Laila Tarraf on Fostering Creativity in Companies

By Todd Anthony, Founder, Head of Strategy

Laila Tarraf had no intention of getting into Human Resources. After getting roped into recruiting straight out of business school (Haas), she helped grow Webvan during its wild, pre-bubble expansion. At Walmart.com, CEO Jeanne Jackson noticed Laila was already doing the Head of HR job, so she offered her the opportunity to step up into that role. With the mind of a social psychologist, she was good at it and had a knack for helping companies grow. More Head of HR/Chief People Officer stints followed at Peet’s Coffee, GI Partners, and Allbirds.

In 2021, Laila published her first book, Strong Like Water, a story about how a series of tragic losses became the catalyst for tremendous personal and professional growth. Today, she’s a sought-after advisor to founders, investors, and CEOs on complex talent, culture, and organizational and succession challenges. In this lively exchange over lunch with Pinwheel ECD Todd Anthony, they discussed the connection between psychological safety, growth mindset and creative, human-centered company cultures. 

In your profile on LinkedIn, you say, “My core operating principle is that building a commercially successful business enterprise is not mutually exclusive with nurturing a psychologically safe human-centered culture.” It seems like company culture is one of the things that you’re most interested in. I’m wondering how that came to pass. 

I care about people and am super interested in what motivates them and makes them tick – even outside of business. People are fascinating. When you get a group of people together, the dynamics that happen are fascinating. 

I think culture is one of those words that has so many different meanings. To some people, it’s the fun things leadership does to make employees happy. But the definition of culture is the accepted norms and behavior amongst a group of people. It’s our way of working, right?

It’s an amorphous thing to get your arms around.

It is. I’ve been talking with a venture firm for about a year, and last Friday night I got an email from one of their folks. They want to work on operating principles and culture, but they’re having a hard time selling it to their higher-ups. So they asked me to help them make a case for why it’s important to focus on culture, why it’s important to align on operating principles, and how those things relate to business performance.” 

At first, I’m like…wait, either you’re ready to work with me or you’re not.” But then I went ahead and answered their question. I’ll read to you what I said. [Reads answer from email out loud]

“Research has been done over the past 20 years trying to tie hard-to-measure soft human capital metrics to hard business outcomes. Most of this research shows how greater employee engagement drives greater discretionary effort, which drives a higher quality of work, lowers employee turnover, and increases retention. We believe that all of these outcomes lead to higher business performance, but I don’t know that anyone has ever been able to draw a clean, straight line with a one-to-one correlation between greater retention and higher EBITDA or more revenue – unless the person you’re retaining is some star salesperson.”

“In the past 10 years or so, we’ve expanded the conversation beyond engagement to culture. Why? Because we know that culture impacts employee engagement.  At a  high level, a positive connected  culture drives greater engagement than a toxic one. 

Harvard professor Amy Edmondson’s work around psychological safety became well known when the New York Times wrote an article about Google and its quest to build the perfect team in 2016. In short, Google found that the most successful teams were the ones that had the greatest psychological safety. Meaning, the teams that felt they could take risks in their work because they weren’t worried they were going to be unduly punished. So, in this way, they were more innovative and consequently more successful.”

“In addition, the higher the psychological safety within an organization, the greater you can drive accountability. Leaders have an outsized role in creating a culture with high psychological safety by how they show up and act.”

Then I shared the psychological safety accountability matrix.

In her book “Teaming,” Edmondson says that when you have high psychological safety, you’re able to drive high accountability. And the organization is a learning organization. If you’ve got high psychological safety and low accountability, people are in their comfort zone –

Meaning that they’re potentially going to get lazy?

Yep. If I know I’m not going to get punished and you’re not holding me accountable, I can do whatever I want. If there’s low psychological safety and low accountability, they don’t give a shit. Now if there’s low psychological safety, but you’re driving high accountability, it’s an anxiety-producing environment. 

This is the first thing I do when I go into an organization: I assess the level of psychological safety. That is directly tied to fear – and how much of it there is in the organization. When employees feel like they can’t tell you what’s really going on, that’s when the leaders are in trouble because then you lose touch with what’s really happening. Right? And that’s when you get unpleasantly surprised. 

So what is a leader to do about that? 

There are specific leadership behaviors that cultivate greater psychological safety. You need to be accessible and approachable, showing fallibility, showing limits of your knowledge, using direct language, yadda, yadda. Creating more psychological safety allows you to drive higher accountability and move the organization to a place that’s more innovative and risk-taking, which makes you more successful. 

So leaders set the tone for the culture then? 

If I’m trying to connect the dots for someone who’s more linear and cerebral, it would be something like: “You set a strategy. Executing on that strategy requires people. People need to be organized and led. How people work and how they’re led becomes their way of working, which in essence becomes the culture.”

Culture is hard to describe because it becomes the water a fish swims in or the air that we breathe. We don’t see it, but we know it’s there. It just becomes our way of working – the accepted norms and behaviors. Being intentional about the kind of culture you want, and having a leadership team that is aligned in how they act and lead, just gives you more control over how precisely you can deliver on your business goals. 

It’s like driving a car that has a loose suspension versus driving a Formula One racecar. They’ll both get you to where you want to go, but one is going to be a lot more efficient and probably more fun getting you there.

It makes perfect sense. You’ve made a nice case that psychological safety is a component in how innovative/creative an organization is. Because it allows for experimentation and it takes the risk out of exploration.

It does, yeah. 

What are some other components of a company culture that could contribute to a more creative or innovative company?

Growth mindset. This is Carol Dweck, a Stanford professor who wrote a book called Mindset. Her research was around people who think they have a finite or fixed level of talent that prevents them from trying something they think might reveal they don’t know how. They believe that how good they are today is something that’s not going to change. So they don’t try. They don’t risk. Because if their boss finds out that this is all there is, they might fire me. But people with a growth mindset believe that their intelligence, ability, and talent are malleable, flexible, and able to grow. Especially when they’re challenged.

Ever expanding.

Yeah, it relates to neuroplasticity. Our brains have neuroplasticity, right? And Dweck’s work was with young kids, like primary school. There were kids who were told, “You’re so smart, you’re so smart.” And the kids concluded, “I’m not going to try anymore because I’m not going to risk doing something that makes you think that I’m not smart.” There were other kids who were given hard problems and they were like, “Oh! Let me in there.”  These are really good creative thinkers and engineer types who found passion and joy in figuring something out. When they get it wrong 50 times, their mindset is, “Well, now I know 50 ways that don’t work.” So they keep going to use those clues to find the solution. 

The fixed mindset people think, “I’ve now failed 50 times. I’m worthless. I’m out of here.” 

Is there a connection between a growth mindset and psychological safety? 

People with a growth mindset, the ones who figure things out and innovate, need the flexibility to try things and fail. Leaders who believe in a growth mindset will give them that flexibility. The art of it is how much rope you give someone. 

Sure. Well, what you’re talking about is really complicated in the sense that it’s talking about individual change that can lead to company change.

Yes.

But people are hard to change. How do you go about doing that part? Taking somebody with a fixed mindset and turning them into a growth mindset person? That sounds like parenting a little, but-

It is. But people have to want to grow. If a growth mindset is important to you as a leader in an organization, I think you make it a part of your company DNA –  your values. You hire for it, reward it, performance-manage to it. You really integrate it into all your people touch points so that you can make it real and bring it to life.

So you reward experimentation? What does that look like? 

There was a book I read back when I was at Peet’s called The Last Lecture by Carnegie Mellon professor Randy Pausch. He ended up getting cancer, but before he passed away he wrote this book for his kids. It was a beautiful book with life lessons about risk-taking. He talked about how at the end of every semester, he’d give an award – “The First Penguin” award – to the student who took the biggest risk. Apparently, the first penguin that dives into the water is most likely to be eaten by sharks. That first penguin is the one that literally tests the waters. 

So I created that award when I was at Peet’s. It’s so easy to follow the crowd, so I wanted to reward the person who had the courage to jump into the water first. Most of the time people get awards at work, it’s for their successes. You don’t see all the failed attempts that helped get to that result. 

Ok, so you want to create a culture where it’s okay to step outside the lines and try new things. But having a culture requires norms, customs and even rules. You said in your book, Strong Like Water, that culture can serve to divide you in a sense because by giving you an identity it gives you a reason not to evolve. 

There’s a saying, “Strong opinions, loosely held.” And I think that is a good way of thinking about your culture. You have strong beliefs and opinions but you are able to hold them loosely because the world is dynamic and business is dynamic so you need to be able to flex.

Right, otherwise they become dogma.

Yes, and you quickly become irrelevant. Because the only constant is change. 

But there is a part that is sacred – that part you never change. For us at Peet’s, it was who we work with – the coffee farmers and what we pay them. Those are relationships that go back 30, 40 years and they’re sacred. We don’t touch those. So, it’s really identifying what is core to your DNA – the core beliefs and unique value proposition that if you messed with them, you would be something completely different. 

I wonder if you think that there might be certain cultural dynamics at companies that stifle creativity. 

Yeah, it all goes back to psychological safety. The most obvious thing is by being overly critical and punitive, right? Berating people in public for mistakes made. A lot of this is in how the leaders hold themselves and whether the leaders, either explicitly or implicitly, set the tone that mistakes will not be tolerated and that there has to be perfection. It creates a culture of fear. The greater the fear in an organization, the less creativity you’re going to have. 

At Peet’s after the 2009 financial meltdown, I remember the CEO Pat O’Dea was challenging everyone to be more creative and innovative. I said to him, “Look, we are not creating the conditions for people to be creative and innovative.” Creativity requires space. A little bit of levity, a little bit of humor, a little bit of exploration and experimentation. It’s a very different mindset than most MBAs have. 

Totally different. In fact, it could be considered the opposite.

It’s more of an artistic mindset. And you need both mindsets. So as head of HR, I’d say that we needed to protect those sacred places and give people the room to breathe. That’s one thing. Also, I think you need to appreciate and recognize the effort and not always focus on the outcome. At Allbirds, one of the things we did was have the shoe designers get up and show various attempts that didn’t work out. And we’d all have a laugh. 

I love that. The other thing that’s kind of cool about it is that you invite people into your problem and they might have an idea.

Right. I also think autonomy is so important, but autonomy means different things to different people. So, really getting on the same page with how you define autonomous. Like you said, how big is the sandbox or how long is the leash. Control is a derivative of fear.

Last time we spoke, you were talking about conflict resolution and difficult conversations. And I suggested that maybe it goes back to trauma. People individually had trauma in their lives and maybe they’re bringing that into the workplace.

The original trauma is this break. It’s this forced separation that we all go through. When psychiatrists talk about the core childhood wound, that’s what it is. And there is a narrative that we develop around that.

Yeah. And then we all bring all that shtick, narrative and all, into the office. And we all intermingle them. 

It’s amazing that anything gets done. Everyone just wants to be seen and heard and loved. So when I think of all the work that we do as HR people and coaches, it’s about getting people to see each other for who they are, to be kind to each other, and to care about each other.

How does leadership instill that into the culture? 
Leadership needs to model it. And part of the problem, sorry Todd, is the patriarchy – the patriarchal system. Historically, it has led with macho strength and has avoided showing any sort of caring or fallibility. It’s changing though – today we talk about vulnerability and empathy so the conversation has evolved. But it’ll take a generation to really take hold.

Yeah, it’s true.

Emotions and feelings are just energy. Electrical impulses. And if you don’t let them out… if you push them down, they just get layered and layered and you wind up living on a hair-trigger.  Just allow yourself to express them, even if you don’t know why they’re coming up, because your prefrontal cortex is the last to know.

What do you mean by that –  that the prefrontal cortex is the last to know? 

Electrical pulses go up through your spine and then hit your amygdala. The first thing your brain says is, “Am I in danger or not? Fight or flight? If you’re not in danger, it goes through your limbic brain, which is the seat of emotion but there’s no language there. Finally, it goes to your prefrontal cortex where you can try to intellectually understand it.

You just explained 60% of the problems I’ve had in life, right there.

And we stop ourselves from feeling until we know here (points to head). But if you let yourself feel it here (points to chest), eventually you will know or you won’t. 

Well, Laila, thanks so much for your time today. I really enjoyed our conversation. 

My pleasure.


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