’s and C-suite’s goals.

Robert S. Kaplan is Senior Fellow and a Professor, Emeritus at the Harvard Business School (HBS). Dr. Kaplan co-developed both activity-based costing (ABC) and the Balanced Scorecard (BSC), widely recognized as seminal contributions to management theory and practice. Prior to joining the HBS faculty, Dr. Kaplan was Dean of Carnegie-Mellon University’s business school. Professor Kaplan received his B.S and M.S from M.I.T and a Ph.D. from Cornell University.

1. Organizations Can’t Change If Leaders Can’t Change with Them (hbr.org)

2. 68% of Enterprises Fail to Achieve Desired ROI on Digital Transformation, and Most Cite Change Resistance as Key Obstacle—Everest Group (prweb.com)

3. “2022 M&A Outlook: Continued Strength After a Record Year,” Morgan Stanley, January 14, 2022. 

https://www.morganstanley.com/ideas/mergers-and-acquisitions-outlook-2022-continued-strength-after-record

4. Walker, Karen, “Merge and Destroy?” 

https://www.forbes.com/sites/karenwalker/2020/09/29/merge-and-destroy/?sh=30548e3a5932

5. Kaplan, Robert S., “Using the Balanced Scorecard for Successful Health Care M&A Integration,” 

6. Kaplan, Robert S.,Norton, David P., “Mastering the Management System,” 

7. Porter, Michael E., “How Competitive Forces Shape Strategy,” 

8. Kaplan, Robert S., Norton, David P., “Having Trouble with Your Strategy? Then Map It”, 

Harvard Business School’s Robert S. Kaplan, co-inventor of the Balanced Scorecard offers three guiding principles of M&A execution excellence.