Lean startup and Psychological safety. How to accelerate innovation by eliminating fear?

As Agilest, we often find ourselves thinking about the role that Lean Manufacturing played in establishing the movement that we use to define our careers. The connection between what is called Lean or the Toyota production system, and the modern processes and tools that we call Agile software development is undeniable. You can see this in the core components of the Agile Way, like identifying and delivering value, continuous improvement, reducing waste, etc.

This usually leads most of us to ask the question: would we have ended up with Agile without Lean?

While the answer to that question is not easy, and you can find people on both sides of the debate, both having some valid arguments, what is clear is that without Lean manufacturing, we would not have Lean startups.

Concepts like MVP (Minimal Viable Product), build-measure-learn feedback loop, innovation accounting, and others can be paralleled by some of the principles established by Taiichi Ohno.

These principles are an integral part of the innovation lexicon now, and it is hard to believe that there was a time where we used to work on new and innovative ideas without them. Companies of all sizes used to go about innovation in an Ad-Hoc manner but the lean startup framework provided some guidelines that they can use to build the right process to innovate systematically.

But the state of lean in the real world is not all roses. Organizations all over the world are having a tough time integrating these principles into their innovation chain, even if they can see the value they provide for others.

You hear this often from leaders in established companies, they all say they want to innovate like company X or team Y, but when talking about some aspects of the work culture at those places, and how to innovate at the same level, they need to foster the same way of working. You either get some excuse like “yes, but we will need more resources to do that”, or at first, they are excited about the idea but nothing gets done. It is easy to blame this lack of actions, on the usual suspect, as people often do when they talk about corporate bureaucracy, the management by command and controls, and the interdepartmental fights. The truth is, those are the symptoms, not the real issue.

The real problem that corporations need to tackle to be able to innovate at the highest level is fear.

“Fear is the mind-killer”.
Frank Herbert

Fear stops us from innovating on so many levels. In fact, innovating in a climate that does not provide safety is almost impossible. An actual neuroscience research proved that fear depletes the brain of cognitive resources needed for any creative work.

Any leader who is serious about using the lean startup framework as an innovation engine in their organization, should start by answering this question: is my company fostering the kind of culture that empowers people to go beyond their fears and take on risks or not? If it does, what do I need to do to improve it? If it doesn’t, how can I create such a culture?

The good news is the research done by universities and companies over the last two decades has provided a recipe we can follow to eliminate fear. It is called psychological safety.

Psychological safety at the origin of Lean manufacturing

Psychological safety defines a climate at work where employees feel they can take risks and speak up. Without being afraid of saying the wrong thing or being ridiculed for their half-baked assumption, they can ask questions when they do not understand something, talk when they see something concerning, or propose some wacky ideas that may sound like a long shot but can have enormous potential. They know they can experiment and try new things, without being afraid of any punishment or shame if they fail.

To understand the role of psychological safety in the proper implementation of a lean startup, we need to take a step back and investigate the society where lean originated.

If you ask anyone what is the whole mark of Japanese culture — or if you Google it since we are in the 21st century — the word respect is front and center. This is not the kind of culture that can be associated with work descent. Disagreeing with your boss may not be disrespectful, but it is not the default behavior when you spend your life learning how to respect any figure of authority.

So, one may be forgiven to imagine that in such a cultural context, feedback flows in one direction, from the top to the bottom, but a simple analysis of the way Toyota operates will reveal that this is not the case. Employees in the front line were encouraged to make major production decisions, based on their experience and observation. This is most exemplified by the Andon cord.

A way for any employee to stop production if they noticed a defect.

While this might seem like a normal and intuitive thing to do when you see a problem, anyone who worked in a factory will tell you that in real-world, things are not that clear cut. Sometimes you will be looking at what you think is a production flaw but you are not 100% sure, or you see something but it is not that major. So you find yourself thinking: is this small imperfection worth stopping the work for? Or worst:you are under pressure from your boss or short on time, and you know that stopping the production will cost money, so you start considering letting some small flaws slip by.

While it is hard to chronicle all the time the Andon cord was pulled or not pulled at Toyota, it is a statistical fact that in some cases, an employee may have pulled it for something not worth stopping the production for. But imagine what would be the state of the Toyota brand today if no one ever dared to pull the Andon cord. Would they have achieved that level of quality and reliability associated with the name Toyota? Or would they have been able to invent a new way of working that changed not only manufacturing, but a lot of other industries, if employees were too afraid of being wrong, of what their boss will say if they stopped the production while the company is behind on some delivery?

Here, a culture that does not only tolerate risk-taking when faced with uncertainty but welcomes it, helps a lot. A culture where employees are not ordered to just do their jobs, without asking questions or raising concerns, but are encouraged to use their judgment in analyzing the situation. A culture where they can take action if they think there are any abnormalities, even if they are not sure.

Psychological safety in the build-measure-learn feedback loop

As we mentioned earlier, fear stops us from innovation on so many levels and nowhere is this more visible than in the build-measure-learn feedback loop, one of the core components of the Lean Startup methodology.

This process allows companies of all sizes to innovate by designing and implementing small experiments, and iterating fast, over, and over, until they discover the right product or service they should build to fulfill their client needs and build it.

The role of this simple principle of iterative and incremental work in solving any complex issues cannot be underestimated: almost everything around us that works as it is supposed to do is the result of real-world experimentation. If we look at the first version of a lot of popular tools we use today, they will not bear a lot of resemblances to their modern counterpart, and if we try to use these old versions as a substitute for the newer ones, we will find that they are incapable of fulfilling the same needs. It took the people who built these tools a lot of iteration to get it to the point where it does its job perfectly.

This is so common that it might well be the unofficial rule for the evolution of any complex entity in the world. As Tim Harford said: “You show me a successful complex system, and I will show you a system that has evolved through trial and error.”

Build! Start now.

The build-measure-learn feedback loop is a continuous cyclical process that can be started from any step, but people often start by the build stage. This is usually prompted by someone coming out with an idea, then the team starts working on it, by building a prototype they can present to internal or external clients and test how they react to it.

Phrasing it this way, you can see why this stage can be hard or even impossible without a culture of psychological safety. There are so many opportunities for uncertainty at this stage, that without strong leadership, focusing on eliminating fear and getting people to come forward and take risks, the process may never start.

Every time one of your team members has a great idea that may help build the next big thing, their first thought will not be: “this idea is the one that will allow us to dominate this market, as such I should bring it to the team immediately”. Their first thought is often: “this is a great idea, but what if I am wrong about one of my assumptions, what if the solution I am proposing does not fulfill the customer needs, what will others think of me if I propose that we work on something not worth it”.

These mental gymnastics happen because as professor Amy C. Edmondson said: “Nobody wants to look ignorant, incompetent, intrusive, or negative.” So, our strategy to avoid all of this is not to speak up. When we have something to say but we are not 100% sure that it is the right thing to say, we do not say anything. The problem is we can never be 100% sure that this idea will work, that an issue is real, or even if the solution we are proposing will fix it. We experiment and iterate to figure out if that is the case or not, and this cannot start without having complete faith that no matter what you have to say, you will be heard. Faith that you, your team, and the whole organization, are better served if you do not hold back and you say it.

“Nobody wants to look ignorant, incompetent, intrusive, or negative.”
Amy C. Edmondson

As such, it is most important for leaders who want to innovate to create a climate where it is safe to experiment and to make it clear that the only way to be able to start the experience is for anyone to bring forth their crazy ideas.

Yes, today, some people go beyond fear and get their ideas out to the world, even start working on it. And we often refer to those with terms like courageous and risk-takers or innovator or just entrepreneur but the truth is, not everyone falls in this category and counting on self-discipline alone is not a sound management strategy.

Leaders should create a place of work where people understand that yes, it is normal to be afraid when faced with uncertainty, but that fear should not make you incapable of speaking up because your voice has value, and it is not just tolerated, it is more than welcome. And if you say something wrong, it is not the end of the world, we are just going to move on to the next idea.

They should make it clear that as a part of the feedback loop, you should make your idea public as soon as possible, so we can start experimenting. Your hypotheses may not sound that smart to you, but with the right input from another colleague, they can be game-changing. You might think that your insight on a specific subject is wrong, but if you do not mention it to other people, we will never know.

And this goes the other way two. Once we manage to get people to start bringing ideas forward, it is not mission accomplished, we can start building everything. Let us face it, not all ideas will be winners, some are just not worth pursuing, and the only way we can work on the good ones is to drop the bad. So, while gathering ideas should be a top priority for any leader who is serious about innovating, some form of curation must be part of this process, and the easiest way to do so is to make sure people are open and honest with each other about their work. Employees should not be afraid to say to each other that this idea will not work, that this plan is doomed, or that they did not do an excellent job researching or building something.

This permission for candor is at the heart of psychological safety, and each leader should make it his primary mission to create a space for it. While it may be tempting to say, we have an open invitation to speak up, it is not enough.

As is the case with the feedback loop, this also is a never-ending work: the leader should keep an eye on anything that may lead someone to not speak up, and try to eliminate it. They should model the behaviors they want to see, by asking questions when they do not understand something, bringing ideas to their team before they are 100% sure, and more than anything else, they should invite descent, they should make it more than clear that if someone had some concerns about some of their work, they need to come forward with it, and there is no reason to be afraid if someone disagrees with something they have said.

Measure! Move fast.

To take full advantage of this feedback loop in supercharging your innovation process, you should make sure that your implementation respects one important aspect that Eric Ries emphasizes in the book Speed. You should shorten the time that it takes to go through the loop and once you are done, you start the next one as fast as possible. This may sound logical. Everyone knows that the innovation world moves fast, and today’s bleeding-edge technology is tomorrow’s run-of-the-mill gadget. But as we saw in the example of the Andon cord, real life is messy.

As we have seen, it is easy to say that we welcome experimentation, but it is hard for people to start experimenting. And even when they manage to muster the courage to finally start building something, they often get stuck in the building phase.

While this is most visible for people with a background in engineering or other technical fields, trust me, it happened to me too. I spent a long time trying to get to the perfect version of the thing I was building, which I never showed to a single client. It is not by any means limited to this crowd. I talked to founders with diverse backgrounds, and investigated multiple startups, and I came to the same conclusion. People are afraid of putting the thing they are working on out there, and they use some excuses about wanting to build something better to avoid doing it.

And this grinds the experimentation past to a halt. Yes, you are doing some work by adding some new features to your MVP, but the truth is, work that goes beyond what is needed to test your hypothesis is just waste, and it is only driven by your fear of rejection or worst yet, the fear of lack of interest.

And this fear is often worse when you are working for an established company because if you are a small startup and launched something flawed or incomplete, nobody probably even noticed. It is often a good thing since you seem to have avoided a major public humiliation, but when you have a boss breathing down your neck for results, a lack of real clients using your new product, even in the testing phase, is not necessarily a good thing. The company has spent money and time on this project and they want results.

So, leaders should try to create a climate where people are not afraid to show their work, they should make it clear that no feedback is feedback. And that any experience is designed to validate or disprove assumptions, and this may sometimes take the form of no one wanting to use the thing you just built.

In a sense, they should create a workplace where they hold themselves and their teams to the standards of the scientific method, where as long as the parameters of the experience are well designed, any outcome is not a failure. Leaders should make their team understand that this is not about confirming some preconceived notion, it is about testing some assumption. This will give people the push needed to go beyond their fear and start putting their work in front of people to see if their assumptions are valid or not.

Leaders also have to work with teams to make sure that experiences are designed as small as possible. This will not only make sure the cycle moves fast, it will also have some baked-in component of psychological safety, since with small experience failure is more tolerable.

They should celebrate risk-takers. Putting in place a system that encourages people to take risks is great and all, but we humans are more likely to do a thing when we see our peers do it first, or as the song said, monkey see, monkey do. So, when someone dares to go beyond their fear and put something in front of a client, that is something worth celebrating, to encourage the rest of the team to do the same.

Learn! Finish strong.

By its nature, learning requires admitting that we do not know something. While this is long gone by now, since we have already designed and run two-third of an experience, with the main goal of validating some assumption, the fact is, until now we have not been proven wrong. So, we still hope that what we built is exactly what the customer needs or that with small tweaks we will end up with the perfect product.

But that is not true, as anyone who ever went through the experimental process of innovation can tell you. Your odds of just proving right are slim. So slim that leaders who are working on innovative products should be worried about individuals and teams that are consistently proven right. They should consider this as a red flag, since it is either they are not stretching themselves far enough, by testing out of the box ideas, that will lead to real innovation, or they are just skewing the result of the experience. In either case, they should work to establish a climate of safety where their employees are not afraid of running some daring experiment and showing the real result.

A lot of the hypotheses you will develop along the way will be disapproved more than validated, so leaders must make sure that their people do not just stop when their experiences do not return the expected results, but get up and continue working because the reality is this is not a failure and should not be perceived as one, either by the person who is doing the experience or the leadership.

This might sound like something not even worth mentioning. But from all my conversations with founders and Ex-founders, my experience with startups, and my observations of the innovation initiatives I was following in small and big companies, this step of the Feedback loop is when the quitting process starts. The more time we spend stuck at this stage, the less likely we are to show the next version of the product to a client after building it. This is the danger zone, a place where entrepreneurs often find themselves asking the same question: what if this is the best I can do, what if we built the next version and the reactions are the same, what change should we do next?

So you need to make sure you and your team take time to get some insightful data from the client feedback and move fast to build the next version.

This starts by developing the right expectations before the experience even begins and communicating them. You will be amazed at how far a simple conversation about what we can expect from an experience can do for the team’s safety. A lot of time when the team gets to this stage, they are already just hit with some harsh customer feedback. So, if the leader has already taken the time to discuss with the team that the experience may reveal this outcome, this will eliminate the surprise and soften the blow.

No Blame. Innovation has a lot of uncertainty, and uncertainty often breeds stress. And when people are stressed, they often default to finger-pointing and blaming each other, and this is bad for so many reasons. First, it is a huge waste of time and energy, two things that we are already short on. Second, it leads the team to be stuck in place, prolonging their stay at this step of the process, which is dangerous. Third, it leads to a kind of culture where people are afraid of doing anything.

If my team is blaming my colleague for the idea he proposed at the last iteration, I am better served by not proposing any innovative ideas. Like this, I do not run the risk of being wrong and being on the receiving end of similar blame. So, the leader, or whoever is facilitating the conversation, should keep an eye on this kind of behavior and make it stop. They need to make clear that blame is not welcome when they are doing the post feedback and analysis.

Talk about psychological safety, and how it is safe to fail. Sometimes nothing emphasizes the importance of a subject more than just talking about it. And the role of making your employees believe that your teams or organizations are places of psychological safety in fostering creativity and innovation is well established. So, take time to talk to your team about what it means to have a psychologically safe workplace, see if they feel they can speak up and take risks, and if not, what is stopping them from doing so?

When Eric Ries presented the lean startup framework, he gave companies all over the world a blueprint on innovation, a guide that they can use to build better products and services fast. His model is great because it can work no matter where you are in the world, in what industry you operate or the size of your company.

To take advantage of this new way of building things, the only thing you need is the right mindset. You and your team need to be able to take on risks and do something new, and for that, you need the right culture, a culture without fear, that encourages risk-taking and helps team members bring forward great ideas and build the next big thing.

You need a culture of psychological safety. In this regard, psychological safety and lean startups create their internal feedback loop, where each one supercharges the other. Experimentation and iteration allow us to work in small batches, reducing the negative impact of any failure and making psychological safety possible. And psychological safety gives Lean startup a giant boost by injecting some much-needed security allowing people to go beyond their fears.