C (3:08)

When you think about the word courage, a lot of times people confuse it as fearless. Actually, it's taking action in the face of fear. Organizations too can become cautious. They can become fearful because as organizations try to create consistency, predictability, accountability, the whole system collectively becomes risk averse and is unable to move. And that's why you start to see successful companies failing. Because it's not that they don't have resources, they have talent, they have everything going and they get stuck. And the stagnation comes from this kind of collective fear that starts to permeate an organization. Courage is being able to lean into that fear, saying, this is scary, but, but we're still gonna do it.

A (3:59)

And why did you think that now was a good time to write about this topic? Is it a difficult time for business leaders and organizations collectively to be courageous?

C (4:12)

So to understand that question, you have to first ask the question, what triggers fear? So what triggers fear is uncertainty. Now let me back up from that. What is uncertainty? There was a very famous essay written by an economist, Frank Knight, who distinguished risk from uncertainty. Risk is where you know the distribution of outcomes and you can put a probability on them. Uncertainty is where you don't know. If you look at what's happening around us today, we have geopolitical uncertainty, we have technological uncertainty, we have economic uncertainty, we have health uncertainty, we have environmental uncertainty. And I can go on and on. And I'm not the only one feeling it. In a recent essay, an author talked about how in earnings calls, CEOs mentioned the word uncertainty three times as often in this last quarter than they did the previous quarter. If you look at the VIX index, which people in the stock market loosely call the fear index, you know, it has spiked. So we have manifest uncertainty, which naturally, normally will trigger fear and anxiety, which naturally and normally leads to the classic freeze response. Let's wait. We don't know what to do. Let's not invest right now. We need to just see how this tariffs and whatever else is gonna play out. And sometimes that may be the prudent response, but sometimes you need to be willing to lean into that fear.

A (5:43)

And your previous research showed that in times particularly of economic uncertainty, because you were focused on recessions, companies that managed to take action were the ones that ended up better off in the long run.

C (5:58)

Yes, it is true. I wasn't Studying courage. Back then, we were just looking at strategies for down markets. What do companies do in down markets? And we found that 9% of companies lean into recessions as opportunities for growth and come out stronger. They don't just engage in cost cutting like everybody else. They do cut costs, but they also invest for growth.

A (6:18)

You argue that there are steps one can take to become more courageous, or at least feel more courageous. Have you seen or worked with business leaders who sort of weren't initially courageous decision makers, but grew into it?

C (6:35)

Yes, I think there are many, many examples of this. You'll see that in actually in small ventures as well, where first time entrepreneurs will say, you know, I'm new to this. I've never done this before. But, you know, I took a leap of faith that I decided I had to do this. I felt compelled to do this. But it's also true in other organizations where as people move up the chain of command, sometimes they're able to move pretty far up by just following orders and getting the job done. And suddenly they're in a position of authority where now the buck stops with them and they have to make gray zone decisions. The black and whites are made by people below them. And so now the buck stops with me and I've got to exhibit courage or I'm a P and L leader. This is the first time I'm leading. I'm running my own P and L, or it's my first time being CEO. And what you see suddenly is how people have to grow into those jobs because sometimes they don't have those muscles inside them. I'll give you an example. Anne Mulcahy, former CEO of Xerox, who led the legendary turnaround of Xerox, was not even a candidate to be CEO. She had been passed over the previous time around. And the company's dealing with SEC investigations, is dealing with bankers who are furious that they've used up their revolver credit. They're dealing with customers who are furious that their sales force has been reorganized. They're dealing with morale issues. People are really thinking this company is going to go bankrupt and your CEO, and you've never done it before. And you discover some people are able to rise to the occasion. So as I probed these inspiring examples, I had to ask them, how do you resource yourself? Like, what was the internal conversation you were having? How were you processing that? What did you have to do to boost yourself up to do what you did? And you discovered there are some systematic things that they're doing. Some of them were extraordinary. People, some were ordinary people who had never done anything bold in their life before. I'm writing a case right now on Boston Scientific, which was a failing company. In 2011. They had done the second worst acquisition in modern history. They had acquired Guidant. They were $27 billion company themselves. They bought Guidant for 28 and in a few years they were down to 4, second worst acquisition after AOL Time Warner. It was a mess. So how do you come in and take that business and over the next decade do 52 acquisitions and turn it into a 150 plus billion dollar juggernaut? This gentleman who comes in, Mike Mahoney, before he takes the job, he hires a consultant to personally advise him. Listen, analyze this company that has made me this offer and I want to know, should I take this job? And the consultant goes off and says, comes back after two weeks, says, do not take this job. Stay at jj. You have a great gig going. This company is not something you should do. He still took the job.

A (9:40)

Part of what I really enjoyed about your research was that you do cover CEOs like Mulcahy, but then you also cover people working at much lower levels. You know, managers at the Taj Hotel during the terrorist attack on that facility, Frances Hogan, the Facebook whistleblower. So let's talk about sort of the strategies that you uncovered that all of these people at all different levels of the hierarchy use to embolden themselves. You point to five strategies. Create a positive narrative. Cultivate confidence. Take small steps, Find connection, and stay calm. And I'd love to just go through each of those one by one to give our listeners some practical takeaways for how they can do the same. So what do you mean by create a positive narrative?

C (10:29)

The first step, I think you need to understand is courage is a proactive choice we make. And when we think about proactive choices, it starts with a story we tell, ourselves, a narrative. Most of our behavior is a result of how we interpret the world around us and how we see ourselves in that world. Academics call that identity, which is how I see myself. And meaning or social construction is how I see the world. So people make a deliberate, intentional choice. Who am I, why am I here and what is going on here? And it can happen in extreme situations. I interviewed a Ukrainian commando who was an M and a lawyer before who volunteered to fight in the front lines. And he said, you know, I'm Ukrainian and if I don't do something, I mean, I would never be able to live with myself. And so, you know, he made A choice to do something. And he had his own narrative. And sometimes organizations build that narrative. You know, in the Marine Corps, Semper Fidelis. Always faithful. So when you're leading an organization or when you're a member of an organization, what's your story to yourself? I'm here to win. I'm here to make a difference. I'm here to have an impact. And when you encounter situations. So Francis Haugen encounter a difficult situation, she only really fully internalizes it when one of her own friends becomes radicalized by content on Facebook. So she sees it herself firsthand, and then she says, well, somebody else should do it. Why should I? And then she recognizes that if she doesn't do it, nobody else will. So how do we build that positive narrative and make courage a choice?

A (12:12)

The second piece is cultivate confidence. But how do you do that when you sort of aren't feeling good about your ability to handle all of the uncertainty coming at you, particularly when you are stepping up to that new role, you know, division head, or running your first P and L, or entering the C suite?

C (12:33)

When I first wrote this idea of cultivate confidence, I'm thinking, oh, my God, cliche. Hell, you know, I hate cliches. And here I am doing that exactly myself. But you have to really get beneath that idea to understand the nuances behind it. And there was a very famous Stanford psychologist, Albert Bandura, who studied this concept, and he called it self efficacy. He actually had people who were fearful of snakes in two weeks being able to hold a snake and put it around their neck. So the idea was there are two levels of confidence, self efficacy. One is domain specific. I need to know my task really well. I need to be an expert at it. And the more intentional I am at what I do, the more confidence I have in doing that task. Whether you're a marketer or a finance person, or mastering your craft. Right. As a researcher, as an editor, we all try to master our craft to the point where we have confidence in our ability to do it.

A (13:30)

And to make decisions about it. Yeah, absolutely.

C (13:32)

And to make decisions about it. But that's superficial still. Beneath that sits this generalized self efficacy, which is this can do spirit, which means no matter what curve balls come my way along the way. I got it. I'll get it done. And that's what you have to do when you say, let's take that leap of faith, it might fail. We'll improvise, we'll adjust, we'll find a way forward. So just because we don't have all the information doesn't mean we need to sit out and wait. That can do. Spirit is something that is a much harder thing to instill inside yourself and inside organizations where you're willing to take that first step.

A (14:15)

I guess it gets to Carol Dweck's growth mindset, too. You know, believing that you can learn and grow and get better at anything you're trying to do.

C (14:25)

Absolutely. So learning becomes part of it, but the other one is the recognition that I can improvise my way through it. I know I'm such a expert at this topic that I can improvise if I have to. I can go beyond the manuals, you know, so that you're not dealing with unknown unknowns. So how am I going to. Like in the Fukushima crisis where the plant manager doesn't know there's no manual for what to do when everything is shut down.

A (14:52)

And this is when a tsunami is hitting nuclear facilities in Japan.

C (14:56)

Yes. Where you have a wall that is 20ft high. Having to face up to tsunami waves at 55ft completely submerges the plant. So how do you take action in those contexts where he says, we'll do it, we will find a way. And that kind of confidence building is what I think leaders have to understand as you take your organization into darkness, into fog, into unknown domains, that we'll find a way because the system will want to not go anywhere. The system will want to, like, let's wait and see. Let's wait until we have all the data.

A (15:36)

And you want to make sure you're doing that without being overconfident in your ability to handle any situation, right?

C (15:43)

Absolutely. There's a fine line between courage and reckless. And so I think it's important to understand that, too. But having that general confidence, I think is somehow organizations go from playing to win, where they have a winning mindset, to playing not to lose. So how do you jumpstart that winning spirit in an organization becomes really building up that confidence? I think that becomes very, very important for leaders in organizations today.

A (16:16)

Yeah. And even as a CEO or a team manager, even if you aren't particularly confident in your own individual ability to conquer a challenge, sort of expressing the idea that working together we can all do this is a way to sort of get beyond yourself and make it a team effort.

C (16:38)

So now you're going to one of the other resources that I found, leaders pulling together, that we think of courage as a solo sport. Courage is a team sport.

A (16:48)

And so that's that find connection piece.

C (16:50)

Exactly. Yeah, yeah.

A (16:52)

How do senior leaders in particular surround themselves with the right kind of people who are going to encourage them to be brave? You know, think about the collective, not their own jobs and sort of not necessarily just be yes men or women.

C (17:08)

These courageous individuals look for four kinds of support. It wasn't just having a team around you. They were looking for something very specific from these people. The first was moral support, supporting me saying yes, you got it, you know. The second was informational support, getting valuable information. The third was resource support, resources that you might need. And the last one was appraisal support. So if you look back at entrepreneurs again, like we were discussing earlier, you know, why do some of them go to venture capital? They're looking not just for resource support, they're looking for moral support, information support and appraisal support. And I think this idea that when you have the right forms of support, it gives you courage.

B (17:58)

What does the future hold for business? Ask nine experts and you'll get 10 answers. Can someone invent a crystal ball? Until then, over 42,000 businesses have future proofed their business with NetSuite by Oracle, the number one AI cloud ERP, bringing accounting, financial management, inventory and HR into one fluid platform. Speaking of opportunity, download the CFO's guide to AI and machine learning at netsuite.com IdeaCast. The guide is free to you at netsuite.com Ideacast netsuite.com IdeaCast Foreign.

A (18:40)

Let'S circle back to the third step that you list in your article and book, Take small steps. Could you give an example of how a leader might do that to sort of walk their way into feeling more courageous?

C (18:55)

This idea actually originates from some research by a very famous social scientist, Carl Weich, who introduced this concept called sense making. And he was studying firefighters and other extreme, you know, emergency response people that when they go into a building they don't know what's going on around them. So what they do is they have to act their way into knowing. So instead of knowing everything and then taking action, you walk in, you take cues connected to patterns you've seen before. You say, aha, this is what's happening. I've seen this before, this is like that. And you're rapid fire iterating as you're walking into the situation. Now how do we extrapolate that into business? So you start to take small steps into it and you work your way into iterating and getting a greater understanding of the situation. So if you're getting into a new market, you're trying to build an adjacency and go into a new arena. Take the old days of Nike going from footwear into apparel. That was a huge leap because footwear, they were pre selling. People would buy up the new shoes in advance and if they didn't sell, that was on them. Apparel is a fast moving market where now all the unsold stuff comes back to Nike and then you're going global. Or you look at Netflix, on which I wrote a case. Going from DVD distribution to content streaming, from content streaming to content production. How are we going to do that? You know, these leaps into the unknown, which are in arenas that you don't know anything about, you sense make your way, you tiptoe your way into it.

A (20:46)

So is that about just pilot projects? Experimentation?

C (20:50)

Yes. But add to that the learning loop that as you're piloting your rapid fire, trying to iterate and learn as you go. But taking that first step is sometimes the hardest piece of it. The willingness to lean into the fog and try to navigate your way in with the idea and understanding that I will adjust as I go, so courageous action doesn't have to look like I have to leap off a cliff. I'm working my way into it.

A (21:22)

Okay. And then the final piece is staying calm, which probably is the most difficult thing to do in times of turbulence and turmoil. So how did the leaders that you studied actually do it?

C (21:36)

I think I wrote that chapter for myself personally. There's a great body of research in social science on emotional regulation. The example I use in the book is really around Simone Biles, because the thing is, fear naturally floods the brain, right? It is not a calming emotion. I'm sad to say also that, you know, the two most common emotions in the workplace are fear and anger. So fear is widespread, paralyzing emotion. So how do we learn to regulate ourselves and how do we learn to step away? First of all, set it aside so we get some distance from it. Let me use Simone as an example. So he's a classic example of how she got the twisties in the Tokyo Olympics. Mind you, she's doing gymnastics where any move can be fatal if she does it wrong. So she has to be very, very careful. And she suddenly has this kind of twisties, which suddenly she's no longer in control and withdraws from the Olympics. So first thing you have to do is tune it out and center yourself again. It's called selective attention. She tunes out from all social media, she tunes out from the news. And when she comes back, she then starts a very small regulated practice going back in Next step, ritualizes becomes a daily ritual for her. And when we do rituals, it creates kind of a sense of normality over what may not look normal. And then she reframes it. Reframes it. As you know what, this is my chance to come back even stronger. We have to first figure out how do I selectively tune myself out of the emotional response I'm having. I have to ritualize and ask myself what do I need to do to just keep at the task. And finally I have to then figure out how do I reframe it for myself. I'll add one more to it that I think is important is I found a little bit of a kind of a twist in this. Some leaders are intensely outcome focused, but not caught up in the outcome. They're very process focused focused. So it's about getting the task done right, that results are byproducts of doing what needs to be done well. So your immediate focus becomes not on winning, but on doing.

A (23:57)

Yeah, my son plays tennis and we hear this all the time. If you played the point right, but you still lost it, that's okay. If you played the match right, if you followed your strategy, if you adjusted where you needed to, but the guy just hit more winners than you did or more serves than you did, then a loss is okay. But it's hard to do in a business setting where you're beholden to targets and investor expectations.

C (24:23)

I think there's something, a kernel of an important idea there, sticking to your strategy, sticking to what needs to be done, and not letting a scoreboard or a KPI kind of completely cloud you. Here's how the business translation of that would be. We all have outcome metrics, right? Show me your ebitda. Show me your other numbers. Right? Your sales growth numbers. We should also be equally focused on input numbers. What are our inventory turns like? What is our customer satisfaction? What is our employee engagement? If those are healthy, you hope the outcomes will be good. But I think if you have only outcome measures and you're not thinking of the process measures, I think that's the challenge. I think you need both.

A (25:14)

Yeah, I think also focusing on the long term goal or purpose of the organization, there will be ups and downs. But are we on the right trajectory getting to where we want to be in the long term?

C (25:28)

That's a great observation, Alison. I think it's worth noting because one of the other catalysts for courageous behavior is what I call conviction. And you have to have conviction around an idea or an ideal. And what do you believe in And I think when organizations create a rallying cry around a purpose, it's because it then is to create conviction in everybody that that's what we're here to do. That's our raison d'. Etre. And when you have conviction about an idea or an ideal, that's what inspires people, you know, And I think inspiration, inspired behavior leads to courageous action because you're doing it for a larger cause. And I think hitting an EBITDA number is not inspiring.

A (26:19)

Right.

C (26:20)

You know, I think you need something.

A (26:21)

Bigger than that as a senior leader, someone who has pull in the organization. How do you work to cultivate courage across teams? You know, whether that's being brave enough to give negative feedback or report a problem or make a decision about, you know, something that other people have doubts about.

C (26:41)

You know, I wrote a case on a Singapore bank called dbs on the turnaround of the bank. And the CEO, when he took over, somebody gave him advice and said, you can't turn sheep into wolves, so go hire a new team and clean house. And he came back and said to himself that that is so wrong. I am going to turn sheep into wolves. And he transformed the bank from the bottom rated bank in Singapore when he takes over to the number one rated bank in the world in seven years, beyond their wildest of dreams. And he doesn't fire anybody. And his whole lesson, I think, was he said, as a leader, you have to create the conditions in which people behave. You're a context architect. You need to create the conditions in which people are willing to try, experiment, learn, fail, grow. You can't mandate it either. So the first thing I think is a leader has to be a context architect to create the conditions for brave behavior. Whether it's allowing for failure, resourcing, experimentation, learning and growing. That's all that is important. I think the second piece of it is the leader themselves has to embody courage. And I think you have to really probe the word embody. Embody doesn't mean role model, you know. Okay, yes, role model too. Embody means you actually live it. You live and breathe it. So how are you as a leader showing up? How are you willing to take ownership? How are you willing to step up? The last piece of the puzzle is how do you communicate it? Every company I've talked to these days has the word courage in their mission values somewhere or the other. The courage word is out there, right? You can't communicate. Be courageous, be bold. You know, how do you bring it alive? And sometimes these kind of emotion laden Words. You need to kind of bring it through storytelling by really communicating the idea through a set of stories, by celebrating it, by putting out courage stories of, look at what this person did, you know, look at how this individual really brought this idea alive. I think that is the other piece of the puzzle. You know, it's not something you can snap your finger, put courage in your official values and leadership qualities and change a few KPIs and say, let's resource it. Okay, we're courageous. You're working with the human mind and the human emotion.

A (29:18)

How should we all evaluate whether we're being smartly courageous?

C (29:24)

That's a hard one.

A (29:28)

So I saved it for the end.

C (29:30)

Yes, it's a hard one because there.

A (29:32)

Are plenty of people who are taking bold, decisive action right now that I don't know that any of us would think will lead to good long term results. So what is the measure? How do you know if your courage is paying off in the right ways?

C (29:48)

Let me go back to Aristotle. When Aristotle was making the distinction between courage and cowardice, and he was thinking of it in the context of the ideal soldier, he made a distinction between courage and reckless. So in his mind was that, you know, you have to be methodical, thoughtful, so that whatever you choose to do is impactful. If it's not impactful, then you know, you're just making a statement and it doesn't lead to much else. And so how do you look for the maximum possibility? So there's a bit of pragmatism woven into this, that courage is not reckless.

A (30:29)

Yeah. Do you think that over the past couple of years, business, as we've been facing all this uncertainty, business leaders are figuring out ways to act courageously. Or would you like to see more of it? Would you like to see more bravery?

C (30:46)

I think I would not be alone if I said that the world needs more bravery today. We are in a world where somehow bravery is in very short supply and it manifests in actually all facets of our lives. In the business world, where there is tremendous uncertainty, we need to see more bold behavior, more in other spheres of life as well. Let me take technology, for instance. I think people are no longer even willing to have a conversation about where is AI going? What are the consequences of it? Any naysayers have been completely drowned out and are no longer speaking up the way they were just a year ago. And so how are we thinking through the consequences? You look at environment, sustainability, where have those voices gone? So I think business leaders are facing so many realms in which there are consequential changes happening around them. And I think I for one would be really thrilled to hear more clear voices with a clear point of view that is necessary today.

A (32:01)

Well, Ranjay, thank you so much. It was a delight interviewing you on this topic and also working with you on the article. I really appreciate you joining us.

C (32:09)

Thank you so much. Addison.

A (32:13)

That'S Harvard Business School Professor Ranjay Gulati, author of the HBR article Now Is the Time for Courage, as well as the new book how to Be the Surprising Science of Everyday Courage. Next week, Adi will speak with Cory Doctorow about the trend of technology getting worse over time for users and society. If you found this episode helpful, share it with a colleague and be sure to subscribe and rate IdeaCast and Apple Podcasts, Spotify, or wherever you listen. If you want to help leaders move the world forward, please consider subscribing to Harvard Business Review. You'll get access to the HBR mobile app, the weekly exclusive Insider newsletter, and unlimited access to HBR Online. Just head to hbr.org subscribe thanks to our team, Senior Producer Mary Du, Audio Product Manager Ian Fox, and Senior Production Specialist Rob Eckhart. And thanks to you for listening to the the HBR IdeaCast. We'll be back with a new episode on Tuesday. I'm Alison Beard.

B (33:15)

Have you ever loved your HR or payroll software? I didn't think so. Deal changes that it's one global AI native platform for hr, IT and payroll. Built in house and backed by more than 2000 experts in over 130 countries. It keeps you compliant, it scales as you grow, and it's actually nice to use. Book your demo@deal.com, that's D E L.com HBR.