These are the secrets to cultivating an outstanding work culture

Some companies are so dysfunctional that employees fantasize about quitting in a huff, dreaming of utopian workplaces where everyone works collaboratively toward a common goal. Author Daniel Coyle examines the DNA of great teams in his new book, The Culture Code: The Secrets of Highly Successful Groups. He joined the Knowledge@Wharton show, which airs on SiriusXM channel 111, to share what he’s learned and explain why your office might need to conduct a “culture capture.”

An edited transcript of the conversation follows.

Knowledge@Wharton: You’re a special adviser to the Cleveland Indians. How important is the culture of a baseball team?

Daniel Coyle: It is everything. You spend a lot of time together, and good groups with good chemistry, that feeling you get with a good team ends up being a huge asset in performance. It plays out on the field as it does in business, as it does in art, as it does in family and every walk of life.

Knowledge@Wharton: In the beginning of the book, you ask an important question: Why are some groups greater than the sum of their parts while others are less? What is the answer?

Coyle: It’s the Holy Grail. We’ve all been a part of groups that add up to more, where you feel that connection, that belonging, and that group is able to accomplish great things. When Harvard did a study tracking average culture versus strong culture, strong culture was 782% of net revenue over 10 years.

Having a strong culture is absolutely the key. We’ve always thought of that as being a soft skill, that culture is this indefinable thing that’s very nuanced and complex, and individual. Science has pulled back the curtain to show the language that is happening beneath that. It’s not a language of words but a language of behaviors that create connections and safety, that create openness and exchanges of information, and that create direction.

Our brains are wired to form groups. We can align our behaviors with these ancient languages that are wired into our brains — languages of creating safety, of creating vulnerability so that you can share accurate information, of creating a story so that you can decide on direction. That’s what all these great groups have in common. Underneath the surface, they’re all the same group, whether it’s the Navy Seals or Pixar or the San Antonio Spurs.

“When you are vulnerable together, that is what builds trust.”

Knowledge@Wharton: How do you compare the Navy Seals with the San Antonio Spurs?

Coyle: When you look from a distance, they couldn’t be more different. Yet when you look more closely, they are doing the same thing. One of the key areas that I think people misunderstand is the role of vulnerability and the role of openness with players, with coaches, with leadership and with the rest of the team.

There is a Navy Seal commander named Dave Cooper. He was the guy who trained the team that got Osama Bin Laden and I tell his story in the book. He said, “The most important four words a leader can say is, ‘I screwed that up.’” The reason he said that is because we are deeply hierarchical. We normally think our leader should be bulletproof and always confident, but that’s not actually how good teams work.

Good teams work when people have permission to tell each other the truth. There is no stronger signal than the leader saying, “Hey, I don’t have all of the answers here. What do you think?” If you are going to succeed, you have to share accurate information. You have to tell each other the truth.

San Antonio Spurs coach Gregg Popovich tells his players a truth, and he also loves them to death. There is a connection there that all of these teams have of creating safety, and Popovich is a genius at it. You see him yelling on the court and connecting with his players on the court, but what you don’t see is that the team eats dinner together more often than most families. He’s constantly making dinner reservations, ordering wine.

On the day I visited the Spurs, they were going to look at tape because they had lost the day before. What Popovich put on the screen wasn’t tape from the game, it was a CNN documentary about the Civil Rights Voting Act of 1963. He created a discussion around that. He was genuinely curious about what the players thought. Would you have stood up during that time? What did your grandparents do? That sense of being connected and curious and engaged with not just the job but with the person is what really happens across these cultures. It’s not magic. It’s sending a clear, targeted signal that we are connected.

Knowledge@Wharton: How do the Navy Seals stay connected?

Coyle: They build vulnerability into their daily habits. They have this thing that is applicable across every walk of life. It’s called After Action Reviews (AAR), and the Seals do it after every single mission and training run. You finish the job as a group, then you stop, circle up and ask three questions: What went well? What didn’t go well? What are we going to do differently next time?

“Good teams work when people have permission to tell each other the truth.”

Those meetings are hard because people are pointing out flaws and being open about weaknesses. But it is by far the most important thing a group can do together. Most groups do not get great feedback. Either facts are hidden or there are big issues and the information doesn’t flow. An AAR is an information machine. It allows people to build a shared mental model of the problem you’re trying to solve together.

Knowledge@Wharton: What do you mean when you say teams must build safety? Is it making people feel a sense of belonging so they feel that they can succeed?

Coyle: That’s right. It’s not just kumbaya, warm and fuzzy, we-like-you stuff. It is really about clarity. It’s about saying, “We’re connected here.” There is a cool experiment I write about in the book about a company that wasn’t retaining people. They changed their training to add a single hour where all they did was ask questions. What happens on your best day? What happens on your worst day? If we were on a desert island, what skills would you bring to the survival? In that group, retention went up 270%. It was a clarity of signal to say, “We’re connected. We share a future. We see you.”

Knowledge@Wharton: Talk about the importance of trust in both the leadership and in each other.

Coyle: Trust comes down to cooperative behavior, not having to check. We normally think we’ve got to build up trust before we can be vulnerable. But what the research and the habits of these groups have revealed is that we think about it backwards. When you are vulnerable together, that is what builds trust.

These teams that come together in an AAR, or when they come together to talk about what really happened and their mistakes, that moment of vulnerability actually creates closeness. It’s like a cultural calisthenic. We understand in our bodies that our muscles will respond to pain by getting stronger. Groups are built exactly the same way. You can’t just wait for trust to descend from the heavens. You have to build it by being purposefully open with each other.

Knowledge@Wharton: You also highlight some cases where this culture code did not work out.

Coyle: I visited top-performing cultures around the world and embedded with them. I also visited some of the worst performing, and it was fascinating to see what a mirror image they formed of the good ones. I researched the people who man the missile silos in Montana and North Dakota. It is an absolutely terrible culture that makes all kinds of mistakes and has extremely low morale. It’s unfortunate because these are people who have their fingers on the button, literally.

But the reason is because there is zero safety in that job. They are isolated physically, they are isolated mentally, and they have to be perfect. If they make a mistake, they get downgraded to a lower rank. Under conditions where there is no safety, nothing else can happen. Safety and connection are the absolute foundations of the pyramid. When you don’t have that, you can’t have a culture because our brains are just not built that way. We’re not going to connect if there isn’t that room to make mistakes.

“Smart cultures have leaders who atone early, have fallibility and vulnerability.”

So, smart cultures have leaders who atone early, have fallibility and vulnerability, say we don’t have all of the answers, we expect you to mess up, and we want you to use that as a learning moment. The old authoritarian model of culture, where no one could make mistakes and the leader had all the answers, worked for simple problems. But when the world is complex and moving fast, and you need to have knowledge distributed through an organization, and you need people to be able to take risks in order to be good, that model stops working. What does work is when you are able to create a safe connection and, through vulnerability and purpose, create a giant being that is smarter than the sum of its parts.

Knowledge@Wharton: Are companies recognizing the importance of a positive culture?

Coyle: There’s a clear distinction that is timely to talk about. The normal reaction to culture is, “We are going to make things really fun and engaging. We’re going to have a foosball table and have a blast together.” It’s important to have fun together, but I would divide fun into two categories. There is shallow fun, which is foosball tables, and then there’s deep fun, which is where the people in the company take ownership over what is happening, where they are given a budget to redesign the office or have a hack-a-thon to rebuild the HR function. There was a recent study that showed that companies focused on deep fun and experience ended up four times as profitable as companies focused on shallow fun or just mere engagement.

Knowledge@Wharton: You also talk about purpose, which is an important part to setting an agenda for a lot of companies.

Coyle: It really comes down to telling a story of why we’re here and where we’re headed. It’s very ancient-brain stuff, and in many groups it emerges in a moment of crisis. Certainly, that was the case with Pixar. They were doing a follow-up to their hugely successful Toy Story. It was supposed to go straight to video, and they had this moment where they asked, “What are we really about? Are we about making A-level work or B-level work?” They chose … the peak, and through that crisis to get Toy Story 2 done, they invented a lot of the processes and made explicit a lot of the culture.

But we don’t want to wait around for a crisis to form our culture. It’s smart to get away from the daily grind and try to do a ‘culture capture.’ Ask deep questions about what you’re really about. Two questions that help do that are — what gets rewarded around here? What is a story about something that happens here that doesn’t happen anywhere else? Ranking your priorities ends up being powerful things to do so you can give people a direction to go when times are tough.

Knowledge@Wharton: Can you ascertain an organization’s culture from the hiring process?

Coyle: There are few moments that really define groups, and the two that define every group are the moment you bring in someone new and the moment you kick someone out. That’s why groups are so intolerant of brilliant jerks. Bad apples do not last long at these places because they want to protect the group, no matter how brilliant they are. Jerk-like behavior can drag the whole group down.

Knowledge@Wharton: Can you talk about how having a good culture benefits the bottom line?

Coyle: The greatest asset and sometimes the greatest Achilles’ heel of a group is its culture. We’ve seen companies that have risen on the strength of that culture, and we’ve seen other companies that have fallen because they haven’t paid keen attention to it. It is the greatest, most powerful tool that we have for group success, yet our understanding of it right now is almost sort of medieval. The idea that science is giving us a new way to think about that, learn it and control it is tremendously exciting.