Can Vulnerable Leaders Build Tough Companies? Let's Check in on Microsoft and Hubspot
Special guest appearance by Lydia Tár
This is the third (and I think final) post in a series that I kicked off by talking about my now-overcome hostility to the idea of vulnerability in the workplace.1 I could have gotten to my current, soi-disant enlightened position on the topic a lot quicker if I’d started with researcher Brené Brown’s blockbuster TED talk on the topic.
Brown got fascinated by the people she came across in her research who had a deep sense of worthiness. She spent a lot of time trying to figure out where that lovely feeling came from. She concluded that:
These folks had, very simply, the courage to be imperfect… they were willing to let go of who they thought they should be in order to be who they were
They didn't talk about vulnerability being comfortable, nor did they really talk about it being excruciating… They just talked about it being necessary.”
I think vulnerability is also necessary for running a healthy company. Let me explain why.
Red in Tooth, Claw, and Baton
In the previous post I talked about how us weirdo human beings have two kinds of status: dominance, which every social vertebrate has, and prestige. People high up on corporate org. charts — those with a lot of status in the organization — usually have both kinds. The head of sales got that job because she closed some monster deals back when she was on the road, and so on.
But now that she’s sitting pretty at HQ, how is she going to act? What kind of leader is she going to be? This is an important question because we expect very different behaviors from dominant people vs. prestigious ones.
In short, we expect dominant people to take, and prestigious ones to give. We act accordingly; we try to stay out of the way of dominants while seeking the company and attention of the prestigious.
We also have another expectation. It’s a cynical one, but one borne out by ample experience over our history as a species. We expect dominance to win out over prestige, especially as the stakes rise. As psychologist Dan McAdams puts it, “the human expectation that social status can be seized through brute force and intimidation, that the strongest and the biggest and boldest will lord it over the rank and file, is very old, awesomely intuitive and deeply ingrained. Its younger rival – prestige – was never able to dislodge dominance from the human mind.”
The 2022 movie Tár is a dynamite fictional representation of how accurate this expectation is. It shows conductor Lydia Tár, who’s in an extremely prestigious job at the start of the film, use all kinds of dominance stratagems to keep her status and get what she wants (spoiler alert: at the end of the film, her status is much reduced)
So here we are. We humans recently invented this odd kind of community called the company, where a lot of us in the rich world spend a lot of our waking hours (although less than we used to!). This community is full of both kinds of status — dominance and prestige — and full of individuals who possess both to varying degrees. As a result, we’re often unsure about how things are going to go. But we’re inherently concerned that the folk at the top, no matter how they got there, are going to become domineering — to start using “brute force and intimidation… [and] lord[ing] it over the rank and file”
Your boss (and your boss’s boss and etc.) can make your life miserable by being domineering. But they can also teach you something, make you feel good about yourself, help you develop skills, and do other things that prestigious humans do. Which boss is going to show up? Is the prestigious one going to show up reliably, and resist the many temptations of dominance?
Closely related: is there any valid signal a boss can give that they’re going to lead with prestige instead of dominance? “Valid” here means costly to produce, and hence hard to fake. Vulnerability is just such a signal. To see how, let’s watch some tigers.
I haven’t been able to verify provenance and authenticity here2, but let’s say that this is what it appears to be: a video of a really big tiger getting introduced to some merely big ones. A dominance game immediately ensues. It’s a short one.
The huge new tiger doesn’t waste any time; it immediately identifies and approaches the biggest animal present. In just a couple seconds, that tiger realizes and accepts that he’s now second fiddle. He signals that acceptance by literally rolling over. Instead of mounting even a brief defense, or even a brief show of defense, he makes himself vulnerable by exposing his soft underbelly to the giant newcomer. The newcomer doesn’t need any more than that; the signal sent by the former #1 was sufficient because it was so costly (disembowelment being a costly development). The dominance game is over, and things carry on with a new top cat.
The lesson here is that vulnerability is surrender in dominance games. Which is why so few of the top executives at Microsoft were unwilling to risk showing any of it in 2014, soon after Satya Nadella took over from Steve Ballmer as CEO (in the previous post I described how the Microsoft of the Ballmer era was full of Lydia Társ; however they attained their status, they wound up maintaining it via dominance games).
The Best Offense Is Less Defensiveness
Early in his new job Nadella brought in psychologist Michael Gervais3 to a meeting of Microsoft’s senior leadership team (SLT). Gervais had a canny way to expose an all-too-common problem. As Nadella writes in his book Hit Refresh:
For the first exercise Dr. Gervais asked us if we were interested in having an extraordinary individual experience. We all nodded yes. Then he moved on and asked for a volunteer to stand up. Only no one did, and it was very quiet and very awkward for a moment. Then our CFO, Amy Hood, jumped up to volunteer and was subsequently challenged to recite the alphabet, interspersing every letter with a number—A1B2C3 and so forth. But Dr. Gervais was curious: Why wouldn’t everyone jump up? Wasn’t this a high-performing group? Didn’t everyone just say they wanted to do something extraordinary? With no phones or PCs to look at, we looked down at our shoes or shot a nervous smile to colleagues. The answers were hard to pull out, even though they were just beneath the surface. Fear: of being ridiculed; of failing; of not looking like the smartest person in the room. And arrogance: I am too important for these games. “What a stupid question,” we had grown used to hearing.
No willingness to be vulnerable (by anybody but the brave Amy Hood). Obvious wariness, brittleness, and fragility, even at the highest levels of the company. I’ve been harping on for the past two posts about defensive, zero-sum “Model 1” organizations. The behavior Gervais exposed — learned aversion to risk and novelty — shows what’s so bad about such organizations.
SLT members were all financially secure4 and wildly successful in their careers. My guess is that more than a few of them were risk-takers and rebels earlier in their careers and elsewhere in their lives. Yet their company’s culture rendered them unwilling to open themselves up to an “extraordinary individual experience” in front of their closest colleagues. As Nadella writes:
Our culture had been rigid. Each employee had to prove to everyone that he or she knew it all and was the smartest person in the room. Accountability—delivering on time and hitting numbers—trumped everything. Meetings were formal. Everything had to be planned in perfect detail before the meeting. And it was hard to do a skip-level meeting. If a senior leader wanted to tap the energy and creativity of someone lower down in the organization, she or he needed to invite that person’s boss, and so on. Hierarchy and pecking order had taken control, and spontaneity and creativity had suffered as a result.
When I interviewed him for my book The Geek Way (TGW) Nadella gave a gorgeous one-sentence description of an organization defined by nonstop dominance contests: “Nadella told me that an outlook of “in order for me to win, I gotta be able to point very clearly to somebody who’s losing” was common at Microsoft when he took over.”
I spent the previous two posts describing bad things that happen to defensive, dominance-heavy companies. Let’s spend the rest of this one talking about whether such companies can rescue themselves. Can a leader get an organization out of the doom loop?
Microsoft’s extraordinary comeback under Nadella shows that the answer is yes. Part of his success — I believe a big part — is his insight that vulnerability starts at the top.
After being confronted with their own defensiveness, SLT members started talking more openly. Nadella writes that,
We shared our personal passions and philosophies. We were asked to reflect on who we are, both in our home lives and at work. How do we connect our work persona with our life persona? People talked about spirituality, their Catholic roots, their study of Confucian teachings, they shared their struggles as parents and their unending dedication to making products that people love to use for work and entertainment. As I listened, I realized that in all of my years at Microsoft this was the first time I’d heard my colleagues talk about themselves, not exclusively about business matters. Looking around the room, I even saw a few teary eyes.
It’s kinda hard to imagine a roundtable like this taking place at any meeting convened by Jack Welch, isn’t it?5
As I write in TGW:
To be clear, the goal… isn’t to turn every meeting into a therapy session. Instead, it’s to get people comfortable with not always being in control or victorious, and less concerned about projecting an image of infallibility and invincibility. The SLT meeting Nadella describes was important for Microsoft’s transformation because it got the top leaders of the company to at least start thinking about behaving less defensively. Such behavior stood a good chance of spreading, because it originated with the most senior and respected people in the company. As we saw [in the previous post] we ultrasocial human beings consciously and subconsciously pay attention to prestige. If the most prestigious people around us start acting differently, we’re likely to mimic this new behavior, even if we’re not always aware that we’re doing so. Some kinds of change, like greater openness or defensiveness, really do come from the top—from the most prestigious people in an organization.
And in case there’s any doubt about how well Nadella has done, here’s a chart of Microsoft’s share price over time:
Messages Sent and Received
I also interviewed Hubspot CEO Yamini Rangan for TGW. She took over the job from cofounder Brian Halligan in September of 2021, piloted the company through the tech stock rollercoaster that was the pandemic, and brought it to an enviable place. Its value has increased by about 50% over the past twelve months, and rumor has it that Google wants to buy the place.
A lot of CEOs would get defensive when their share price fell like Hubspot’s did early in Rangan’s tenure, but she instead stressed vulnerability:
With the macroeconomic environment changing, and with the market volatility that is happening, sometimes we as a leadership team don’t know what trajectory we’re on. Is what we see in August going to continue, or what we see in September going to continue? Being transparent in a time of uncertainty calls for knowing that you’re wrong sometimes. I’ll tell you that I’m uncertain about this, which means next month I might have to change my response because things have changed. So I think being transparent in a time of certainty and business as usual is quite different than being transparent in a time of great uncertainty. And the only way you can do that is to be vulnerable and say, I don’t know, I honestly don’t know.
When I asked about the kind of behavior she thought was important to model, she talked about sharing her performance review from the board:
The board had given me a performance review and I said, here, based on all the board feedback and based on the feedback that you all have given me, here are the things that I did okay at, and here are all the things that I need to improve, and here’s kind of my plan of how I’m going to be improving on those areas. I then heard that a bunch of leaders did the same thing. This is something that I’ve done in multiple places to show leaders “your behaviors are exceptionally important.” Especially now, because transparency during a time of uncertainty is exceptionally hard. Doing things now that show a level of authenticity and vulnerability is helpful. It gets everybody around you to naturally say, Okay, what do I do? How do I do that?
I think this is so smart. It’s not the move of a defensive person or someone engaged in dominance games. It’s instead something a worthy, prestigious person does.
And it’s likely to spread, because we humans respond so strongly to the signals sent by high-status people. I think we underestimate the amount and influence of the signaling that goes on among us. I certainly did, until I started reading books like The Elephant in the Brain by Kevin Simler and Robin Hanson.
Hanson has been writing about signaling for a long time. He believes, and he’s helped convince me, that we signal all the dang time, so much so that when challenged by fellow economist and ace interviewer Tyler Cowen to name a human behavior that’s not a signal, Hanson’s reply was “scratching your butt.”
When they’re not scratching their butts, then, leaders’ behaviors matter. We all know that, of course, but I think we still chronically underestimate how much they matter. They let everybody else know what kind of organization they’re part of. And they’re a powerful way to signal that real change is afoot.
Some of the online chatter about this video suggests that it was taken at a fur farm. I hope that’s not the case, but why else would a bunch of normally solitary tigers be penned in such tight proximity?
Gervais and I had a great conversation on his podcast. Give it a listen!
Unless they had some really expensive hobbies
As Thomas Gyrta and Ted Mann describe in Lights Out, their book about GE’s decline: “Welch cultivated an environment of pressure... And his rough discipline also discouraged executives… from coming clean about their actual results... To do so might have been the more honest approach, but it also almost certainly would have blunted, if not ended, an ascendant career. If you couldn’t do the job and hit your targets, they all knew, Jack would get someone else who could.”