Book Recommendation: Trust Factor: The Science of Creating High-Performance Companies by Paul J. Zak (AMACOM, 2017)
The Author, Paul Zak, is the Director of the Center for Neuroeconomics and one of the most prolific researchers into the brain chemistry of human relations and organizational performance. This book is a summary of a tremendous amount of research into the behaviors that contribute to building high performance teams and organizations. He has conducted his research in for-profit and non-profit businesses as well as government institutions and even the military. The final chapter is a wonderful survey of the differences in culture between these types of organizations. At the center of this book is how culture affects performance.
Here’s the spoiler alert for anyone that plans to read it – Flawless ExecutionSM, the model for building high performance teams and organizations we teach and use at Afterburner, Inc., is soundly and strongly supported by the empirical evidence that Zak presents in this book. In a decade of personal research, I have found no other work of science that is a better prescription for what we do at Afterburner.
I will attempt to summarize the critical formula, according to Zak, that drives high performance and then return to some of the specific findings that support and relate to the Flawless Execution methodology. So, in full disclosure, this recommendation is an attempt to demonstrate why Flawless Execution works as a high-performance cultural model according to Zak’s findings.
The Flawless Execution Formula
Joy = Trust x Purpose. It’s as eloquent as E=MC2 and perhaps just as profound. Before you react and think that this formula is imprecise or soft, hold on. Like in a physics formula, each of the terms can be precisely defined and measured at least as much as the behavioral sciences and biochemistry can measure them. Zak is famous for blood testing. He’s sucked more blood than Dracula testing for the chemicals that affect our brains. Chief among those chemicals is oxytocin . . . but more on that later. In English, the formula can be translated as trust combined with purpose results in joy at work.
Here’s a direct quote to break it down a bit more:
“The science here is subtle, and many organizations have missed the point: Organizations should not try to make people happy at work. Joy is the result of working with trusted colleagues to meet important goals. It is that striving that research has shown produces a sense of accomplishment. Joy arises naturally when people want to be at work and are challenged and recognized for what they do.” (pg. 174)
Notice some of the key words – result, challenge, trust, accomplishment, recognition, goals . . .
One of the most important factors, one that many management and self-improvement scholars have written about for decades, is trust. Zak invokes the significance of trust in his formula up front. Trust is a powerful lubricant in the human social machine. High trust cultures are proven and well-known to excel and succeed where low-trust cultures do not.
And that is what brings us to oxytocin.
Zak has called oxcytocin the ‘moral molecule’ because of its central role in human relationships. He suspects that it is the chemical that makes us distinctively human. When one human being treats another with respect, recognition for their efforts, compassion, etc., the brain releases oxytocin. This is a ‘feel good hit’ and we humans crave such oxytocin ‘hits.’ Thus, when one person treats another well it elicits reciprocity. Reciprocity builds trust and trust begets more trust. Mistreating people, particularly with aggression and fear, does the opposite causing the brain to release cortisol, the stress hormone. Opacity of goals, strategy, and vision creates uncertainty and uncertainty creates anxiety which also releases cortisol and reduces engagement, or joy. That’s the short explanation of the brain chemistry, but there’s much more to it.
To give readers a clear understanding of how high-performance can actually be engineered into organizations, Zak uses the centrality of the oxytocin molecule to create an acronym to explain how it all works. Here it is:
O – Ovation; think rewards and recognition, and not just the monetary kind
X – eXpectation; think frequent feedback and small wins
Y – Yield; think productivity – how much gets done or created
T – Transfer; the freedom to get things done on one’s own terms
O – Openness; transparency, particularly with organizational plans, goals, vision, strategy etc.
C – Caring; putting people and their needs first
I – Invest; help people develop holistically
N – Natural; vulnerability and the capacity to admit errors is good
Let’s look at each in a bit more detail.
At the very end of the Flawless Execution Cycle, the very last step in the debriefing process, we say to end on a high note. That’s what Zak means by ovation, or, as he credits Dean Kamen to have said, ‘You get what you celebrate.’ (pg. 34) For ovation to drive trust, and ultimately joy, it has to be unexpected, tangible and personal. It also needs to be close in time to the completion or accomplishment of the goal. So, if you want ovation to work to drive high-performance, you need to do it frequently and in relation to actual results. This is why the Flawless Execution cycle must be iterated frequently so that there is a direct connection to the effort and the ovation. Zak points out an important caveat, though – ovation must connect to actual effort and not come as a result of ‘just showing up.’ Unwarranted or unearned recognition undermines ovation. (pg. 37)
The connection between ovation and expectation is close. “From the perspective of the brain,” writes Zak, “anything that happened more than a few weeks ago is nearly irrelevant, so waiting a year to give employees feedback on their performance is nearly useless. Regular feedback on performance builds neural pathways in the brain that adapt behavior to meet goals.” (pg. 45) Challenging goals help create healthy stress which, when accomplished and recognized, give us an oxytocin hit in the brain. As noted above, we have come back to the iterative nature of the Flawless Execution cycle and its closing with the debrief in which feedback and ovation is provided. Closely related to this idea is the notion of small wins, the frequent accomplishment of small goals or missions that make incremental advances to larger goals. Zak underscores the importance of these relationships where he writes: “After a goal is reached, celebrate the victory and have the team describe how they did it as part of the ovation debrief [italics mine].” (pg. 48)
But the objective or goal needs to be more than just challenging, it must be “specific, measurable, verifiable, and public” (pg. 50). That should sound very familiar to those trained in the Flawless Execution method of mission objective construction. Further, he describes the importance of connecting objectives to strategy and the HDD in a structure he calls ‘scripting.’ His chapter on eXpectation is extraordinarily similar to how we organize the ‘Execute’ step in the Flawless Execution Cycle. In fact, he surveys the importance of Flawless Execution concepts such as checklists (pg. 52), X-Gap meetings (huddles) (pg. 54), and Task Saturation (overwork) (pg 56).
Yield is Zak’s progressive and expanded term for productivity. Productivity is a term heavily laden with the baggage of a pre-Twenty-First Century labor economy when people were treated more like machines or resources (Zak does not like the term human resources) rather than individuals that, in the modern economy, are volunteers. If Zak were to construct a model like Flawless Execution in the shape of a pyramid, he would put people at the foundation just like we do. Yield is the results that engaged colleagues (Zak’s preferred term for employees) create because they are “fully committed to eXpectations by taking ownership of the execution and outcomes.” (pg. 67) In the Flawless Execution Model there is a notion of leader’s intent which is simply the idea that although objectives may be handed down in the hierarchy of an organization, they are constructed in a way that allows those that will own and execute the objective to determine how best to achieve it.
Zak highlights the critical importance of debriefing to generate Yield. To do so, he returns to brain chemistry. When we make mistakes our brain releases dopamine which acts to increase our awareness and potentially revise our understanding of how the world works. It’s a primary mechanism for learning. But, if an organization’s culture punishes mistakes, learning is inhibited and mistakes hidden. An organization cannot become high-performing if it cannot learn. If it does not debrief honestly and without blame, it cannot improve.
Transfer is a higher level of Yield. It’s about enabling people to decide how best to do their work. It’s releasing them from the confining structures of the daily grind by allowing them to decide how, when, and where to work – at home, in the middle of the night, or at a coffee house. Going back to brain chemistry, the structures of a defined work day, work space, and commuting hazards induce stress which causes the brain to produce cortisol. Cortisol is deadly; it shortens our lives. To combat the effects of cortisol and stimulate greater Transfer, Zak suggests we need to revisit our definition of management, to consider management not so much as a people-focused process but one focused more on process itself. In the Flawless Execution model we have a place for this idea, standards. We recognize that if you give people good processes, standards, or standard operating procedures and then you let them use those as guidance they will be better able to accomplish goals that align with the entire enterprise. Standards are not intended to be limiting. Instead, they free people from having to spend precious effort resolving problems over and over again. When you don’t have to waste time and brain power re-solving problems you can expend that effort coming up with innovative solutions and exercising good judgment in unique contexts.
By openness, Zak means transparency. Flawless Execution equates the notion of openness to alignment and situational awareness. You have to understand your environment and your role in it. When things are opaque or hidden from the people in the organization trust is diminished. When we don’t understand what is going on, why we are doing what we are doing or what we are compelled to do, we become stressed and our minds try to create meaning and patterns where they may or may not exist. Face-to-face communications can help reduce opacity and create greater openness. That’s the way we humans are designed to interact and the way we teach collaboration. So, before you use social media, e-mail or some other virtual form of communication to accomplish what you could do in person, consider the price that you are paying. Also, hiding information almost always comes back to get you in the end. Being open about things from the start is the best policy – which is a great segue to the “N” in OXYTOCIN, but Zak had to put it last to make the acronym work! So, we’ll come back to that shortly.
When we show genuine concern for others, the oxytocin flows. What’s interesting is that, from an evolutionary standpoint, oxytocin receptors are old parts of the brain which means that caring isn’t a new idea concocted in the 1960’s at UC Berkeley. It basically means that organizations are better off being nice. Give people time off when they need it. Make sure they are safe and happy. Zak cites the success that Alcoa had by taking extraordinary efforts to ensure the safety of its employees back in the 1980’s. It was a complete culture shift that many believed would sink the company. Just the opposite happened and Alcoa became an example of success that many other management and organizational scholars have cited for the effects of deeply caring about colleagues.
Invest in the development of your colleagues. In the Flawless Execution model we have a specific tier entitled ‘training’ that we consider fundamental to high-performing organizations. Now, training is a small sub-set of development. Training regards specific skills needed to successfully accomplish job tasks and roles. Investing in colleagues means a lot more that just training them. Development is a much bigger subject. At Afterburner, as former elite military professionals, we know this because it was an expected part of the culture when we served in the military. We knew we had an obligation and duty to invest in others beyond just training them.
Years ago we recognized that, as veterans transitioned out of the military and faced lower-than-average employment, the existing military and governmental structures were not investing what was needed in those veterans. We decided to help. We built a program to help veterans plan, not just for their transition out of the military, but for their entire careers and give them the tools they needed to do it. It all began with developing a career HDD – a holistic description of an individual’s desired future. That is what Zak identifies as missing from most organizations. He defines spiritual as “those activities that let us reflect on who we are now, who we want to be, and how we are living our lives.” (pg. 142) That’s not just an annual review that helps managers assess and guide direct reports to the next career goal, but a whole-person debrief. High-performing organizations that truly invest in people, care about the whole person and how the organization can help them become who they want to be, even if it means that that person must ultimately leave the organization. We couldn’t agree more and have developed a whole-person HDD structure that individuals can build and share with their boss-colleagues.
Natural leaders are vulnerable. No, not cry babies, but they are down-to-earth, listen attentively to others, and, most importantly, admit their mistakes and failures. For natural leaders, vulnerability is a sign of strength and it engenders trust. No surprise there for those of us at Afterburner that have intentionally and vociferously stomped our feet about the absolutely critical second step of the Flawless Execution debrief process – for the leader to set the right tone by admitting their own errors before anyone else and opening up to the criticism of others. Zak carries the significance of such honesty up to the strategic level of planning where natural leaders must admit strategic errors and make a pivot to try new things. (pg 157) Related to the natural style required of leaders is also for leaders to ‘walk the walk.’ Trust and intentional efforts to affect culture erode quickly when leaders say one thing but do another. They must lead by example to build trust.
For many years we have introduced the Flawless Execution model as a three-tiered pyramid with Purpose (Organizational Identity, HDD, Strategy and Leader’s Intent) at the top, Process (Plan-Brief-Execute-Debrief) in the center, and Platform (People, Training, and Standards). Now consider that Zak states, “An organization’s performance can be stated as an engineering relationship in which three components determine performance. Those components are denoted by the acronym POP, which stands for people, organization and purpose.” (pg. 7) The similarity between Zak’s model and Flawless Execution is staggering. It is clear in this work that, by people, he means selecting the right people – to get the right people on the bus as Jim Collins would say – and to train and develop them with care, appreciation and appropriate expectations (goals and standards). By purpose he means having transparent alignment between daily goals, strategy, HDD, and organizational identity. Purpose means being personally invested in the mission of the organization and how it intends to achieve it. And, by organization he means how one designs culture to achieve engagement across the enterprise. OXYTOCIN is his design model and it contains the same elements as Flawless Execution.
We have always called Flawless Execution a performance or continuous improvement model rather than a cultural change model. We have also always said that perfection isn’t possible but that organizations can always improve through the pursuit of perfection. Zak reiterates this point. He says, “The optimum is never achievable. Your goal should be to continuously make improvements in the culture. And don’t get stuck in analysis paralysis, seeking perfection; it is better to be approximately right than exactly wrong.” (pg. 28) We find that many organizations fear tackling their culture because it is such an overwhelming task and that they won’t get it right. But, remember, perfection isn’t the goal. No culture that Zak has ever studied was perfect. But unquestionably, there are companies with such powerfully positive cultures that it drives tremendous gains on the bottom line. Connecting the effort necessary to change organizational culture to fiscal results is extremely complex. That’s part of Zak’s point and it comes out clearly in the statistics and additional studies he presents in his summary chapter. There is an unmistakably strong correlation between culture and performance. But what is most exciting about this book, is that its author demonstrates that it can be engineered. We at Afterburner have understood that for two decades. Flawless Execution is a brilliant cultural engineering design. Trust Factor proves it works.
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