In recent years, we’ve been reminded of how critical psychological safety is to inclusion and belonging. But, it is worth remembering that fostering a culture of psychological safety within an organization is critical to innovation. Creating an environment of psychological safety encourages risk-taking, promotes open communication, supports learning and experimentation, and sparks diverse perspectives. ATD asked members of its executive leader consortium CTDO Next how having a psychologically safe culture has driven innovation within their organizations. Here are their stories.

Encourages Risk-Taking

In a psychologically safe environment, individuals feel comfortable expressing their ideas, opinions, and taking risks without fear of negative consequences. When employees feel psychologically safe, they are more likely to share creative ideas, challenge the status quo, and take calculated risks, which are essential for innovation to thrive.

At WEX, they take the broadest possible approach to this endeavor, focusing on building “a culture of experimentation.” The key, they explain, is trying small-scale experiments and tests with different options to see which one has the greatest impact. Test subjects could be customers or internal employees. They’ve learned that with smaller-scale tests and experiments, they can move much faster while minimizing risk.

At Navistar they start at the top, with a leadership principle that is “Dare to try, manage the risk.” The goal is to make it OK to take reasonable risks, try, and fail fast. And they assembled a set of 15 tools (including things like Managing Conflicts, Challenging Cultural Assumptions, and Stakeholder Communication) to support the kind of behaviors that enable that philosophy.

Promotes Open Communication

Psychological safety creates an atmosphere where open communication is valued and encouraged. When employees feel safe to speak up, share their thoughts, and engage in constructive dialogue, it facilitates the exchange of diverse perspectives, fosters collaboration, and sparks innovation. Open communication allows for the exploration of new ideas, the identification of potential improvements, and the ability to learn from failures.

CTDO Next member company Hilti has been conducting an annual engagement survey for the past 20 years, using an external vendor. Participation exceeds 90 percent and typically gets 15,000 written comments—close to 50 percent take the time to write comments after answering 45–50 questions and the comments are all of high quality. More importantly, Hilti acts on the engagement survey—“We consider it as a leadership scorecard.”

Three to four times a year there are global town hall meetings with the executive board, and the board visits each of the company’s 10 regions for a week once a year. Those trips include a day in the field with customers and an account manager, roundtable discussions, and town hall meetings. The regions do the same with their countries.

Communication of Hilti’s new strategy “Lead 2030” includes podcasts, articles, town halls, and more. And there’s a training program devoted to understanding the strategy (“Ignite Lead 2030”) that involves every one of Hilti’s 33,500 people. These interactive sessions are facilitated by general managers and top management only.

And Hilti uses employee resource groups (ERGs) to focus on topics that could easily be suppressed.

Supports Learning and Experimentation

Innovation often requires experimentation and learning from both successes and failures. Psychological safety provides a supportive environment that enables individuals to try new approaches, learn from mistakes, and iterate on their ideas. When employees feel psychologically safe, they are more willing to experiment, share their learnings, and iterate on their ideas, ultimately driving innovation.

The “Smart Breakdowns” approach at Paramount Global is a great example. As part of their training on agility and adaptability, Paramount states that “Smart failures result in valuable learning,” and they offer a four-step approach to making sure they maximize that value.

They changed the language they use to talk about it from failure, which has a negative connotation and implies blame and shame to breakdown, which sends the signal that things can be improved or restored to a better state.

They went to great pains to separate breakdowns from genuine performance issues. For example, a breakdown might be a one-time mistake or missed deadline that leads to new insights or a process improvement, whereas a performance issue would be a clear pattern of repeating the same mistake or repeatedly missing deadlines.

They taught managers to use a feedback model aimed at having the kind of conversation that would optimize the opportunity for learning from breakdowns.

They emphasized turning breakdowns into breakthroughs by using their existing programs to reward employees if a breakdown led to success, efficiency, ratings, profitability, and others, and they made sharing learnings a standard agenda item for team meetings.

Sparks Creativity and Diverse Perspectives

There’s a direct connection to belonging. Psychological safety encourages individuals to express their unique perspectives, enabling a diverse range of ideas and creative thinking. When employees feel safe sharing their thoughts and opinions, it creates an inclusive environment that values diverse viewpoints. This diversity of thought can stimulate innovation by bringing together different perspectives, experiences, and ideas to generate innovative solutions.

Navistar used their “collaboration toolbox” as one tool when they joined several brands to create the TRATON group. These cross-brand teams leveraged simple tools like The Six Thinking Hats, The ‘Elephant in the room,’ Force Field Analysis, The Johari Window, Stop – Start – Continue, Force Field Analysis, and The 5 Whys. These tried-and-true techniques, in the context of a broader program, sparked new creativity.

At Defense Acquisition University (DAU) to make experiments valuable to the goals of the enterprise, they are created by a Guiding Coalition of employees and by a nominating process that is rooted in business strategy but not owned by business leadership. This model empowers the doers and encourages widespread participation. DAU reports getting more volunteers for these efforts than they can efficiently use.

Overall, psychological safety creates an environment where individuals feel empowered, respected, and supported, which significantly contributes to fostering innovation. By nurturing psychological safety, organizations can unlock the full potential of their employees, encourage risk-taking, promote open communication, support experimentation, enhance collaboration, and cultivate creativity—all essential elements for driving innovation within the organization.