Intellectual Honesty Is Critical for Innovation

Here’s how to balance psychological safety and intellectual honesty for better team performance

Published: Wednesday, May 31, 2023 - 12:02

When top Amazon executives were debating in the mid-2000s whether to greenlight Kindle, the now ubiquitous e-reader, sparks flew in the boardroom. Jeff Wilke, CEO of Amazon’s retail business at the time, openly challenged Jeff Bezos in front of the board. Wilke argued the venture would fail because Amazon lacked experience creating hardware. Bezos conceded Wilke had a point but argued that the value of the experiment creating software-embedded devices outweighed the risk to Amazon.  

Later, Wilke says, “Turns out I was right on everything that I called out, and Jeff was still right to say we should do it. [We] created a valuable skill set that we can use to invent new things on behalf of customers.”

That debate—part of Amazon’s “disagree and commit” process—is one of the reasons Amazon has so successfully created so many new lines of business. It also reveals a paradox: Leaders today are increasingly striving to create a sense of social cohesion, sometimes described as psychological safety, where people feel included and that their views matter.

But if intellectual honesty—proactively voicing disagreement in a rational way—is handled improperly, it can chip away at the social cohesion often at the heart of psychological safety. In the most extreme cases, intellectual honesty can even destroy psychological safety, leading to highly vocal debates and environments charged with anxiety.

Striking the right balance between psychological safety and intellectual honesty is crucial but challenging. In a study of more than 60 startups and established firms in a variety of industries, my collaborators and I found that many teams prioritize psychological safety without realizing that it can sometimes undermine intellectual honesty—and vice-versa.

Distressed, anxious, comfortable, innovative: What’s your team culture?

Our study identified several principles that are critical for fostering an innovative, high-performance team culture that balances intellectual honesty and psychological safety. But first, let’s examine four typical team cultures that have varying degrees and combinations of psychological safety and intellectual honesty, and how these cultures facilitate or hinder innovation and learning. Greater awareness of a team’s culture could help leaders improve team performance.

Distressed

Distressed teams lack both psychological safety and intellectual honesty. As a result, they struggle with learning and innovating. Such teams are common in organizations where individuals lack emotional intelligence. In such environments, leaders often can’t admit that they are wrong. No one is willing to acknowledge that the company is under threat.

A salutary example is Nokia. Executives and managers who worked there during the late 2000s described a culture of fear and intimidation in which senior leaders pressured managers to perform without revealing the extent of competitive threats. Anyone who dissented was punished, and employees were afraid to deliver bad news, including that the company’s cellphone strategy was failing.

Anxious

Anxious teams score high on intellectual honesty and moderate to low on psychological safety. Team members are encouraged to be brutally honest, even if it harms their relationships. In interviews, people on teams with an anxious culture told us that they often don’t feel safe or respected. They worry that they are in constant competition with their colleagues and what the team thinks of their ideas.

Anxious cultures have high turnover rates. Ray Dalio, who pushed for radical truth and transparency at the hedge fund he founded, Bridgewater Associates, once reported that 25 percent of new employees left within 18 months. And according to one analysis, blunt-speaking Tesla CEO Elon Musk loses 27 percent of his executive team every year.

Comfortable

The opposite of an anxious culture, a comfortable culture is characterized by high psychological safety and moderate-to-low intellectual honesty. Team members are typically agreeable, need to be liked, and are less assertive or proactive. They feel safe speaking up but choose not to, believing that avoiding potential negative conflict is better for morale and the team’s productivity in the long run. They might not care enough about the mission of the team or organization to rock the boat.

Comfortable teams tend to perform consistently, but they rarely produce pioneering innovations because members don’t push one another to improve. One manager at a professional services firm told us that he wasn’t assertive when challenging colleagues’ ideas unless his work was directly affected. Further, according to one study, people in psychologically safe environments tend to be less motivated and don’t work as hard as people who expect their performance to be critiqued.

Innovative

The most innovative teams are those that balance psychological safety with intellectual honesty. Members feel safe to voice their opinions and openly debate ideas. They take decisive action, but they do so in ways that maintain respect among team members. In contrast to people in distressed cultures, they are able to swallow their pride and accept other viewpoints.

“People who can’t handle the truth can’t admit a mistake, and so they go blindfolded off the cliff,” explains Martin van den Brink, chief technology officer at ASML. Van den Brink led a decade-long effort to create extreme ultraviolet lithography machines, a technology used to make advanced microchips. “I never pretend I will be right. I just say, ‘This is what I think; tell me the flaw in my thinking.’”

Principles for building innovative cultures

We have identified four principles that are most important to achieving an innovative, high-performance team culture.

Principle 1: Foster emotional intelligence

Emotional intelligence is the mortar that binds psychological safety with intellectual honesty. It includes self-awareness (awareness of your emotions), self-management (regulation of your emotions), social awareness (empathy and the ability to see others’ viewpoints), and relationship management (the ability to find common ground and build rapport).

Leaders should be particularly skilled at social awareness and relationship management. By listening with empathy, seeing others’ perspectives, and defusing conflict, they are more likely to foster intellectual honesty while preserving safety. They are also able to engage in self-reflection, show humility, use humor to relieve tense situations, and tell people they are valued.

Principle 2: Hire and develop proactive employees

Research shows that personal initiative is more than twice as important as psychological safety in predicting whether someone will offer their ideas or raise questions. When Charles Gorintin founded the French company Alan in 2016 with the aim of creating innovative digital offerings for health insurance and healthcare, he hired executives who were proactive and willing to challenge one another’s ideas. They created a culture in which leaders are encouraged to make decisions swiftly with the best information available and to change course quickly when new information emerges.

Gorintin says, “It is often better to make the wrong decision, act, and learn how to fix it than wait to make a decision in the first place.”

Principle 3: Legitimize and encourage honesty

Organizations can address employees’ fear of retribution for speaking up through management principles or processes that legitimize and encourage honesty, such as the one practiced at Amazon. Research suggests that task conflict—or disagreement about work—within teams leads to more entrepreneurial strategies, more innovation, and higher performance.

Principle 4: Subordinate egos to unifying goals

When employees feel engaged with and responsible for the team’s or organization’s mission, they are more likely to speak up about problems and issues that could jeopardize the mission. This sense of working toward a common goal is stronger than psychological safety in driving intellectual honesty.

“I find that candor emerges when people are committed to the mission and feel dependent on their teammates for getting the mission accomplished,” says Sterling Anderson, a former Tesla executive and founder of Aurora Innovation, a $3 billion startup that sells self-driving vehicle technology.

Psychological safety and intellectual honesty can sometimes work against each other. The challenge for leaders is to promote candid debate that’s focused on the problems the team must solve as well as defusing interpersonal conflict. By doing so, they can nurture a culture that leads to higher performance.

This article is adapted from Why Innovation Depends on Intellectual Honesty (MIT Sloan Management Review, 2023).

First published April 27, 2023, on INSEAD’s Knowledge blog.

About The Author

Nathan Furr

Nathan Furr is an assistant professor of strategy at INSEAD, one of the world’s largest graduate business schools. Furr is a recognized expert in innovation, entrepreneurship, and value creation. His research focuses particularly on how new and established firms adapt to technology change and enter new markets. Furr co-authored the books The Innovator’s Method (Harvard Business Review Press, 2014), and Nail It Then Scale It (NISI Publishing, 2013), and multiple articles in Harvard Business Review and Sloan Management Review. Furr also co-founded the International Business Model Competition. He earned his Ph.D. from the Stanford Technology Ventures Program.