TIP187: THE CULTURE CODE

W/ DANIEL COYLE

21 April 2018

On today’s show, we talk to the New York Times Best Selling author, Daniel Coyle. Daniel is a leading expert in the development of peak performing cultures. In his new book, The Culture Code, Daniel interviews people like billionaire Tony Hsieh, Pixar’s Ed Catmull, and many more. If you ever wanted to know what it takes to build a top performing team, you’ll definitely want to hear what Daniel has to say.

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IN THIS EPISODE, YOU’LL LEARN:

  • How you create the strongest culture in your organization regardless of your rank.
  • How high performing cultures communicate with each other.
  • Why the San Antonio Spurs are winning significantly more games than they are supposed to on a consistent basis.
  • Why the most important 4 words a leader can say is “I Screwed That Up!”

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

Preston Pysh  0:02  

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 Hsieh, Sergey Brin, Larry Page or even Warren Buffett as examples of this. 

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’ best-selling author. 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. While he was writing this book, he had the awesome opportunity to interview people like billionaire Tony Hsieh. He’s interviewed Pixar’s Ed Catmull and so many more that he incorporated into the book. 

I think you’re really going to enjoy some of these firsthand accounts and these incredible stories from thought leaders. Without further delay, here’s our interview with the thoughtful Daniel Coyle.

Intro  1:00  

You are listening to The Investor’s Podcast where we study the financial markets and read the books that influenced self-made billionaires the most. We keep you informed and prepared for the unexpected.

Preston Pysh  1:21  

Like we said in the introduction, we’re really excited to have Daniel Coyle here with us.

Dan, the one thing that I captured and really took away from this book is you quantified what I felt was unquantifiable. I’m really excited to talk to you today. Thank you so much for writing such an incredible book and welcome to The Investor’s Podcast.

Daniel Coyle  1:47  

Thanks so much for having me, Preston. It’s nice to be here with you.

Preston Pysh  1:50  

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. I’ll tell you, it is not an easy undertaking. It requires just an enormous amount of time and effort. 

What made you think about writing a book about a culture that was going to take up so much of your time when before you wrote this?

Daniel Coyle  2:11  

That’s right. It requires an addiction, actually, to keep it going and get addicted to the mystery and to the quest. I guess I kind of fell in love with the mystery.  

I’ve written about high performance for a long time now. I have this job where I was sort of traveling around and looking at people who are really good at their individual skills and try to figure out what makes them tick. 

I have books about that and exploring that in many ways. I kept bumping into 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’ll be a vibe and a feeling in that room of connection and cohesion. It was like these groups were just one single animal almost. 

I guess it really came to life for me when I was in Russia. I was at a tennis court. I was at this club that produced all these champions. I was there on a day where a new player showed up, a new girl. She was about eight years old and she showed up for her first lesson. 

There’s this interaction that took like five seconds, but it was this amazing interaction where she showed up, the first day the door opened. She’s standing there with her new tennis racquet and a plastic grocery bag nervous for her first day. 

This lead coach, probably the most famous tennis coach in Russia goes over to this girl and says, “Hey, I’m glad you’re here. I want you to do something for me.”

The coach has a lot of tennis balls and he said, “I want you to catch this.”

She tossed the girl the ball and the girl caught it. In that second, that girl went from being an outsider to being connected in some way to being a part of this group. 

I just got kind of fascinated obsessed with what’s that made of? How did they make that girl go from being outside the inside, from being sort of a stranger to being on this team?

And so, I started traveling around looking at really high-performing groups such as Pixar, Navy SEAL, San Antonio Spurs, and Zappos. I looked at the sort of tennis balls they throw or those moments where they create that magic and that connection. 

We all are familiar with that feeling of, “God, there’s just something about that restaurant, there’s something about that school, or there’s something about that family, and it feels like magic.” 

However, 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.

I got kind of obsessed with that mystery. It took me about five years to visit all the places and write books. 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 but yes, it ended up that culture feels like magic, but it’s not. 

Stig Brodersen  4:44  

That is a fascinating story. I have to say it’s so evident when you’re reading through the book with all these amazing stories that it’s just so clear how much you enjoyed the process of writing, which is just something I want to put out there. It’s definitely a joy going through your book. 

One of the best stories that you do have in your book is the story about the kids and the spaghetti tower. Could you please share that story with the audience?

Daniel Coyle  5:16  

There’s a guy named Peter Skillman and he got obsessed with the question of what makes certain groups perform better than others.

We all know that certain groups add up to be more than the sum of their parts and certain groups don’t. And so, what’s that made up? 

He devised a way of exploring it through a contest and the contest was really simple. Who can build the tallest tower with the following materials: 20 pieces of raw spaghetti, a yard of tape, and a single standard size Marshmallow? The only rule is the marshmallow has to go on the top. 

The teams he got to do were kind of interesting. He had teams of four: a team of CEOs, MBAs, lawyers, and kindergarteners. Ready, set, go, everybody starts building.

When they begin, all the adult groups start out in the same way. They talk. They talk about what they’re going to do and they make a plan. They decide on ideas and they hone those ideas. They divvy up the roles and they start working. 

It looks gorgeous. It looks perfect. Very cooperative and smooth. Kindergarteners don’t do that exactly. They just sort of start eating a bunch of marshmallows and it’s very chaotic. 

If you had to bet your life savings on 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. When we see the verbal, experienced intelligent individuals interacting in such a smooth way, we think, “Well, that’s going to add up into an intelligent, smooth group. It’s going to add up to the performance.” That’s our mental model. 

However, we actually look at who wins, the kindergarteners 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. 

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, ideation, iteration, and innovation. 

The kindergarteners don’t have any problem with that. They’re not worried about status. They’re just doing stuff together. 

If they see a problem, they reach in, grab it and fix it. 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 built taller and better results. They got a better tower. 

When we think about groups, we normally don’t value safety. We think safety is sort of like the icing on the cupcake. 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, it gets rid of status management, then you can have a group that truly adds up to more than the sum of its parts. 

It gives us a lens. That story is powerful because it uses the 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, MBAs, and the lawyers? Where are we behaving like the kindergarteners 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 use to sort of beginning the book, I saw that same pattern 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. Then they trade leadership and someone else solves that problem. 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?

IN THIS EPISODE, YOU’LL LEARN:

  • How you create the strongest culture in your organization regardless of your rank
  • How high performing cultures communicate with each other
  • Why the San Antonio Spurs are winning significantly more games than they are supposed to on a consistent basis
  • Why the most important 4 words a leader can say is “I Screwed That Up!”

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