Create a culture of radical candor and transparency in your organization
The Operating System for Evolutionary Organizations Part 7/10
Would you rather want to know the harsh reality and learn to handle the anxiety or be kept in the dark and feel better?
In evolutionary organizations the answer is clear. That’s why radical candor & transparency is a key component of their operating system. This sounds so simple, yet many choose to not act according to it. Or they believe they do, but they don’t really do. This key component is all about being open and honest, as well as radically transparent. It sounds so obvious, but why is it so hard? Moreover, it’s key not just in business but to any relationship. Being open and honest is easy when you have good news or if the information is non-critical. But it gets hard when you are in deep shit or when you have to criticize someone.
This has to do with how our minds are wired biologically: we fight criticism and put our ego in the way. People care more about being exposed and looking good than actually trying to figure out what really happened and learn from it. That is why evolutionary organizations have made it a principle to search for the truth to help each other and the company.
This is the 7th article of a series of 10 where I will dive into why traditional organizations are doomed to fail and how a new breed of evolutionary organizations offers a better way forward. These innovative companies are complexity-aware, nurture self-determination, and act developmental. Thus fostering happiness and achieving lasting success. On top of that, I sprinkled in a little bit of science, distilled a framework of 3 universal principles, and defined an operating system for organizations consisting of 8 essential components, with which any CEO or founder can transform their organization into a workplace that thrives.
The 8 essential components of the operating system are:
Purpose and Direction
Virtues
Density of high-quality talent
Radical candor and transparency
Autonomy
Flexible roles
Developmental practices
Careers and compensation
In this article, we will deep dive into the 4th component “Radical Candor and Transparency”
Please subscribe to receive the next articles in your inbox. You can also read the previous articles on substack or find them here directly: 1, 2, 3, 4, 5, 6
In all of my companies, candor and radical transparency have been key to creating a culture of trust and respect, contributing to the teams performing at their best and allowing the people to work in a way that’s fulfilling. Only if you know what’s actually happening you can tackle it. You can’t fix what you don’t know. This openess creates trust which results in more openness. A positive vicious circle. Anywhere you look, people who have built successful companies stress the importance of being transparent and candor.
One of the probably most known supporters of radical transparency is Ray Dalio. At his company Bridgewater their approach is to actually record everything that happens at work so they can go back to any situation and learn from it. In his book “Principles: Life and Work” he explains the importance of radical truth and radical transparency further. He says: “Understanding what is true is essential for success, and being radically transparent about everything, including mistakes and weaknesses, helps create the understanding that leads to improvements”.
According to Dalio, these principles also enforce good thinking and behavior, because when one has to explain their logic, it becomes accessible to everyone. Radical transparency will help maintain high standards of performance because both good and bad actions will be visible. This means that the more people in the organization can see what happens, including the good and the bad, the more effective they will be at handling issues and making appropriate decisions.
Such an approach compounds and accelerates learning, as everyone’s experience is combined and everyone has the opportunity to hear what others are thinking. On the contrary, not telling people what’s going on also won’t protect them from the worries of life. Concealing the truth can make someone happy in the short term, but it will not help them learn from their mistakes and grow. It’s like letting your kids grow into adults believing in the Tooth Fairy or Santa Claus. It also will not add trust in the organization.
As Winston Churchill said, “There is no worse course in leadership than to hold out false hopes soon to be swept away.”, “People need to face harsh and uncertain realities if they are going to learn how to deal with them—and you’ll learn a lot about the people around you by seeing how well they do”
Dalio explains, however, that radical transparency doesn’t mean the same thing as total transparency. In the context of a company, it just means showing much more transparency than usual. Some things should clearly be kept confidential, like private matters or personal problems, sensitive details about intellectual property, and other things that are likely to be distorted, sensationalized, and harmfully misunderstood if leaked to the public.
Also, Ben Horowitz, a successful entrepreneur and well-known VC, reflects in his book “What You Do Is Who You Are” on important principles of successful companies. Two out of three principles that he says any company should have are trust and openness to bad news. Both these principles address what we mean by transparency and radical candor. Trust comes from candor. The company only stays strong when employees trust their leaders, which is where candor comes into play. The problem is telling the truth in such a way that it doesn’t harm the company.
In a large organization, it is impossible to ensure that everything goes as planned. At times, things will go very wrong. Some managers will try to conceal these problems as long as possible, even when they know the problem will only get worse if it stays hidden from the rest of the team. This is why it’s so important to share bad news with the team because such transparency will if not completely eliminate, but definitely reduce the risk of a disaster.
Aaron Dignan, an organizational expert and author of the book “Brave New Work” is also a strong supporter of transparency. For him, the key to solving the problem is to make sure that the necessary information reaches the right person at the right time. For it to happen, it’s crucial to create an environment of openness where the relevant information is known to all participants, so it can reach the right person easily when needed. The main pushback against transparency usually boils down to two ideas: the belief that people can't be trusted and the fear that holding onto information equals power. However, today, companies like Patagonia, Everlane, and Buffer are shaking up those old beliefs. In order to build transparency, it is useful to work in “public”, using applications and creating an environment that is accessible and visible to everyone in the organization.
And, last but not least, Reed Hastings from Netflix defines candor as key to the company's success: “Talented employees have an enormous amount to learn from one another. But the normal polite human protocols often prevent employees from providing the feedback necessary to take performance to another level. [...] When talented staff members get into the feedback habit, they all get better at what they do while becoming implicitly accountable to one another, further reducing the need for traditional controls.”
Transparency and candor are relevant on just so many levels. First and foremost, it creates trust and enforces good behavior and good thinking. People can’t hide things but have to act in the open. It helps to create an understanding that leads to improvements. You understand what is not working well and what to improve. Being transparent allows you to unlock the potential of everyone. By giving candor feedback, you help everyone act at their highest ability and help them succeed. The people grow beyond themselves. It makes them more fulfilled and mature as they have to deal with realities. Finally, you get more effective at decisions, as well as improve your relations.
True candor is about speaking when it hurts
The truth about telling the truth isn’t always easy. It’s not natural. At times, we want to tell people what they want to hear to preserve good relationships and make them feel great. But telling the truth means being brave. It’s easy to tell the truth when you have good news, but way more difficult to say when something is wrong. It also requires judgment and skill.
Hastings, CEO of Netflix says, “it is tantamount to being disloyal to the company if you fail to speak up when you disagree with a colleague or have feedback that could be helpful” and “only say something about someone that you can say to their face”. By sharing feedback directly with the person instead of complaining about something wrong they did at work promotes a culture of openness and development, as well as prompts employees to take responsibility for changing the organization for the better through direct communication. At Netflix leaders value all types of feedback because it helps employees make the best decisions for the company. In addition
Ray Dalio holds a similar view: “Never say anything about someone that you wouldn’t say to them directly, and don’t try people without accusing them to their faces“. For Dalio it’s crucial to create an environment where everyone will have “the right to understand what makes sense and no one has the right to hold a critical opinion without speaking up.” According to him, being able to speak up and defend one’s opinion in an organization is not an option or privilege but an obligation. What’s not appropriate is complaining about the work of others and criticizing people behind their backs.
Still, it’s good to keep in mind that speaking up one’s mind doesn’t mean insisting on an opinion without listening to anyone else. There will still be cases when a person has to abide by a company policy or a decision, even if they disagree.
Now, think about the following scenarios:
Sales are not going well. If you tell your employees the truth, the shrewdest ones will rightly worry about the viability of the company and leave. If they leave, you will continue to miss your numbers, introducing a death spiral of underperformance and attrition.
Your expense structure is too large and a layoff looms. The company isn’t doomed, but if you do a layoff, the press will write that you are. Employees will read that, panic, and leave. And then you really will be doomed.
An important executive just defected to your biggest competitor because she thinks they have a better product. If you tell the truth about her departure, people will wonder if they should be looking, too.
An employee whom everybody loves at the organization is not performing well and has to be let go. You are worried that the rest of the team will not be able to understand and start asking questions. You also don’t want to put the employee who is being dismissed on the spot.
The product has a serious flaw that is making your customers turn to your chief competitor. If your employees learn this, they will wonder why they’re working for the failing number two company.
Your last valuation was too high and you’re looking at a down round. Your managers sold new hires on the promise of your stock price going even higher.
Your company has an open culture but you're working with sensitive information that's confidential and illegal to leak. How can you handle this information?
In each of these commonplace scenarios, telling the truth seems like committing corporate suicide. But does it mean you should just give up and lie? It doesn’t. As Ben Horowitz puts it: “Trust derives from candor, and your company will fall apart if your employees don’t trust you. The trick—and it’s tricky—is to tell the truth without thereby destroying the company. To do this, you must accept that you can’t change reality, but you can assign it a new meaning.”
If you face a situation like this, then state the facts clearly. If your leadership caused or contributed to the setbacks, be open about it. Explain why taking the action you’re taking is essential to the larger mission and elaborate on how important that mission is.
Honesty can also be destructive
Allowing yourself and others to open up requires an environment of trust and a context of high talent density and respect among employees. For instance, in a different setting, this can simply lead to employees saying unpleasant things to one another, thinking it’s what candor is about.
Imagine you open up about a weakness and are then being mocked for it. You do that once and never again. People need to be humble and care for each other to really help each other succeed and not punch others one more time in the gut. This means you need to teach your people to properly give feedback.
Honesty is not easy and not for everyone. It requires everyone to grow
Ray Dalio says that being honest takes a lot of getting used to. For example, at Bridgewater, his company, every single employee considered the ideas of radical truth and honesty and made a conscious decision to sign up for it. Still, a lot of people find it difficult to adjust to this culture. The reason is the fact that they can’t handle the concept of “two yous” as explained in the “Understand That People Are Wired Very Differently” principle outlined by Dalio. There is an “upper-level you” that understands the benefits of radical truth and a “lower-level you” that tends to react with a flight-or-fight response. The process of adaptation takes around 18 months but may be different for everyone.
But not being used to radical truth doesn’t mean that it’s impossible to learn. It’s like with sports: by practicing the difficult thing every day, you get stronger. Once an individual adapts to this new culture, they can feel liberation and cannot imagine a different way to be.
Misconceptions about feedback
One of the key practices for being open and honest is to consistently give proper feedback. DO it Individually, or in group settings, when it's easy, and when it's hard. Right when something that requires feedback happens. And in search for the truth to help each other succeed.
We are biologically made to fight criticism. Nevertheless, people prefer criticism.
It’s important to keep in mind that few people actually enjoy receiving criticism. Hearing negative feedback triggers feelings of self-doubt, irritation, as well as vulnerability. Your brain responds to criticism with the same fight-or-flight response that’s activated when you find yourself in a situation of physical threat: your heartbeat quickens, hormones are released into your blood, and your focus is heightened.
We feel defensive when we hear bad things about our work because it causes us to stress. Even worse, if we have to listen to negative feedback not one-on-one, but in the presence of others. When this happens, we are wired to experience a fear of group rejection, which goes back to our primitive instinct to stay with our tribe for survival. This way, our brains are constantly looking out for threats of group rejection, which is rooted back to our ancient times when rejection from the group was associated with the risk of isolation and even death. Hence, when we hear criticism, the part of our brain called the amygdala sends us a signal that is meant to say we are in danger.
Let’s also look at the results of a study conducted in 2014 by a consulting firm Zenger Folkman. The company collected data from almost 1,000 participants on their experience with receiving feedback. The researchers found that, despite the benefits of positive feedback, three out of four people believed feedback containing constructive criticism did more to improve their performance than positive feedback. To summarise the results of the study:
57 percent of respondents claimed they would prefer to receive corrective feedback than positive feedback
72 percent felt their performance would improve if they received more corrective feedback
92 percent agreed with the following comment: “Negative feedback if delivered appropriately, improves performance.”
A study by Anna Bruk and her colleagues found out in 2018 that, when people imagined themselves in a situation when they made a mistake, they tended to believe that admitting it would make them seem weak. However, when people imagined someone else in the same situation, they were more likely to describe their showing vulnerability as “desirable” Bruk concluded that honesty about mistakes is good for relationships, health, as well as job performance. On the other hand, there is also research by psychologist Elliot Aronson, conducted in 1966, showing that if someone is already perceived as ineffective, they would only deepen that impression by highlighting their own mistakes.
Such a tendency has a name: the pratfall effect. The pratfall effect is the tendency for someone’s appeal to increase or decrease after making a mistake, depending on his or her perceived ability to perform well in general.
When this data is put in the context of a company setting the takeaway we get is that a leader who has demonstrated competence and is liked by their team will build trust and prompt risk-taking while being able to highlight their own mistakes. But the one exception is for a leader who is considered unproven or untrusted since, in some cases, they will need to increase the employees’ trust in their competency before highlighting their mistakes.
Give feedback honestly, with care & communicate well
So, we understand that being transparent is key for a company. We understood that even though people are biologically built to avoid feedback, they still want criticism as they believe it helps them. This way, you have to put the right conditions in place, create an environment of trust and care, and teach your people to give good constructive feedback that is communicated well and with care. Then, it turns into a superpower.
“A culture of candor does not mean that you can speak your mind without concern for how it will impact others. On the contrary, it requires that everyone think carefully about the 4A guidelines. This requires reflection and sometimes preparation before you give feedback, as well as monitoring and coaching from those in charge,” — Reed Hastings says.
Many great leaders and researchers identified several good ways to give feedback.
Kim Scott classified the different ways to give feedback and concluded that the best way to give feedback is to be radical candor: caring personally while challenging directly and is guidance that’s both kind and clear, specific and sincere.
Prof Marshall Rosenberg advocates to use of the principles of non-violent communication (NVC) technique to generally communicate empathically and non-aggressively with people to not bring up their guards and how this can be applied to give honest feedback with care.
In turn, Netflix uses a technique they defined and called the 4A Feedback guidelines.
Use Radical Candor
Scott uses a matrix known as the "Radical Candor Matrix" that helps individuals understand and categorize feedback interactions. The matrix is formed by two axes: the vertical axis represents the level of care personally shown. Caring personally is about paying close attention to the needs of the other person and putting their interests and success as the top priority. The element of caring personally is about ensuring decency, humanity, and attention.
The horizontal axis represents the degree of directness in communication.
Radical Candor: This is the ideal quadrant where feedback is both caring personally and challenging directly. In this space, individuals provide honest and direct feedback while demonstrating genuine concern for the person receiving the feedback. It promotes open communication and growth.
Obnoxious Aggression: This quadrant is characterized by high directness but low personal care. Feedback here is blunt and critical without consideration for the individual's feelings. It may come across as aggressive or insensitive, hindering a healthy work relationship.
Manipulative Insincerity: In this quadrant, both personal care and directness are low. Individuals may avoid providing honest feedback and resort to vague or insincere communication. This lack of clarity can lead to misunderstandings and hinder personal and professional development.
Ruinous Empathy: This quadrant involves high personal care but low directness. While individuals may genuinely care for their colleagues, they may shy away from giving necessary critical feedback, fearing it might hurt the person's feelings. This can lead to a lack of improvement and progress.
At the same time, challenging directly is about giving feedback honestly and in a timely manner. It’s about telling the other person exactly what they need to hear to improve, but also being humble about it.
Use NVC
Use the principles of non-violent communication (NVC) technique to communicate with people/give feedback.
The NVC principle is a technique that we use to communicate positively, that does not let up the other person’s guard so that they don’t feel the urge to get defensive. This method uses a four-step process:
1) Talk about what you OBSERVE
2) Talk about how this makes you FEEL
3) Say the NEED that you have
4) Mention what you WISH/REQUEST that the other person would change
Use the 4As from Netflix
Hastings lists several techniques that can be useful for practicing effective feedback at an organization, used by Netflix. This is known as a 4A Feedback framework:
Giving Feedback
AIM TO ASSIST: The key to giving good feedback is the intention behind it. Thus, the authors explain that feedback must always be given with positive intent, rather than to express irritation or frustration with a colleague. If you’re sure your intentions are correct, try to explain as clearly as possible how an individual can make their work more efficient.
ACTIONABLE: The feedback should always focus on what the recipient can do differently.
Receiving Feedback
APPRECIATE: We are all naturally inclined to respond when receiving criticism, either with some sort of defense or giving an excuse. However, when you receive feedback, it’s best to resist this urge and instead ask yourself: “How can I show appreciation for this feedback by listening carefully and welcoming it with an open mind?”
ACCEPT OR DISCARD: While you should listen to the feedback provided to you, you are also not required to act on it. The best approach is to treat the person who provides feedback with gratitude and appreciation, but whether or not you want to apply what they said is entirely up to you.
Give feedback instantly
When considering whether to give feedback, people often face a dilemma. On the one hand, they do not want to hurt the recipient’s feelings but, on the other, they want to help that person succeed. At Netflix, as Reed Hastings explains, the goal for employees is to help each other succeed, even if that means feelings occasionally getting hurt. More importantly, in the right environment, with the right approach, everyone can give feedback without hurting the other person’s feelings.
He believes that the practice of responding to feedback with positive cues consistently is what encourages everyone to give more feedback. While many of us are conditioned to follow the well-known principle of “praise in public, criticize in private”, or “only give feedback when someone asks you for it”, it’s useful to teach your employees to share their thoughts in a positive manner in a group setting to encourage collaboration and to proactively give feedback without being asked for it.
But when and where should you give feedback? The answer is simple: anywhere and anytime. You can choose to give feedback privately and behind closed doors, or in front of a group, as long as it’s constructive and respectful.
If you’re serious about candor at some point, you do need to implement mechanisms to ensure candor happens. To summarise, candor is like going to the dentist. For instance, even if you encourage everyone to brush their teeth every day, some people simply won’t do it. And those who do may still miss the uncomfortable spots. A thorough cleaning every six to twelve months ensures clean teeth (clear feedback).
In the next article, I will dive into the 5th essential component of the operating system of evolutionary organizations: Autonomy. If you are interested, please subscribe. I will then notify you when I release the 8th article (in around 2 weeks) and send you the full white paper about the operating system for evolutionary organizations when it’s done. You can also read the previous articles on substack or find them here directly: 1, 2, 3, 4, 5, 6
Picture from Markus Spiske from Unsplash