When I speak with other CEOs, I’m always surprised by how little emphasis they place on psychological safety, especially as the age of artificial intelligence (AI) dawns. Now, more than ever, business problems are more complex and demand that leaders set the conditions for good ideas to come from anywhere, not just the C-suite. Leaders who want to thrive in today’s economy must encourage the flow of original thinking, approve of those who ask ‘what if,’ and reward those who challenge the status quo.
Consider that 50 years ago, 83% of the S&P 500’s market capital came from companies engaged in producing tangible goods—things that were extracted from the earth or manufactured. In that process, humans were a supply chain cost that needed to be managed.
Today, 90% of the S&P 500’s market cap comes from companies that produce intangible capital—the ideas that our best and brightest create, fueled by technology to generate profit.
Leaders today need to understand that thriving in an economy driven by intangible capital requires employers to create a work environment that encourages and allows people to generate inspiring ideas. Psychological safety is essential in creating such a workplace.
RISK TAKING IS THE FOUNDATION OF PSYCHOLOGICAL SAFETY
Simply put, psychological safety is a shared belief held by members of a team that risk taking is permissible, that it is okay to express ideas and concerns, to speak up with questions, and to admit mistakes—all without fear of negative consequences. As leaders, we need to give staff the freedom to question, show vulnerability, and give space to challenge decisions. Many leaders cannot do this, but the ones who do are more likely to win.
Risk-taking and openness to new ideas are imperative as a competitive advantage and necessary when it comes to using AI to move your business forward. The early adopters of AI have cultures that support risk takers. For businesses of all kinds to thrive in this new age and unlock the potential that AI and other new technology has to transform business, they need people who feel safe to take those risks. AI doesn’t work without human direction.
To allay the politicization of the term ‘psychological safety,’ this does not mean harboring under-performers to the detriment of everyone else. It does mean being more clear about what we expect from star performers and having a culture that fosters it.
COGNITIVE DIVERSITY IS THE KEY TO SOLVING PROBLEMS FASTER
We must also actively seek and leverage the benefits of cognitive diversity in our teams. With a diversity of people and experiences, businesses benefit from different thinking patterns, problem-solving techniques, and innovative approaches.
At my company, nearly half of our staff dream in a language other than English—our employees are distributed over 13 countries and 35 cities. They speak other languages and come from different cultures that approach things differently than Americans and with that, they bring a richer and more diverse problem-solving perspective to the table. This is cognitive diversity in essence.
When you bring together psychological safety and cognitive diversity, you can better unlock the power of your team. This requires a different approach to leadership as well—one centered on providing context, not commands. The strongest leaders drive great outcomes by establishing trust and setting the appropriate context rather than through control.
THE TRUST EXCHANGE IS WHAT POWERS CONTEXT SETTING
Trust is manifested as an “exchange” between leaders and team members. As Stephen M. R. Covey taught us in Trust and Inspire, leaders who trust their team communicate their belief in others. “They see the greatness, communicate the greatness, develop the greatness, and unleash the greatness.” It creates an agile culture, as people are inspired as they are treated according to their potential.
When the team is empowered by this belief, the best leaders then focus on achieving great outcomes by setting the appropriate context, rather than by trying to control people. Leaders need to paint a picture of what success looks like, clearly define roles and responsibilities, and answer questions about who has the authority to make the final decision, who is accountable for outcomes, and how we will handle failure.
These are the things a team member cannot know unless their leader sets this direction. Providing the context of the desired outcome, and then trusting them to execute it without micromanaging every detail, is management’s challenge. The biggest temptation managers need to overcome is demanding “approval” over every step. This way of leading must permeate the entire corporate team, starting from the top—including the CEO.
Winning in the AI era will not depend on having the most sophisticated technology strategy. Technology is the price of admission to compete. It is the human capital strategy—rooted in psychological safety, trust, and cognitive diversity—that will separate those who survive and thrive from those who can’t compete.
As Antoine St. Exupery said in The Little Prince, “If you want to build a ship, don’t drum up the people to gather wood, divide the work, and give orders. Instead, teach them to yearn for the vast and endless sea.”
Michael Aaron Flicker is the Founder and President of XenoPsi Ventures and Founder of Wellow.