Every quarter, I gather all the leaders in our company for an All-Hands meeting. We do the usual round table and status updates, but lately, we’ve been playing games. A lot of them.
I recently ran our team through a Prisoner’s Dilemma game theory exercise. For those who need a primer, it’s a simulated canonic tale of collaboration—rather, lack thereof. It explains why two rationale people can end up with a suboptimal, and often, irrational outcome. Being that we pride ourselves as a culture-driven company, I wanted to use the exercise to illustrate a point: we need to bet on each other.
The word “bet” is fairly provocative, since it implies risk or a gambling-mentality. That being said, I use it in my leadership vocabulary daily. As a lover of games, a bet is simply a wager toward a future outcome. We place bigger bets when your chances of winning are good or if the reward is worth the risk. This mindset is rarely applied to management theory, but here I am. I believe all good leaders should be smart-betting men and women.
Back to our exercise. To our surprise, we ended up with an unexpected outcome. We had separated our company’s leaders into two teams and asked them to either “Cooperate” or “Defect.” The following is a chart I used to explain the game to my team.
The game was set up so that the outcomes reflected real world prizes ($10 for each member on the team with the better outcome). Those familiar with the exercise will tell you that the end game usually results in both sides defecting due to a lack of trust. In the context of Prisoner’s Dilemma, each side betrays one another.
We ran the exercise five times with a new member from each team. What shocked us was that we had a team vote for Cooperate each time we ran the exercise. When I asked them why, the Cooperate team said, “Because we know that’s what you want from us. We don’t care about the money.”
My small heart grew three sizes that day. While we did give the winning team the $10 prize, I took out crisp $20s for the “Cooperate” team. Well done, young padawans.
You see, when my cofounder and I started Boba Guys, we said we wanted to build a culture company. Like Patagonia. Like In ‘n Out. Or the early days of Walt Disney. We envisioned a company that would carry on a culture that would outlive us. The only way to do that is to start with a founding culture. To us, that foundation was faith. Faith in each other. Faith in our customers. And faith in ourselves.
If there’s one thing I learned from business, it’s that we are all inherently selfish. We act in our own self-interest. Early on in my career, I had a hard time understanding this, so I struggled with finding the right balance between two common leadership pitfalls: 1) having too much faith in people, and 2) doing everything myself. I did not know how to channel self-interest into a greater purpose. And to be completely candid, I still wrestle with this today.
I had an epiphany a couple years ago when we started growing Boba Guys. I realized that in order for us to build a healthy company culture, we need to resist the urge to avoid mistakes. In my personal experience, I started my career in companies with a culture of “sure things.” Everything had to be perfect. Everything had to be buttoned up. You could not make a mistake. Now, as the leader of my own company, I gravitate toward a culture of “safe bets.”
When I share this idea with fellow founders, I often get the retort, “What happens when you’re wrong? You will lose money. You will have to clean up the mess and fix it.” But what happens when you don’t bet? What happens to your culture when the chase after the “sure thing” is the only way of thinking?
My assertion is that, in startups and small businesses, correct bets far outweigh the setbacks from incorrect ones. With limited resources, you need all the help you can get, so you need to have faith that your team can do it. Give your early employee a chance to succeed, even if you question their competence at first. Sure, they might let you down, but when it finally clicks, it is well worth your time and investment. Otherwise, you will have a company full of individual contributors who can never outgrow the sum of the parts.
It is pertinent especially in customer service. I often hear stories from small business owners, especially in food and beverage, about customers who take advantage of a 100% Satisfaction Guaranteed policy (we offer this at all our stores). The rationale is that a small businesses cannot absorb a group of people who decide to abuse the policy. So instead, they default to skepticism. That, in turn, translates to a decrease in quality of service which then sets of a death spiral of mistrust between the business and customers.
Undoubtedly, it’s a risky proposition. I get that some establishments attract as disproportionate amount of individuals that game the system. There will always be people abuse the system. However, to always bet against your customers is counterproductive. We need to have faith in our employees and customers to do the right thing.
This is all to say that in a Prisoner’s Dilemma world, we need to have faith in your team, or broader speaking, people. Here are three tangible things you can do to make your company more collaborative, trusting, and resilient:
#1 Create programs that incentivize trust/faith in others.
It could be small things like a movie ticket or $10 gift card. Or it could be simple recognition. The point is that culture always comes from the top, so as a leader or founder, it comes from you.
#2 Lever up on trust, but de-risk as well.
One timeless management principle is to set employees up for momentum. Give employees that you are betting on tasks that get harder over time. Make sure the early tasks are achievable 80% of the time. It could be a special project like putting together furniture or creating a new food prep checklist. As my old boss used to say, “Give your team the ability to hit a lot of quick wins in a row. It builds confidence and competence at the same time.”
At the same time, mama ain’t raise no fool. There are surely instances where you need to withhold a bet. The downside risk may be too much. But if you hire right, you will rarely run into situations where you withhold bets for a long time. Like in poker, you should be holding a good hand at least one point in the game. The point is to error on the side of betting on your team. It’s worth it.
#3 Don’t penalize mistrust or cynicism.
The goal is to reward faith and optimism. This point warrants a separate article, but our take is punitive action rarely works (unless it’s fun or silly). You always maximize potential using more carrot than stick.
In practice, this means we generally do not call out employees who do not bet on each other or customers. Instead, they will see me or my cofounder give a big prize for who those who did bet and did the right thing. We hope that, over time, those on the sidelines start betting.
My hesitation with highlighting how I run our business is that it invites criticism. I know pragmatists think it’s foolish to bet on people when the sure thing is right in front of you. But that’s the definition of a bet. Sometimes, even with great chances, you lose. And it does sting. You relied on someone for a project and they left you hanging. You asked someone to cover your shift and they didn’t show up. So, you end up doing it yourself.
But if you are to build a thriving and sustainable company, the long-term ramifications take precedent. Get started on your cultural foundation early as it’s the single-most difficult business feature to change. You don’t want to wait until it’s too late― when the culture is toxic and everyone “Defects.” This post is my bet on you, reader. You can do it. Good luck!