We Study Billionaires - The Investor’s Podcast Network - TIP187: The Culture Code w/ Daniel Coyle (Business Podcast)

Starting point is 00:00:00 You're listening to TIP. So one of the things that Stig and I have noticed about billionaire founders and operators is that they typically put a lot of emphasis on their corporate culture. We could use Tony Shea, Sergei Bryn, and Larry Page, or even Warren Buffett as examples of this. And since this is so important, we've gone out and found the leading expert, Daniel Coyle, to talk about some of the groundbreaking research he's done on this topic. Dan is a New York Times bestselling author, and we're going to be talking about his new book called The Culture Code. Not only is Dan a great storyteller, but some of his insights about culture are really unique. And while he was writing this book, he had the awesome opportunity to interview people like billionaire Tony Shea. He's interviewed Pixar's Ed Catmull and so many more that he incorporated into the book.

Starting point is 00:00:47 And so I think you're really going to enjoy some of these firsthand accounts and these incredible stories from such thought leaders. So without further delay, here's our interview with the thoughtful Daniel Coyle. You are listening to The Investors Podcast, where we study the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected. All right. So like we said in the introduction, we're really excited to have Dan Coyle here with us. And he's the author of the book, The Culture Code. Dan, you know, the one thing that I captured and really took away from this book is you quantify

Starting point is 00:01:35 what I felt was the unquantifiable. So I'm really excited to talk to you today. And thank you so much for writing such an incredible book. And welcome to the Investor's podcast. Thanks so much for having me. Preston. It's nice to be here with you. So my first question for you is really just what motivated you to write this book? Because one of the things that Stig and I have done is we've written some books. And I'll tell you, it is not an easy undertaking. It requires just an enormous amount of time and effort. And so what made you think about writing a book about culture that was going to take up so much of your time before you wrote this? Yeah, that's right. It requires an addiction, actually, to keep it going. You have to get addicted to the mystery to the quest. And I guess

Starting point is 00:02:18 I kind of fell in love with the mystery. You know, I've written about performance, high performance, for a long time. I have this job where I have sort of travel around. I look at, you know, people who are really good at their individual skill and try to figure out what makes them tick. And so I've had this longstanding, you know, writing books about that. And so I have had this longstanding, you know, writing books about that and exploring that in many ways. And I kept bumping in to this same feeling, which you'd go into a room and it might be filled with tennis players. It might be filled with chess players. It might be a business. It might be a restaurant. But there'd be a vibe. There'd be a feeling in that room of connection and cohesion. It was like these groups were just

Starting point is 00:02:53 one single animal almost. And I guess it really came to life for me. I was in Russia. I was at a tennis court. And I was this club that produced all these champions. And I was there on a day where a new player showed up, a girl. She was about eight years old, showed up for her first lesson. And there was this interaction. It took like five seconds, but it was this amazing interaction where she showed up. First day, door opens.

Starting point is 00:03:15 She's standing there with her new tennis racket in a plastic grocery bag, nervous her first day. And this lead coach, probably the most famous tennis coach in Russia, spots her, goes over to this girl and says, hey, just a quick interaction. She says, hey, I'm glad you're here. I want you to do something for me. And the coach held out a tennis ball. She said, I want you to catch this.

Starting point is 00:03:35 And she tossed the girl the ball and the girl caught it. And in that second, that girl went from being an outsider to being connected in some way, to being a part of this group. And I just got kind of fascinated and obsessed with what's that made of? How did they make that girl go from being outside to inside, from being sort of a stranger to being on this team? And so I started traveling around looking at really, really high performing groups. you know, Pixar, Navy SEAL Team 6, San Antonio Spurs, IDOs, Zappos, and looking at the sort of tennis balls they throw, those moments where they create that magic, that connection. And we all are familiar with that feeling of, you know, God, there's just something about that restaurant, there's something about that school, or there's something about that family.

Starting point is 00:04:18 And it feels like magic, but what I found out visiting the groups and in looking at the science underneath is that it's not magic. it's a set of interactions that creates what we call culture. So, you know, I got kind of obsessed with that mystery. It took me in about five years to visit all the places and write the books. And it was so fun. I didn't want it to stop, actually. It was kind of funny. I was having so much fun reporting it.

Starting point is 00:04:41 But yeah, it ended up, you know, culture feels like magic, but it ain't. Fascinating story. And I got to say, it's so evident whenever you're reading through the book with all these amazing stories that is just so clear. much you enjoy the process of writing, which is just something I want to put out there. It's definitely a joy going through your book. So one of the best stories that you do have in your book is the story about the kits and the spaghetti tower. So could you please share that story with the audience?

Starting point is 00:05:16 There's a guy. There's a guy named Peter Skilman. And he got obsessed with that question of like, what makes certain groups, you know, perform better than others? We all know that certain groups add up to be more than some of their parts, and certain groups don't. And so what's that made up? So he devised a way of exploring it through a contest. Contest was really simple. Who can build the tallest tower with the following materials?

Starting point is 00:05:37 20 pieces of raw spaghetti, a yard of tape, and a single standard-sized marshmallow. The only rule, marshmallow has to go on the top. And the teams he got to do it were kind of interesting. He had teams of four. He had teams of CEOs. He had teams of MBAs. he had teams of lawyers and he had teams of kindergartners. Ready, set, go. Everybody starts building. And when they begin, all the adult groups start out in the same way. They talk. They talk about

Starting point is 00:06:04 what they're going to do. They make a plan and they decide on ideas and they hone those ideas and they divvy up the rolls and they start working and it looks gorgeous. Like it looks perfect, looks very cooperative and smooth. The kindergartners don't do that exactly. They just sort of start eating a bunch of marshmallows and it's very chaotic and it just is absolute energy just happening. And if you had to bet your life savings, which group is going to win, most of us would bet on one of the adult groups because that's our mental model of cooperation. We focus on what we can see. And when we see verbal, experienced, intelligent individuals interacting in such a smooth

Starting point is 00:06:43 way, we think, well, that's going to add up into an intelligent, smooth group. It's going to add up to performance. That's our mental model. But if we actually look at who wins, the kindergartners win. They win every single time. And the reason is really simple because our mental model of group performance is wrong. It doesn't include the two most important factors. It doesn't include status management and it doesn't include safety.

Starting point is 00:07:07 The adult groups all look like they're being smooth, but in fact, their interactions are being hindered by status management. There's a little whisper in the back of their minds. Where do I fit in here? Is it okay to say that? Who's in charge? And so that hinders cooperation. it hinders ideation, it hinders iteration, it hinders innovation. But the kids, the kindergartners,

Starting point is 00:07:25 don't have any problem with that. They're not worried about status. They're just doing stuff together. And if they see a problem, they reach in and grab it and fix it. And there's no better feedback than having your tower fall down. That gives you really, really good feedback on what to build. They're safe. They don't worry about status. And because they don't worry about status, they consistently build a taller, a better result. They get a better tower. And when we think about groups, we normally don't value safety. We think safety is sort of like the icing on the cupcake.

Starting point is 00:07:57 We think it's like this extra thing that you get. It's everything. It's massive. If you can create safety in your group, if you can create this sense of belonging and safety where it gets rid of status management, then you can have a group that truly adds up to more than some of its parts. So it really, it gives us a lens, I think.

Starting point is 00:08:14 I think that story is powerful because it gives us a lens to look at our own lives and our own groups and say, okay, where are we managing status? Where are we in the group like the CEOs and like the MBAs and like the lawyers? And where are we behaving like the kindergartners, where we're just all shoulder to shoulder, solving problems together and not worrying about who's in charge and what people think of us. So that story, which I used to sort of begin the book, I saw that same pattern.

Starting point is 00:08:39 When you watch a Navy SEAL team solve a problem together, when you watch the San Antonio Spurs play, when you watch Pixar build a movie together, what you see looks like the kindergartners actually. It looks kind of chaotic. You can't tell who's in charge because no one is in charge. They're working together solving problems. One person is a lead for a second and then they trade leadership and someone else solves that problem and someone else chimes in a little bit and they're adding up to more than the sum of their parts. It's a real distinct feeling. If you can start to tune into it, it's one of the most powerful. things that you can get in terms of building culture. When are we managing status and when are we truly safe? Can you talk a little bit more about the safety factor? Because I think somebody you would hear that would say, well, I don't want to create a team where everyone feels like they can just do anything and it's just complete free reign. So how do you respond to that kind of argument that a person might say back? That's right. The real world isn't like kindergarten building a marshmallow tower. The real world is more complicated. The answer is that safety is created in these moments where we deliver what are called belonging cues. Belonging cues are really short,

Starting point is 00:09:43 simple signals, behavioral signals that are sent that say, hey, we share a future. I see you as a person. I see your whole person. We are connected in some deep way. A beautiful way that actually is a kind of a cool story about belonging cues and safety. It involves a company called WIPRO. And WIPRO is a call center. And like a lot of call centers, they struggled with retention. It's hard to get people to work at a call center because working at a call center kind of sucks. It's a hard place to work. So every year, 50% of their people would leave. And they tried to fix it.

Starting point is 00:10:16 They tried to improve the perks. They tried to improve the campus. They tried to improve the work. None of it worked except for this one hour experiment that they did. And the one hour experiment was really simple. They took two groups of new hires. The first group, let's call them group A, they got this presentation for an hour on how great it was to work. at WIPRO. They met a star performer. They learned about the history of the company. They got a tour,

Starting point is 00:10:40 and that was it for one hour. The second group, Group B, they got a very different experience. Basically, they flipped it. Instead of being a presentation about WIPRO, they started asking the new hires questions. Like, hey, tell me about what happens on your best day. Tell me about what happens on your worst day. If we were on a desert island, they asked, what skills would you bring to our survival? If we were marooned on a desert island, what skills would you bring? And at the end of it, they got a shirt, but the shirt said their name on it. It didn't say Whipro, it said their name. And then seven months later, they tracked the retention in those two groups. And the retention in the second group went up 270%. Massive boost. Not 7%, not 70%,

Starting point is 00:11:22 270%. Because belonging happens in these moments where we get a crystal clear signal. We're connected. I see you. We're not managing status in that moment. We're actually expressing a social connection through our behavior. And teams and groups that are good at that, take that Whipro idea and they apply it, especially to threshold moments. The moment where you enter a group is by far the most important moment you have in that group. Pixar does a beautiful job with this, actually.

Starting point is 00:11:53 When you're hired at Pixar, whether you're a barista in the cafe or a director, you get the exact same experience. You go into the auditorium and you sit in the fifth row because that's, apparently that's like where directors like to sit at the fifth. throws the best seat. I didn't realize that. You sit in the fifth row and the president of Pixar comes out. His name is Ed Catmel and he says the following sentence. He says, whatever you did before, you're a movie maker now. We need you to help make our films better. And then every day, they have a whole group meeting. It's called it daily. And they review the footage in animation.

Starting point is 00:12:28 You only make a few seconds of footage each day. The whole company gets an opportunity to review the footage of the previous day and offer suggestions. So you could have a barista making a suggestion on some plot point in a Pixar movie. That is a behavior. That is a belonging cue. And the smart groups flood the zone with belonging cues. They're constantly sending this signal over and over again. We are connected. We share a future. I see you. I'm interested in what you have to say. That sounds like such a simple, soft thing. It sounds like, oh, it's just kumbaya. In fact, it's really one of the smartest, clearest things that any group can do to send this signal of connection. Because that's how our brains are built.

Starting point is 00:13:11 Our brains are built to worry about connection all the time. Our brains are built to like question our connection to groups. Even when we know logically we're well connected. So these groups have kind of mastered the communication to the deep brain, the deep parts of our brain that are constantly worried about our connection to that group. And they're sending that signal over and over and over again that we're connected, these belonging cues. Let's take a quick break and hear from today's sponsors. All right. I want you guys to imagine spending three days in Oslo at the height of the summer.

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Starting point is 00:17:36 That's Shopify.com slash WSB. All right. Back to the show. You know, it really reminds me of your story about meaning Tony Shea. Tony Shea, the founder of Sapo's and someone who we've been following really closely here on the Amanda's podcast and read his book, Delivering Happiness, very inspiring book, also really to understand culture. But you met with Tony Shea face to face, and he has this very special technique of connecting people all the time. And could you tell us that story and also how you

Starting point is 00:18:14 experience Tony just hanging out with him? It's a bit ironic. he's quite a low-key person for running Zappos. You wouldn't imagine him being quite as low-key as he is, but he's always focused on something he calls collisions. And collisions are literally how many times during a day you bump into somebody in your group. And so what Tony does is when you walk around with him, he's constantly alert to where you are in the ecosystem and interesting people that you might want to bump into. And all he wants to do is have you have a conversation with them. He doesn't care what it's about. He doesn't care when it happens, but he wants to connect people.

Starting point is 00:18:52 Actually, he had somebody who invited them out to sort of explore the idea of working at Zappos. And that person, he sent them an email beforehand and he said, okay, welcome. Here's a list of 15 people I'd like you to talk to. Let me know after you talk to them and I'll give you another list. That was basically all the instruction she got. She thought it was kind of a joke. Like, what, really? But that's how much they value that kind of connection, that kind of brute.

Starting point is 00:19:17 heated collision. And there's this crazy new science called sociometrics, which is sort of like moneyball for the office. And it's based on capturing the data of normal social interaction. And it's captured through, you wear these, it's kind of big brothery, you wear these little things around your neck and it'll capture the energy in your voice. It'll capture whether you're face to face with someone. It'll capture your location in space. And what is interesting about this is not, you know, we're not all going to be wearing these things, but the insights that it reveals is that all great high-performing groups have kind of the same sociometric fingerprint. You have, for instance, everyone talks to everyone.

Starting point is 00:19:55 You can actually see a diagram of this. And whether it's the Seals or Pixar at Zappos, this is what Tony Shea is doing. He knows that great performing cultures, everyone talks to everyone. There's not silos. There's not one person who's sort of floating off by themselves. Everyone is constantly colliding with each other, almost like noodles in a pot, in a boiling pot where everyone's sort of circling around bumping and circling and bumping. And that sort of sociometric truth, I think that's really how he sees himself as a leader. Like he's the burner

Starting point is 00:20:25 underneath the pot that is constantly sending these noodles in circles to where they can bump into each other and create something. So that idea of collisions is really at the core of what these good cultures are. It also brings up some challenges for our world where we're not always in the same location. You know, I'm curious, what else did you take away from Tony that was maybe surprising, like something that you just didn't expect before you met him? I was sort of surprised at how laid back he was, I have to say, like kind of really at home in letting whatever the collision was, let it happen. He described it a really interesting way. He said, look, I am not, you know, if you think of Zappos as like a greenhouse, right, he's trying to grow this culture there.

Starting point is 00:21:09 And the way he described it, he goes, look, I'm not the plant that everyone wants to be like. Like, my job is not to be the ideal Zappos person. I'm the architect of the greenhouse. Like, I need to put the sunlight and the soil and the water in and just let whatever's going to happen happen. The way he saw himself so clearly as a designer of social interaction was really powerful for me. He's not trying to embody, in a lot of groups, the head person embodies the qualities that he wants the culture to have. he didn't have any of that illusions. He wasn't trying to be the best Zaponian that exists.

Starting point is 00:21:43 He was just trying to think like a designer. How can I bring in more collisions? How can I sort of bring light and water and warmth and help people grow? Very interesting. You know, there's another character in your book that I also found really fascinating, and that's the coach of the San Antonio Spurs, Greg Popovich. His team has performed extremely well, and it's not because they have the most money among their peers. instead, Popovich has a unique technique for connecting with his players, which you've been talking about.

Starting point is 00:22:13 So could you tell us how he communicates with his players and why this makes the difference? Yeah, and I was fascinated by the San Antonio Spurs. Just because they have been able to create such a strong culture without drafting at the top, they're not getting the best players. They have to add up to be more than the sum of their parts. We've been so consistent. But most all because they are something that I think we're all trying to do. We're all trying to be excellent.

Starting point is 00:22:38 Our goal in running a business is not just to have everybody feel warm and cozy, right? It's to perform. So how do you have that sense of cohesion with this bar of excellence where, look, we've got to perform at a certain level or we're not going to succeed? And he really captured that for me because going into it, we all know, sports fans know, basketball fans know that Popovich is probably the grouchiest coach in sports. He's red in the face all the time. He's yelling at his players a lot. But when I saw up close, I visited for a few days, and the first day I got there, it was a day right after they had lost. And the first thing that happened was that there was a video session. And I thought that they were going to go into, you know, watch the game tape.

Starting point is 00:23:17 And they go in and they start to play the tape, but it wasn't a game tape, actually. It was a CNN documentary about the history of the Civil Rights Act. It was the anniversary of the Civil Rights Voting Act. And they watched that. And then Popovich starts asking questions. Like, okay, what would you have done? You players, what would you guys have done? What did your parents do?

Starting point is 00:23:36 Tell me about that. Genuinely curious, just like the whip pro, right? It's the same belonging cue. It's like, what would you do if we were marooned on a desert island? Tell me about you. that interaction, he's not just telling him they need to go left or right or shoot more or shoot less. That is just that intense curiosity that he has about the group that he's in and his ability to connect. And then the other thing they do, which was really terrific, was the way that he uses food.

Starting point is 00:24:03 You know, every human being has to eat. And Popovich is keenly aware of this. And so they use food as the core vehicle for connection. A team eats together more often than most families. I mean, they have different sized dinners for different groups in the dinner. The coaches all go to dinner before every game. And at the end of the season, they get an album with the menu of all the places they've eaten and the labels of the wines that they enjoyed together. It is phenomenal to see, actually, the best comeback that the Spurs have ever made actually took place in a restaurant. They had this devastating loss in the finals of the NBA, of the in game six. They were about to win. They lost. And Popovich, rather than have everybody sulk in the locker room, whether and people were. destroyed. They really had the title locked up and they lost it. In afterwards, he has everyone, boom, go right to the restaurant and circle up as a team. And he spends the whole time, almost like the father of a bride at a wedding, greeting everybody, spending time, making sure that their

Starting point is 00:24:58 plates are full, bringing in their families, having conversations, hugging, everyone is reconnecting. He calls it filling their cups. And it was this astonishing act of connection that really helped the team, you know, recover from that and go on and win. So the way, the way that he connects and he's giving them very tough feedback. As one of the coaches said, Pop will do two things. He'll tell you the truth and he'll love you to death. And for me, that really captures what great leadership does. He doesn't hold back on the feedback. It's not like you have to choose between excellence and belonging. He gives them both. He gives them the absolute toughest feedback and it can be very difficult at times when he's yelling at the team.

Starting point is 00:25:39 but he's given them the absolute peak moment of care and connection and love. And those are the words that he uses. He talks about love. He talks about filling their cups and hugging them and holding them. And that kind of combination, I think, is revelatory because we typically see those two things as a tradeoff. Either I'm going to really tell you the truth or I'm going to be really nice to you. But that's a false dichotomy. The truth is you can do both.

Starting point is 00:26:04 You can tell people the truth because you love them to death. You know, it's interesting. You talk about this computer program that are looking at the player stats and how many games they're supposed to win. It actually tells a very interesting story about the importance of the coach and really what he's achieving with this team. So why is this so surprising for St.onia's sports? Yeah, you can look up like with any team, especially with sports, you can add up the individual performers and make a pretty reasonable forecast about how many games they should win. And they do that with coaches, you know, based on the talent that a coach has, how many games should they have won? And when you graph all

Starting point is 00:26:44 the history of the NBA, Popovich is out there like Mars. You know, you've got all the other coaches grouped up, and then you've got Popovich winning way more games than he should have. His teams are literally adding up to more than the sum of their parts. And they're more selfless. They are, you know, in basketball, as in life, there are these moments where you have to make a decision. Am I going to support my teammate, or am I going to focus on myself and try to score for myself? And because Popovich has created such a culture of connection and selflessness, that shows up. It shows up on the scoreboard, and it shows up on his own record. These twin signals of telling the truth and loving them to death actually helps unlock the group's potential. So, Dan, the most successful teams perform best

Starting point is 00:27:30 and a high purpose kind of environment. However, building purpose is not as simple as like writing a mission statement or hanging some posters up in the hallway or writing some corporate values and just posting them around the headquarters. So how do we build a high purpose environment and how is the process different? If you're an executive or you're an employee with very little authority, talk to us about that idea. Yeah, so funny. Purpose and values, you know, if you were to look at sort of companies, senses, groups, senses of values and purpose and write them down. We have a typical convention that

Starting point is 00:28:06 those purposes sort of descend from on hot, right? That we get a group sense of purpose from our hearts. And when you look at really good groups, however, what you see is they're not sort of digging them out of their hearts. They're not emanating those senses of purpose. They're sort of unearthing them. They're digging them from beneath. When I visited a lot of these places, it actually was kind of funny because when I'd first go in some of these groups, and I decided to visit them based on them being the top 1% of performers in their domain, with sustained success. And so I found myself, okay, I'm visiting Pixar. I'm visiting Navy SEAL Team 6. I'm visiting the Spurs. And when you first visit those places, they feel, and this sounds funny to say, but they feel a little bit

Starting point is 00:28:47 cheesy because the people are kind of repeating these mantras. You'll hear the same mantras over and over again if you're at Pixar or Navy SEAL Team 6. Even in Navy SEAL team 6, they have mantras. say like we're the quiet professionals. We shoot, move, and communicate. The only easy day was yesterday. And they keep sort of repeating those mantras over and over again. So when you first get there, it feels a little like you're at summer camp. It feels a little like I began to see that. At first, I thought, oh my God, I'm in the wrong place. But then you realize, no, wait a minute, the fact that everybody is sharing these really clear mental models, everybody's sharing these really clear mantras. It's almost like a map. It's almost like they're building this windshield of

Starting point is 00:29:24 purpose that is made up of these smaller things, these smaller metaphors and stories that they tell each other, these mantras that they repeat to each other over and over again. The San Antonio Spurs are a perfect example. So Popovich came across this book and it told a story, it was an old sort of parable. It told a story of a stone cutter. And the stone cutter is pounding away with his hammer, sledgehammer on this rock. And the passerby says, why are you doing that? And the stone cutter replies, because when the rock breaks, I will not know if it is that blow or the hundred that came before that broke it. Nice story. Well, Popovich captures that story. He thinks there's something about it. And he has it echoed throughout the organization. When you walk in their practice

Starting point is 00:30:08 facility, you see an actual rock and an actual hammer. The mantra that he's created is pounded the rock. And when you go in their locker room, there's about five different languages spoken on the spurs. That quote from the stone cutter, that little parable, is written in each of those languages all around the locker room. He talks about pounding the rock all the time. The players talk about pounding the rock all the time. What they've done is that they've used that mantra sort of to create a north star for them. This is who we are. This is what we do. The purpose didn't sort of descend on them. They dug it out of the ground. They found something that really resonated. that story resonated for them.

Starting point is 00:30:47 And it's the act of creating it and sharing it that make it powerful. It's not just putting a poster on the wall. It's constantly living that and sharing that in every possible way. They're sort of flooding the zone with this story, this purpose. So purpose is something that sort of is more of an architectural question. Like, okay, we can't just pick something random. We actually have to pick something that matters. We actually have to pick something that resonates with us.

Starting point is 00:31:13 We have to pick the right language. You have to pick the right story. And the places that I visited, the cultures were very smart about doing that. They spent a ton of time thinking about sort of building what you might think of as a mantra map. The handful of sayings, metaphors, symbols that really make sense for them and that they broadcast, that they fill the windshield. It works kind of like emotional GPS. Like when you bump into a problem and you're on the spurs, what comes into your head, pound the rock. So it's this sort of a design process, really.

Starting point is 00:31:46 And I think that's what people miss about purpose. They sort of think, oh, it's just going to be this halo that we get and we're just going to be able to do it. But no, it actually takes a lot of effort, intent, and one of the best things you can do is really study how other groups do it. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. Risk and regulation are ramping up. And customers now expect proof of security just to do business. That's why Vantza is a game changer.

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Starting point is 00:35:22 I love that. That was fantastic. All right. So let's talk about this idea of vulnerability. A little bit back, we interviewed the former founder of Marquis Jette, Jesse Itzler, and we asked him, what did he? advice he would have given himself if he could go back in time 20 years and have a conversation with himself. And his response really surprised Stiggin myself. He said he wished he would have allowed

Starting point is 00:35:46 himself to be vulnerable much sooner. And we were just kind of like, wow, that's an interesting thing to say. You know, like that's just not something you hear every day. So let me ask you this, Dan, why should we show vulnerability? That's a great question. I love his response. Why should we show vulnerability. Groups that hide weaknesses from themselves will never be strong. And groups that share weaknesses are strong because of it. When I visited these cultures that I visited, these Pixar and Navy SEAL Team 6, these top, top performing cultures, I was continually surprised by this pattern. And the pattern was that leaders would be extremely open about their mistakes, extremely open. In fact, the Navy SEAL commander that I spent time with, the guy named Dave Cooper, who trained

Starting point is 00:36:32 the troops that got bin Laden, put it this way. He said, the most important four words a leader can say are I screwed that up, which is incredible to think about. We think about the Navy Seals. We think about any group. We think about them being bulletproof, confident to know with certainty about where they're going. But actually, that model of sort of the leader as the authoritarian holder of the knowledge, that's worked for a while. Like, that's a pretty good model. It can work when problems are really simple, but we live in a world, no matter what business you're in, where problems are really complex and problems are really fast moving. And the idea that one person can be certain about what to do is increasingly ridiculous. You know, the idea that one person can hold in their

Starting point is 00:37:14 head, that one army commander can be back at headquarters and have in their head what the team should do rather than that team on the ground making decisions. The idea that one business owner can know what all his people should do, rather than that team on the ground reacting in real time. I mean, it's a metaphor that kept coming into mind while I was writing the book. And it's of a flock of birds navigating through a forest all as one, right? And they're solving problems in real time. They're not getting radio information back from headquarters over the way they should turn left here and turn right here. They're solving problems in real time. And that is really the landscape we live in now. It's moving faster and faster than ever. And so this idea of vulnerability of saying,

Starting point is 00:37:53 look, I might be the CEO, but I don't know what you should do. I have made mistakes in the the past. These are the mistakes I've made in the past. Ends up being really the most powerful way that an organization can ignite the sharing of information. Vulnerability isn't about mushy emotions. It is about sharing information. If you are open about the mistakes you make and the weaknesses you have, you can perform better. You can share a mental model. And the cool part that I saw were the organizations that had refined this into an organizational habit. They weren't just doing kind of free range vulnerability. They have these vulnerability habits that operated almost like calisthenics. With the seals, they do something called an AAR, an after action review. They do it after every training mission and after

Starting point is 00:38:35 every mission. The team comes off the helicopter, they circle up and they start talking about what went wrong and what went right and what they're going to do differently next time. And they're really, the thing that really stands out is that they're awkward. They're hard. It's really hard after you try your best at something to come back and say, you know, I screwed that out. And I think you might have screw that up too. And they end up being these sort of painful, emotional, difficult meetings. And they are by far the most important, powerful meetings that the seals have. At Pixar, they have the same meetings in what's called a brain trust. Every movie is brain trusted several times through its development. They watch a draft of the movie and then some of the best storytellers

Starting point is 00:39:13 at Pixar circle up, get together, and start taking it apart. It's not pretty. It's truly hard to see someone who's a director who's bringing them this precious thing that they've spent months and years building and the people just kind of almost, you know, mercilessly say, this doesn't work, that doesn't work, this doesn't work, that doesn't work. It's really hard. It's really, really, really powerful and important. And the AR and the brain trust are the calisthenic that lets the group be strong. You know, in our bodies, we know physical exercise makes you strong. No pain, no gain. To actually have that experience that pain is what gives you the game. The same is true with group life. The same is true in our groups, that awkward, difficult, like, ah, I screwed that up and you screwed

Starting point is 00:39:56 that up and what happened. Let's talk about it. That awkwardness is actually what fuels improvement because it lets you share real information, accurate information, and it lets you build a shared mental model of what you're trying to do. Fascinating. And it really reminds me of this story you talk about with the birds where it doesn't really have a leader.

Starting point is 00:40:17 It changes all the time. And everything seems to be up in the air. And still, in a way, it's very organized and extremely efficient. And it also reminds me of the story you have about MIT and this balloon contest that is just a very surprising take on it. Would you mind sharing that story with the audience, Daniel? Yeah, there's this governmental outfit called DARPA. They do research on impossible projects. And they did this one where they were trying to figure out how to get information quickly, almost as a mimicking kind of a virus outbreak.

Starting point is 00:40:49 How do we find out what's happening when we don't know what's happening? So they did it by in this really fascinating contest. They released 10 large balloons tethered to the ground at unknown locations across America. And they gave people about a month. They said, to assemble a team to find out the precise location of these 10 balloons. And so, of course, it was like catnip to every geek in America. And they started assembling these teams with all of this like GPS data and social media sharing and saddle. and all these organizations came together because there was a $40,000 prize.

Starting point is 00:41:25 But there was one team from MIT that didn't do any of that. They actually didn't find out about the contest until like five days beforehand. So all they did was send an email. And the email said, hey, we're doing this crazy balloon hunting contest. If you're on a chain of people who helps find these balloons, if you or anybody you send this email to finds the balloons, you get a share in the reward. So it was a really simple signal. It had vulnerability in it.

Starting point is 00:41:49 they were sharing the reward with the people they worked with. The other people weren't. They were just sort of saying, let's build a team and everybody on the team will get the reward. But they sent out this signal, this email. And the contest begins and the government initially thinks this is going to take weeks for people to look at these 10 balloons in random locations across the entire continent. And the MIT team succeeds in nine hours with a completely makeshift team, none of whom know each other, all of whom are united by this simple signal of vulnerability to say, hey, We're doing this crazy project. If we win, we all win. And that sense of having some skin in the game, of having people who are genuinely invested, defeated all the other efforts. That's sort of the

Starting point is 00:42:31 killer app of connection, vulnerability. It sent this signal of a really clear vulnerability that made people want to be a part of it and made people want to give effort. So that motivated cohesion that great teams have doesn't come out of nowhere. It comes out of sending really clear signals that, hey, we're in this together. You know, I really love how you keep talking about communication. Regardless, you know, with the balloon contest or the Navy SEALs or St.onia Spurs, you know, it seems like you really need to have that type of communication where you can challenge authorities on one hand, but also be truthful because communication is not useful if it's not

Starting point is 00:43:13 true one way or the other. But how do we go about that? Because on the other hand, we don't want to, you know, start alienating people because that's never the intention. So could you give us some pointers of how to go about that and really any organization, whether you're high or low? You put your finger on a super interesting nuance here. There's a certain reaction of this where it's like, okay, we've got to be open and vulnerable. We've got to be brutally honest. I'm just going to lay it out there.

Starting point is 00:43:40 And there's a certain person that reacts to this by just saying, all right, I'm going to let you have it. right, we're going to be brutally honest here. But when you're brutally honest, you're actually creating a culture of brutality. That's the real signal you're sending. You're sending a signal of brutality. And the successful way to go is to avoid brutal honesty, instead strive for warm candor. Now, warm candor sends two signals. It sends a signal of connection along with the truth. You don't just send the truth in a brutal way. You always have that tethered to a signal of connection. And the most beautiful example I saw of that, beyond Popovich, who we've already talked about, who does that really, really well, happened at a restaurant called Gramer Sea Tavern, which is run by

Starting point is 00:44:22 Danny Meyer. Danny Meyer runs about 20 restaurants. All of them are sort of like, they're like the Pixar and the restaurant world. If you've ever eaten at any of Danny Meyer's restaurants, you probably remember it because the service is so incredible. And the teams are so well trained and the experience is so marvelous. So I studied Danny Meyer for the book. And I was there when a new, a server who had been training for six months had her first day at the front of the house. Her first day, it's sort of like, you know, first day in the big leagues

Starting point is 00:44:50 after months and months of training. And I saw her manager lean over to her just before. You know, the people are about to walk in. It's about her moment to shine. And her manager leans over and says something to her. And I'm wondering, what's he going to say? Is he going to say something really supportive? Go get him.

Starting point is 00:45:07 You know, is he going to say, what's he going to say? And what he said was, hey, hey Whitney, if you don't ask me for help 10 times today, it'll be a disaster, which is a hell of a thing to say really, right? Like, you know, that's pretty candorous. Like it's going to be a disaster. But think more deeply about what he said there. Ask for help.

Starting point is 00:45:25 Look for me 10 times today. I want you, if there's a problem, we're here to help. We're connected to you. You're not alone. It's a signal of warm candor. That's real candor. You really need to look. or if you try to do this without any help, it's going to be a disaster, but I'm here for you.

Starting point is 00:45:43 So that's the kind of message that can be sent in these kind of good feedback conversations. It's, I'm giving you this signal because you're part of this group, and we have high standards here, and I believe you can make those standards. That feedback is powerful because it doesn't just deliver brutal honesty. It delivers connection. So, Dan, if you had only one minute to describe. and whittled down everything you know about creating great culture. What would that one minute sound like?

Starting point is 00:46:13 You know, I'd take the first 30 seconds, and I would just show a video of a flock of birds moving together, because I think that captures better than anything else. This is great. Actually, your listeners, Google the word murmuration. They're these starlings, these small birds, that they're amazing at flocking together, and they come apart and they come together.

Starting point is 00:46:34 They look like these intelligent clouds. They're beautiful to watch. And because that's what good culture is. And that happens not because of some magical chemistry they have. Their brains are like as big as a grain of rice, right? It happens because they send really clear signals about where they are and where they're going. And that's what good cultures do. Good culture is not about some mysterious chemistry.

Starting point is 00:46:56 It's about clarity. It's about sending really clear signals. We're connected, belonging cues. Really clear signals. We share information. Vulnerability loops, they're called. You have to loop, you have a loop of vulnerability and really clear signals of purpose. We're going here.

Starting point is 00:47:10 We're going to pound the rock. That's what's important. We're not going over there. We're going here. That's awesome. I wasn't expecting you to say that. That's pretty awesome. So what we'll do is we'll try to find a video in our show notes.

Starting point is 00:47:22 So if people don't want to have to hunt around and we'll put that in their show notes for you. So, Dan, you're obviously a very intelligent person and you have achieved a lot. Do you have any book or resource that has really? really late the foundation for where you've been going? Yeah, yeah, no, I'd say the work of Adam Grant has been really powerful. I'm sure some of your readers know his work. He's a very creative and forward-thinking professor, studies organizational dynamics at Penn, and has written several books, give and take, originals.

Starting point is 00:47:53 I wrote a book called Option B with Cheryl Sandberg. Just the creativity and energy that he brings to every project and every discussion is inspiring. And the other person I'd say is my brother Morris, who is really good at thinking through these concepts and helping me. A lot of this stuff is simple, but it ain't easy to be simple. So finding kind of the deeper, seeing the deeper landscapes and these things that are right in front of our noses, like culture and groups.

Starting point is 00:48:17 Super useful. Not that anyone can go out and call it my brother. I guess I'll give you his phone number if you want it. Well, Dan, we can't thank you enough for coming on the show. For people listening to this, the name of Dan's book is The Culture Code, the Secrets to Highly Successful Groups. Dan, if people want to, are you on Twitter? Where else can people find out more about you?

Starting point is 00:48:39 Yeah, I've got a website, Danielcoil.com, D-A-N-I-E-L-E-L-E-L-E, I'm on Twitter and Facebook and some of the other usual places. Well, we'll have links in the show notes to your feeds, to your website. So if people want to learn more about you, they can go there and check you out. So, Dan, thank you so much for your time today. Thanks very much, Preston. Enjoy the conversation. All right, guys.

Starting point is 00:49:01 That was all that Preston and I had for this week's episode of V-N-E-N-A. Ask us podcast. We see each other again next week. Thanks for listening to TIP. To access the show notes, courses or forums, go to theinvestorspodcast.com. To get your questions played on the show, go to asktheinvestors.com and win a free subscription to any of our courses on TIP Academy. This show is for entertainment purposes only. Before making investment decisions, consult a professional. This show is copyrighted by the TIP network. Written permission must be granted. before syndication or rebroadcasting.

We Study Billionaires - The Investor’s Podcast Network - TIP187: The Culture Code w/ Daniel Coyle (Business Podcast)

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