How Radical Transparency Drives A Winning Corporate Culture

I've never met Ray Dalio.

But I'd love to.

His TED talk about corporate culture and outlining the concept of Radical Transparency and building an Ideas Meritocracy is embedded below. He goes further to outline "Why 'Radical Transparency' will change your life" and "(H)ow to build a company where the best ideas win." Paraphrasing Buddha, it's well worth finding 20 minutes to listen to it, unless of course you're too busy, then you should find an hour.

“You should sit in meditation for twenty minutes everyday - unless you're too busy; then you should sit for an hour.” - Zen proverb

Legend has it, one of Ray Dalio's most valuable pieces of gained wisdom was the inspiration for perfecting "radical transparency" as he termed it. "[I] learned the approach through painful mistakes ... and that brought the success," he says. That's pretty brave thing to say these days, where even the slightest mistake or error is considered fatal for one's career. How do you foster a corporate culture that embraces the diversity of ideas and people essential for innovation to thrive, if people are too scared to try let alone fail?

I've yet to meet someone who has ever said, "I just love the passive-aggressive work culture at my firm" or "Person X is such a delightful Keyboard Warrior" or "I just love how Person Y keeps trying to sabotage my ideas" or "Person Z adds so much value to this company by blocking everyone from being successful." I mean, stuff that like is utterly absurd, yet we've all heard stories from friends and co-workers, or former co-workers or other work environments, who have directly or indirectly experienced it in the past. Or, currently.

So why continue to accept such mediocrity where the best ideas don't win?

In some respects, the future of work and the workplace is ultimately going to self-select the doers from the blockers. As automation becomes more pervasive the reality of efficiency and productivity will naturally flow that will inevitably upend corporate hierarchy - and the bureaucracy that fosters it - that has disincentivized even basic innovation with a small "i" let alone anything that deviates from the linear pathway to nowhere.

The benefits of a strong and open corporate culture are both intuitive and supported by social science. According to James L. Heskett, culture “can account for 20-30% of the differential in corporate performance when compared with ‘culturally unremarkable’ competitors.” There is some research from McKinsey in relation to organizational culture in the era of digital transformation, Culture for a Digital Age is particularly insightful reading. Important snippet outlined verbatim, here:

"Each obstacle is a long-standing difficulty that has become more costly in the digital age.  When risk aversion holds sway, underinvestment in strategic opportunities and sluggish responses to quick-changing customer needs and market dynamics can be the result. When a unified understanding of customers is lacking, companies struggle to mobilize employees around integrated touchpoints, journeys, and consistent experiences, while often failing to discern where to best place their bets as digital broadens customer choice and the actions companies can take in response. And when silos characterize the organization, responses to rapidly evolving customer needs are often too narrow, with key signals missed or acted upon too slowly, simply because they were seen by the wrong part of the company."

The Harvard Business Review offers some insights into what makes a culture. In essence, Six Components of a Great Corporate Culture makes the case that each culture is unique and there are a myriad factors go into creating one. The author observes that there are at least six common components of great cultures and isolating those elements can be the first step towards building a differentiated culture and a lasting organization.

1. Vision: A great culture starts with a vision or mission statement. These simple turns of phrase guide a company’s values and provide it with purpose. That purpose, in turn, orients every decision employees make. When they are deeply authentic and prominently displayed, good vision statements can even help orient customers, suppliers, and other stakeholders.

2. Values: A company’s values are the core of its culture. While a vision articulates a company’s purpose, values offer a set of guidelines on the behaviors and mindsets needed to achieve that vision.

3. Practices: Of course, values are of little importance unless they are enshrined in a company’s practices. If an organization professes, “people are our greatest asset,” it should also be ready to invest in people in visible ways, and bake into the operating principles of daily life in the firm.

4. People: No company can build a coherent culture without people who either share its core values or possess the willingness and ability to embrace those values. That’s why the greatest firms in the world also have some of the most stringent recruiting policies. People stick with cultures they like, and bringing on the right “culture carriers” reinforces the culture an organization already has.

5. Narrative: Any organization has a unique history — a unique story. And the ability to unearth that history and craft it into a narrative is a core element of culture creation. The elements of that narrative can be formal or informal. The narrative is more powerful when identified, shaped, and retold as a part of a firm’s ongoing culture.

6. Place: Certain cities and countries have local cultures that may reinforce or contradict the culture a firm is trying to create (e.g. Silicon Valley, Wall Street, Hollywood etc). Place — whether geography, architecture, or aesthetic design — impacts the values and behaviors of people in a workplace.

Indeed, there are other factors that influence culture but these six components can provide a firm foundation for shaping a new organization’s culture.

Where do these six principles stand with you and your organization?

More from Harvard Business Review: "Unconscious incompetence can be found at every function, discipline, and level in organizations. In fact, it’s often more prominent among experienced staff, which is particularly problematic because, as the go-to people in their circles, they often pass incorrect or incomplete information and skills on to others via to peer-to-peer learning and training. This can lead to significant mistakes, dissatisfied customers and even damaged corporate reputations."

As Gandhi said: "be the change" and take this opportunity to be the kind professional who exhibits the kind of role model behaviors you value, and don't reward the behaviors you don't value. If you're unsure how, start asking better questions, or read a great book I just finished called Humble Inquiry that outlines the gentle art of asking instead of telling. Lesson: Always be Learning. Or #ABL for short.

If you're still unsure, consider the famed New Zealand All Blacks Rugby team.

Case Study: New Zealand All Blacks "No Dickheads Policy"

Rugby is called The Game They Play In Heaven. The New Zealand All Blacks Rugby team is famed for their relentless ability to retain their winning status across different playing cycles by ingratiating a team culture that has been studied by many around the world to better understand the secret sauce. All Blacks mental skills coach Gilbert Enoka has revealed how he introduced a "No Dickheads' Policy," which is enforced and operated by the players themselves. Enoka says the point of the policy is to wean out inflated egos and make everything about the team, with his central belief being you can’t "be a positive person on the field and a prick off it."

"A dickhead makes everything about them," and "(T)hey are people who put themselves ahead of the team, people who think they’re entitled to things, expect the rules to be different for them, people operating deceitfully in the dark, or being unnecessarily loud about their work."

Very often teams put up with a highly talented player but one who is disruptive or exhibits warning signs that might be fatal in the heat of battle later on. The All Blacks have a motto, "(I)f you can’t change the people, change the people."

What makes the culture so successful is that the players are best able to recognize the counterproductive behaviors and traits among themselves, often better able to than management. And the players enforce the rules, ensuring the team comes first. Vince Lombardi famously said "winning is a habit" and the All Blacks have officially dominated world rugby since World Rankings were introduced by Rugby in October 2003, New Zealand have occupied the number one ranking for the vast the majority of the time.

I just finished reading Legacy by James Kerr all about how the New Zealand All Blacks have embedded the principles required to sustain a winning culture, irrespective of which players take the field or which era, and how they've sustained it over decades. Worth reading with many parallels to business. Special thanks to James Hodges who gave it to me to read when we chatted at Money 20/20 in Las Vegas.

Perhaps the notion of creating an Ideas Meritocracy isn't so radical, after all.

Jeremy K. Balkin is the award-winning author of Millennialization of Everything: How to Win When Millennials Rule the World (RMB 2017)

Disclaimer: views my own.