Peak Performance #28 | The Three Cultures of Ownership
What it means to take responsibility. How to create a culture of ownership.
“The trick is to take 100% responsibility. No less. No more.”
Ownership. Responsibility. These concepts are foundational to your development as an individual and leader, as well as to the development of your organization.
At the level of the individual, being responsible is simple, but difficult. To be responsible means to take responsibility for the outcomes of your stories, emotions, intentions, actions, and inaction.
To take responsibility means to own the impact of those things. Impact is defined as the tangible results, including the emotional effect on others. To own your impact requires two things:
Acknowledging the outcome, not only in private but also in the presence of those who were affected
Getting into action to create the positive results that did not manifest, clean up the negative results that did, and clear the emotional impact on those around you
Individual responsibility does not mean playing the hero or fixing something all on your own. It means raising your hand in candor, owning the results that were or were not created, holding space for others to clear how they are feeling about those results, and explaining how you will get in action to make things right. Taking responsibility is an ongoing process, something that you choose day in and day out.
When responsibility is elevated to the level of the group, things get more complicated (relationships always seem to do that, don’t they?). People’s behavior is hugely influenced by the culture that they operate in. While many people will take individual responsibility in optimal conditions, most won’t in suboptimal.
As a leader, one of your primary jobs is to manage the company’s culture around ownership. It is essential that you model and enforce how you want responsibility to work at the organization.
In my experience, groups of people exist in one of three states of ownership. Note that these are states, not stages: a group is capable of moving fluidly between the states depending on the content and context in which they are working.
In your organization, any group may exist in any one of these states at any given time. They are likely flowing between them as they flow between different contexts. Many groups will have a default state that they reliably come back to, only wandering away from it for topics that feel particularly safe or unsafe.
As an example: your leadership team beautifully models ownership in most contexts. You notice that same ownership disappear in the context of fundraising or acquisitions. As the pressure mounts around the most challenging milestones at the company, you find a team that is usually emblematic of responsibility operating like a group of toddlers. What’s happening? The context is pushing a sufficient number of people’s buttons so that what was once a culture of ownership devolves into a culture of blame.
To identify and influence what states of ownership a team is in for any given context is a leadership superpower. Let’s talk about what they are, and what to create or change them.
Negative-Sum Ownership: Cultures of Blame
The first culture of ownership is negative-sum ownership, or a Culture of Blame.
In game theory, a negative-sum game is a game in which value is destroyed rather than maintained or created. Each round that is played has its winners and losers, but it always leaves the collective worse off in net.
For a purely mathematical example, it means for me to gain three points, you must lose at least four. In this case the winner, me, has gained (woo!), but when you tally up total points, the collective lost some ($3-4=-1$). As we play repeated rounds of the game over time, the collective progressively gets into a worse and worse state.
There’s another implication to negative sum games: in order for any individual to not actively lose they must put someone else down, making the collective worse off in the process. This happens whether or not an individual realizes or intends for it to. The incentives in this situation causes things to spiral: the only way for an individual player to save themselves from a downward spiral is to put the collective into one. Everyone scrambles to stay ahead, which then causes the collective deteriorate.
This is precisely what happens in a culture of blame. In cultures of blame, the way to get ahead is to tear others down. If you are not the one doing the tearing, you are the one getting torn.
Cultures of blame have heroes and villains. The heroes get bonus points for villainizing the villains as much as possible. Because of this, cultures of blame can hide beneath the guise of heroism: it appears that everyone is trying to make things better, but in reality they are simply trying to get ahead at the expense of others and the collective.
As this dynamic unfolds, trust frays. Information ceases to flow transparently. Asymmetries of power are gathered in order to “win” each bout, all the while leading to an acceleration of the culture’s downfall. This dynamic ignites a downward spiral: of relationships, of productivity, of effectiveness, and of morale.
Zero-Sum Ownership: Cultures of Fairness
The second culture of ownership is zero-sum ownership, or a Culture of Fairness.
In game theory, a zero-sum game is a game in which value is neither created nor destroyed, it is maintained. Each round has winners and losers, but the total of wins and losses adds up to zero. In net, the collective is in the same position after each round. In zero-sum dynamics reward only travels in one of two ways: not at all (I get zero points and you get zero points) or transfer between individuals (I get two points and you lose two points).
This is a culture of fairness. In cultures of fairness, there are still heroes and villains. Every obstacle that is overcome allots blame to the person who creates it and accolades to the person who solves it. Most importantly, this blame and accolades is in proportion to the problem that is created and the problem that is solved. No one is overly punished or overly rewarded. It is fair. In this situation, morale swings dramatically for the individually while being relatively bounded for the collective.
Organizations can grow and thrive in cultures of fairness. People know that they will be fairly rewarded for their accomplishments and fairly reprimanded for their errors. They are not incentivized to tear others down, but rather to avoid creating problems and proactively solve them when they arise.
While this fairness creates a meritocratic environment and a foundation of psychological safety, it has a few disadvantages. First of all, the cultural pie doesn’t grow. In cultures of fairness, culture is not a force multiplier that drives the development of the individuals or the organization. If an organization has a culture of fairness and is a force to be reckoned with, it’s unlikely that its secret sauce is in the culture.
Additionally, cultures of fairness are volatile and hard to maintain. I’ve seen very few companies that are capable of maintaining cultures of fairness as a steady state. Cultures of fairness are vulnerable to nefarious actors who use politics to get ahead, plunging the culture into blame.
Positive-Sum Ownership: Cultures of Responsibility (True Ownership)
The third culture of ownership is positive-sum ownership, or a Culture of Responsibility.
In game theory, a positive sum game is a situation in which value is created. No matter what, the collective gains in every interaction. This doesn’t mean that every individual wins in every scenario (though they can!), rather that collective value is created in every situation. I may lose two in an interaction, but in that same interaction you gain at least three.
The most extreme example of a positive-sum game is a win-win: a situation in which everyone is better off than they started. All of our scores are positive.
This is a Culture of Responsibility. In cultures of responsibility, everyone takes responsibility for how things go. Certain team members may take small hits for errors they make, but the collective is ultimately better off thanks to their candor. This collective advantage is generated from at least three axes:
The speed by which the culture can address issues
The collective learning that is created by fast feedback cycles
The collective trust that is built between parties, which reinforces a virtuous cycle of positive-sum dynamics
Collective responsibility enables the organization and its culture to grow from every interaction; every obstacle makes the organization better off.
Building your Culture
As a leader, it’s your job to coach your leaders and their teams into ideal ownership states.
A culture of blame is a dangerous state for any part of your organization to be in. It’s characterized by finger-pointing, a prevalence of negativity, and a corresponding drought of positivity, opportunity identification, and innovation.
As a leader, you need to nip cultures of blame in the bud. These warrant immediate intervention. This might involve conflict-resolution and/or a reframing of perspective: if this continues, we all lose. In order to ensure this perspective is maintained, you may need to explicitly adjust the incentives: if this is not a net win for the team, I will enforce individual losses for all of you and for me.
That last part is important: you cannot reconcile a culture of blame with blame. It must be addressed through responsibility. You must be willing to take responsibility for how your action or inaction created the dynamic of blame. This includes making it clear how you intend to reconcile it, including your requests and requirements for how your team members proceed.
The ultimate goal is to build a culture of ownership across all teams and contexts. One way to do so is to artificially enforce a win-win culture: rather than focusing on punishing people for their mistakes, instead focus on rewarding them for being candid, taking responsibility, and learning from them. That’s not to say mistakes are never punished, rather mistakes are only punished if they are not handled with candor, responsibility, and learning.
There is an artistic balance to be maintained here. You need to watch out for the culture slipping because someone is repeatedly erring without improvement. A culture of ownership is not a culture of false positivity. A culture of false positivity can quickly devolve into a culture of blame if not addressed.
As a leader, you don’t want the desire to be positive-sum to make you fear taking any action that isn’t a win-win. A bad hire who is underperforming may need to “lose” (leave the company) in order for the company to maintain a positive-sum state. A high performer who has gotten too full of themselves and is not owning their mistakes may need to be reprimanded to get them back into contribution to the culture. Individual “losses” are not the status quo, but something that is deployed for the sake of maintaining for positive-sum and win-win dynamics.
The leadership questions to ask yourself:
When players need to “lose”, how can you act on that from a place of ownership rather than blame?
How can the culture take responsibility for how it contributed to the situation and do so in a way that drives ongoing trust, learning, and growth?
How can the culture take 100% responsibility, no less and no more? Can it avoid falling into a culture of blaming others, self, or playing hero for every mistake?
Perhaps the fundamental law of ownership: Left to its own devices, a culture will progressively become more negative sum. Without active maintenance, a positive-sum culture inevitably becomes zero-sum and a zero-sum culture becomes negative-sum. Your job as leader is to combat this gravitational pull.