Navigating Change Through Leadership and Culture with Hanna Bauer

When Hanna Bauer's publishing business faced a perfect storm of budget cuts, industry disruption, and the ebook revolution, she learned that Six Sigma processes weren't enough. The real transformation required leading with heart.

In this raw conversation, Hanna shares the wake-up call that changed everything: a top employee resigning to take a pay cut elsewhere. This crisis revealed the truth about organizational change; you can have all the right processes, but without genuine human connection and psychological safety, your best people will walk.

Whether you're leading digital transformation or navigating organizational change, this episode delivers practical wisdom on building growth-oriented cultures where people actually want to stay.

This week´s Takeaways:

1. Hope Drives Change People with high hope find a way where there is no way. Leaders must tap into this to navigate uncertainty; it's not just positive thinking, it's the catalyst for transformation.

2. Psychological Safety Starts at the Top Growth-oriented cultures need leaders brave enough to say "maybe it's my team" instead of pointing fingers. Cross-functional honesty beats departmental defensiveness every time.

3. Influence > Position Leadership is influence, nothing more, nothing less. You don't need a title to create change; just the will to advocate for your team and drive positive impact.

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Chapters

• 0:00 Welcome And Guest Introduction
• 1:02 The Perfect Storm In Publishing
• 3:22 Finding Hope Amid Layoffs
• 6:12 When Data And Process Eclipse People
• 8:40 Humility, Listening, And Retention
• 11:17 Defining Culture In Practical Terms
• 14:04 From Goals To Growth Mindset
• 18:05 Top-Down, Bottom-Up, And Alignment
• 21:09 Resilience And Learning From Failure
• 24:05 Error Budgets And Limiting Blast Radius
• 26:10 FMEA, Delegation, And Oversight
• 28:27 Psychological Safety For Leaders
• 31:05 Cross-Functional Quality And TQM
• 33:00 Closing Lessons And Takeaways

Transcript

Peter Maddison: 0:04 Welcome to Definitely Maybe Agile, the podcast where Peter Maddison and Dave Sharrock discuss the complexities of adopting new ways of working at scale. Hello, Dave! Good to see you again. And today we are joined by Hanna, so Hanna, why don't you go ahead and introduce yourself?

Hanna Bauer: 0:20 Hello! Hi Dave, hi Peter. Pleasure of being here, thank you so much for having me. Hanna, obviously. I'm CEO from HEARTnomics. I'm a faculty member with Maxwell Leadership and also Six Sigma Black Belt, so I'm excited to be able to come in here and talk about organizational digitization and all kinds of stuff that we're doing right now—most importantly, the heart aspect. And that is leadership, really the glue that binds those two together. So I'm all about leadership and I can't wait to have an organic, fun conversation with both of you about it.

Dave Sharrock: 0:57 We're looking forward to that. I think in our sort of introductory conversation, just getting to know one another, it's interesting how much overlap there is, even though we're coming at it from often organizational change and it's driven by DevOps or Agile or some sort of digital transformation.

Hanna Bauer: 1:13 Yes.

Dave Sharrock: 1:14 But I also think we have that common understanding that it's the people that make a change happen.

Hanna Bauer: 1:19 Yes.

Dave Sharrock: 1:20 So maybe to start with, from that side, what brought you into working in organizations to drive change through that aspect of people-oriented change?

Hanna Bauer: 1:34 Well, I would love to say it was motivation, but it was more desperation! That's because for us, it was like a perfect storm. So having been—we were in a business, a small business—and what I call back in 2010, it was budget-free. So similar to what's happening right now in the US with the government shutdown. So our main customer being schools operating with government money... basically, in a matter of weeks, the clients—the money that they had to buy our products was no longer available. So that was one: income wasn't certain.

The second thing was the rise of the sudden change of standards, making basically our product obsolete the way it was, and opening it up to a lot of competitors. We were in a niche market, and suddenly the bigger publishing houses came into our market because now it was national standards, so we had to recreate. So we had to think fast in how we're gonna be able to still bring the value to the market.

And there was this other little thing called ebooks that was starting to gain some force back in 2010, where they declared the death of print. Well, us being 99.9% print, suddenly the way that we distributed our products—again, not only people wanted this ebook, they didn't have the broadband to support the ebook, they didn't really have a way to even download the stuff, they didn't know what the content was, we didn't know what the business model even looked like. So the publishing houses at the time were experiencing what the media—basically the music industry had gone through before.

So where did I come in with leadership? I had to get really good, really fast in accepting and embracing change, and then helping my people go through that, navigate a lot of uncertainty. We didn't know what the business model was gonna look like, we didn't know when the money was gonna come in again, and we really didn't know how long—even the investment in producing new content, how long was that gonna last with the consistent change in standards? So we had to become really fast and effective and efficient, innovate in a time where the income was going down and not really know where it was gonna come from.

So for me, leadership is what really was tested in that. And in leadership comes communication, comes in motivating your team, the way that really building culture. I realized that we didn't have the culture—I didn't know it at the time—but what I was missing was a really strong sense of what is our culture, us being confident in the value that we can bring to the market so that we can build from that.

So I tried different processes and systems. I tried like, hey, what's the latest thing, the buzzword, right? What was happening? What's the next technology, you know, what do we need to incorporate? What do we need to bring in here? And realizing that all those were good because I had to stay relevant with the market, but really what I needed to know is what was our core for both in talent and skills of our people, and really what was our vision and the value we wanted to bring—continue to bring to our clients in the future. And that's where leadership came in and change management and all the fun stuff that comes along with it.

Peter Maddison: 5:06 Awesome! So once you—yeah, but I love the story. I can definitely see that must have been a fairly chaotic and trying time as you worked through it. What, as you came to that realization, what was it that sort of finally sort of made it stick?

Hanna Bauer: 5:22 And that there was no immediate relief. I mean, honestly, there was no—I knew that we needed to have some short-term wins, and but we also needed—we did need some band-aids, but we needed long-term therapy, right? Like we needed something that was gonna get us back to what we needed to go through.

So that's when I—what I realized was: what were the short terms? You know, what did we need to operate to still basically keep the core survival in essence? What did we need to survive? But also in that survival, while maintaining—not necessarily what we were doing or what we're expecting—coming to terms with that, that this year was not gonna look like the previous year, it was not gonna look like what we had forecasted. It didn't mean it was the end. So getting back to that hope.

Actually, that's one of the lessons that I learned. At the very beginning of this, we had to start with layoffs. It's not how you want to start innovation and my new journey into change. And unfortunately, that was our reality. It wasn't just our reality, it was a lot of the reality of publishing homes—like a lot of publishing houses, they closed, they changed. Big names, little names, a lot—there was just a disruption, and that's what we call it in the market.

And what I realized was that I had allowed a lot of external circumstances, these unknowns, to start defining me, or even start defining where we were gonna go. I recall specifically this one time when I was going through our manufacturing facility where you know, no longer could hear the machines running, I could no longer go into the sales room—the phones weren't ringing anymore. Yet I remember seeing one of our workers so involved in the work that he did. And then when he came to me, he reminded me by the comment that he—this excitement about his son being excited about having, using one of our books in his classroom, that he said that it was the first time that he had really felt proud of the work that he did.

And when I heard him say that—as a father, as someone who really, in essence I was a leader, right? I was the one with the position, I was the one with ability, decision-making ability—yet he had the answer that I needed. He had the answer in one: why do we work and belonging to work, but most importantly, the hope. What was that hope that we needed to do?

And I remember that so keenly in a very dark moment for me, a very dark moment for the industry, that it was like that aha moment. We need hope. Hope is not a thought, something that we just look at and like feel good or just positive vibes. Hope really is the catalyst for change, is the catalyst that we build from. People with high hope will find a way where there is no way. Just like water, right? I mean, water finds a way and eventually water makes a way.

So what made it stick was seeing—in the eye of, through the eyes of one of my employees—really not only where we still had a place in the marketplace, but really the hope that he had and why did he work. Because I knew I was gonna have to bank on that. I was gonna have to tap into that with my entire team, and starting with me, to be able to then come up with solutions that we didn't quite yet have at that time.

Dave Sharrock: 8:53 A lot of what—when I'm hearing you describe the stories, you really capture the emotion of that moment very, very well. And I feel that that's something that—it's in the HEARTnomics, the name of your enterprise as well, of course. But there's also—there's something there which we sometimes forget in being in corporate environments, in a business, a professional environment where we want to be clear and articulate and professional, and sometimes we let go of that sort of the feelings and the emotions and the reasons why we're there. And I think that's just such a brilliant reminder for that.

Hanna Bauer: 9:32 Oh no, it is huge because I mean, if you look at productivity, you know, we talk about a lot of productivity and employees that are highly productive, right? But we realize that is tightly knit with engagement. And when is an employee engaged? When they feel like they belong, when they have ownership, when they're very much—it is an emotional thing. When you own something, you very much want to take care of it, right?

So it is—there is a lot of emotion, and we want that. I mean, because when we ask for solutions, when we're talking about dealing with the external customer, when giving the best service, we have to bring our entire selves. We can't say like, hey, leave your personal stuff out the door and just be professional. Like we have this dual thing: turn off, turn on. And yet we want our employees to give their best selves. Well, we can't—but we're asking them to bring part of yourself here.

And that is one of the hard lessons I did learn. I mean, fast forward, I got really good with processes, I got really good with systems. I mean, I became a Black Belt in Six Sigma. I found a lot of help with that. I mean, we got the profits, we were able to come—it works! But in the midst of that, I as a leader lost that touch of being with the—in the heart of my employees, and I had to come back to that. And that's where my DISC and my Zig Ziglar came in because I had to relearn that. I mean, and that's something I think as leaders we forget because it is—of course we have to be fiduciarily responsible. Of course we're looking at paying them, we have to—we want to stay afloat, we want to stay with the doors open. And this is—as a leader, I'm showing this 100% by making sure everybody gets paid every week. But it's not the only thing, you know. It's of course the main thing. I mean, money is like oxygen to the business, right? There's no money, there's no business. But we can't, in the reason just for that, forget the people that we work with, and really even starting with the leader themselves, because that's what—a lot that I do talk about is the burnout.

Because we are looking, we are making decisions, we are caring for a lot of people, and we're navigating in places we don't know. But we need to look at the person, and I had to learn that as a leader. Once I learned that, that's really what you're using is trust. That trust is what you're gonna—what you need in order to be able to navigate change, especially when you don't know what that change is even gonna look like. Because like for us, ebooks at that time, we didn't know what the business plan was for that. Kind of like AI now, right? It's exciting, it's good. What is it gonna look like, you know, three years from now, five years from now? I mean, what is it? You know, we're planning for a lot of places that we haven't gone. So we are going to need to have that trust of our people, and we can't have the trust if we don't know them and if we're not consistently investing in them.

Peter Maddison: 12:29 Yeah, going to an AI and saying, "Here, write me a story," see what you get back. And results may vary! It's fascinating like you say. One of the pieces you mentioned there was—you were talking about how you mentioned that Lean Six Sigma and applying—which is actually a data-driven way of looking at your organization, is trying to reduce variance in the organization, which I think a lot of—it makes sense and sounds—we've worked a lot in sort of an organization that's manufacturing or looking at that reduction in variance is very key. But that it took you away from the important parts of the organization and understanding the sort of the role that the people play. So when you saw that, what did you do to sort of course correct when you realized you weren't connecting as much with the people as you wanted to?

Hanna Bauer: 13:20 I had to humble myself. That was the first thing. The thing about you know, with Six Sigma, I mean we use data, right? We use—we turn qualitative data into quantitative data. We use the data to tell us a lot of things, and really what we're looking for in Six Sigma is we're looking for that 99.99999% accuracy, right? So in that, a lot of times what gets the praise could be the fact that, "Ooh, we found the defect," or "we found the mistake" before it hit. So then, in a sense, that's praise, which is good—it's good that we caught it. I mean, that's what we want. We want to catch it before the client catches it.

But it shouldn't be the only times we celebrate. We gotta celebrate, we have to learn to celebrate all the other wins, all the times we did catch them, right? Because it might be—it felt like it started turning into a culture of finding the defects, of finding the critical stuff. So you know, and although Six Sigma—one of the things is to take away the blame game—unless you're also feeding the person and the people, it can easily turn into the blame game, or it can easily be turned into like the data.

And in general, we have a lot of data. I mean, we live in the data tech data era. I mean, there's nowhere you don't turn and there's not data. The question is, how is the data being used? And a lot of people are afraid of data because it's used as a punitive way, even with just employees, with schools. So they don't want to see the data, and even when we have the data, we have a whole lot of stuff there that we may just not look at it. We have it, yay, but we're not really applying it.

So for me, I did—I had to start by humbling myself. I had to—I was losing my talent. I did a really good job in investing in my people. I did a good job in bringing everybody together. When you do Six Sigma, when you do Kaizen events, you have to do the entire organization. You know, we did an entire transformation—you don't just do one part. I mean, you can, you know, but it's not gonna be sustainable, right? I mean, just like Agile. I mean, you have great technology teams that are doing the Agile, but then if you don't have finance or management doing that, whatever initiatives they have, it's gonna be this constant tug of war, or just we're at each other's places.

So when you're talking about transformation, it may start somewhere, but you really—you wanted to expand to the entire organization. Well, in my case, that's what we did. We expanded to the entire organization, and so I invested in my people, but then my people started walking out the door still. So why were they leaving me?

And I realized—and in one particular, this one—one of my leaders that I really thought, "Hey, this is the person that's gonna take this on, you know, like I can kind of step back and start looking at other things." And this was the person that turned in the resignation letter. And come to find out, he did a resignation letter, not even to get a better, like higher paid job. It was actually he took a pay cut.

And that to me, it's like—I couldn't pay him enough to stay. He'd rather go somewhere else. And coming to terms and like, "Well, why? I mean, I have the processes, the systems. Hey, we made it through. I'm doing all this stuff—me, me, me, me." And realizing that that's what it was. It was me. I was the one leading the agenda, I was the one leading the projects, I was the one leading all these things, and I wasn't making the time to listen to my people. I wasn't taking the time to really allow for there to be an environment where my very talented team could bring those ideas to the table, but also implement and integrate those ideas into our daily operations.

So that's what I said—I took a humbleness, realizing like, "Hey, take a look at the mirror, take a look." And I had to get trained. I wasn't doing it on purpose. I mean, I wanted us all to win. I mean, I wanted everybody to have a job, I wanted people to get paid. But I had to realize there's things I needed to learn. I needed to learn DISC, I needed to learn communication, I needed to learn not just, "Hey, I care for you, you're getting a paycheck, and maybe we get rewards, and then one time a year, you know, when you get your report, I'll tell you some good things about you." I had to do it on a daily basis, especially in times of change.

Dave Sharrock: 17:36 Which is all the time now, of course! Times of change are permanently here, it feels like anyway, nowadays. Can I—I just—I find it, you're speaking a lot from the perspective of you as a leader, and what you're saying you have to change or what the consequences are of what you've been—the life you've been living, the way you've been leading to that point. And I—you started, when you were first introducing what you'd been up to and what you looked at, one of the things that you mentioned is culture. And that's—Peter and I can talk for hours on culture without necessarily defining it. I don't think we know how to define it in two sentences yet, even though we've discussed it a lot. But I'd love to understand your insights. Like when you look at culture and you describe that you didn't recognize the culture and you knew you had to change it, or that was a realization at some point that you have to change it. And I think you're hinting at some of those things.

Hanna Bauer: 18:31 Yes.

Dave Sharrock: 18:32 Now, culture is what—Peter and I spend a lot of time talking about culture, working with organizations, trying to outline how leaders influence culture. But it's also intangible. It's—on the one hand you can always spot it, on the other hand you cannot measure it. There's something very weird about that. What's your kind of guidance to leaders in terms of culture in their organizations?

Hanna Bauer: 18:57 Oh Dave, I'm right there with you because anytime I ask leaders to like, "Well, can you define your culture?" It's like, "Well, it's—it's there, we just know it's there." It's kind of like air, right? Like we know it's here. I mean, obviously we know when it's not there. We know when air's not there. I mean, we're not—but it is. What's culture?

And the way that I found culture to be defined and the way that I saw it work for me as well—the way that we think, the way that we interact, and the way that we act, right? I mean, it's the way that we interact with one another, is the way that we take action together, is the way that we think. And that goes again to fulfill the three things as a business. What are we doing? Well, we're executing a strategy, we're navigating crisis, and we are seizing on unexpected opportunity.

So that's gonna require—the only way that we can do that—and you probably heard that, knowing that culture from—I think it's Mr. Peter Drucker that said that culture eats strategy for breakfast any day.

Peter Maddison: 19:52 Absolutely! So we talked about that.

Hanna Bauer: 19:54 Yeah! So I mean, if you think about culture, it's what it's gonna sustain, right? I mean, it's how we think together. I mean, how do we think? Is—for the best way I've been able to describe it, and once I understood it, is like—I don't mean I don't make any decisions outside of me. I mean, my character. Well, same thing with culture—an organization makes no decision outside of its culture. Is culture to an organization, it's like character to a person, is what they're known for, you know.

So everything that happens inside an organization is happening inside the culture. If we like it, the culture is sustaining, and if we don't like it, the culture is also sustaining that. So when for me, realizing that, "Hey, I didn't like that we were so critical with each other, I didn't—well, what was the culture? What were we celebrating? I mean, what were people getting rewarded for? You know, what was the behavior that we were supporting? What was the behavior that we were encouraging, right?" Because culture again is the way that we act to—interact with one another.

Once I started seeing that, again—and the reason why I also—I mean, I've been under a lot of bad leadership too. So a lot of my lessons came from like—and it's funny because you know, like, "Well, I don't want to do that," and then you start seeing like, and you have your opportunity, you're shot at it and like, "Oh shoot!"

Dave Sharrock: 21:20 Exactly! We're learning from that, right? So we're learning, we're role modeling the experience that we've had, maybe.

Hanna Bauer: 21:27 Yeah! And I can't say there was a single time where I had a leader that said, "Hey, we gotta work on the culture," or "we gotta work on the values." I didn't. So I didn't really have a reference point. I just started feeling the symptoms of bad culture. Like I said, that critical spirit, the hostility, the resistance to change, the suspicion, the—you know, the behind the—the meeting before the meeting talks, so that the meeting was already planned, and then the after meeting from the meeting that I wasn't invited to, you know. So you know what I mean? So that's the culture. So you know, because that means like, "Hey, that we don't have transparency, it's not clear here, or there's no trust," or you know, "or there's no opportunities for us to be able to have this candid—because maybe we all want to live this mask, this pretend thing that we're not," or secretly we're looking for jobs and we'll suddenly quit, right?

So as I was looking at it, you can tell the culture, first of all, by how you—you treat. I mean, like family, you—how you treat one another. But even before that, it's already the immediate response to things. When there was an opportunity, are we rewarding, are we celebrating, or are we pointing fingers? That will tell you right away. That already tells you what the thought is, you know, how do we approach things?

So that's what I started looking at and learning about culture. In with Maxwell, it's been one of my biggest tools is to build those positive cultures, a culture where we grow. It's not moving from goal-oriented to growth-oriented. And because that's gonna be—growth-oriented is gonna require failures. And it's how do we handle those failures? That's gonna be a big part of the culture.

Dave Sharrock: 23:12 So you're—Hannah, you're talking about starting in a culture where failure, as in a defect or some quality problem, capturing that before it goes out—which sounds to me like that's recognizing and positively understanding that failures happen and we're picking them up and catching them. So that sounds like it's working. And then you've just closed out by saying what organizations need to do is learn to recognize and value learning—I think of learning—but failure. Well, what's the difference? It sounds to me like they're very closely related, but clearly one is not working as well as the other.

Hanna Bauer: 23:49 So let's just say when we started Six Sigma, it wasn't like, "Yay, everybody wants to do that!"

Dave Sharrock: 23:54 It's funny, the same thing happens with Agile, introduction of Agile...

Peter Maddison: 23:59 And then they realize that it might do some work to change, and then actually, "Really? Oh no, that doesn't sound fun."

Hanna Bauer: 24:05 Yeah, especially finding defects. I mean, first of all, you know, especially with a department—you don't want to talk about that. So I think even just the embracing the whole concept that, "Hey, there are failures that happen on a daily basis. I mean, we're not the perfect place that we hope that we are." And it's okay. We didn't have the culture in place to accept that.

So before we started, even with the Six Sigma, and although we did, you know, I mean we started—we weren't perfect, we started it. There was a point, like I told you, that it broke. The system broke because I had people leaving. So the system wasn't working. So although we did have that, it was very—the goal, right? The goal was catching the defects, the goal was improving the bottom line, the goal was keeping the doors open. So there's all these goals. "Hey, goal is we're gonna get the profits up, the goal is to get the income."

I had not made the change to move from goal to growth to where yes, we're catching these, but how are we learning together? How are we debriefing? How are we treating each other? How are we doing life together? How are we innovating in the middle of this? Yes, we're catching this, but how are we integrating this into maybe more ideas? Remember, I didn't have even a safe place—and we can go into psychological safety on this—that we have the psychological safety in place to be able to bring out those ideas.

So a growth-oriented culture is gonna require that. It's gonna require the training of leaders at every single level, and your frontline leaders, the ones that are dealing with customers, the ones—your VPs, midline managers—my goodness, senior level. All of those is gonna require that.

So when you become growth-oriented, it's one thing saying, "Okay, but then when you do find failure points, when you do have defects, when you don't meet the sales goals, when you maybe did do a big shipment—a shipment that was completely wrong—how do you handle it?" Because that's gonna speak out more than whatever you say in your goals and your value statement and your mission and your vision, right? So how do we—in a culture that is growth-oriented, we already know. I mean, we know those moments are gonna happen. I mean, we have—we're working with humans. Humans, we can create human errors. The machines create errors. You know, people say that they don't—they do.

Dave Sharrock: 26:27 I think they'll be saying that they do quite a lot right now. Yes, it's becoming more and more normal.

Hanna Bauer: 26:33 Yeah, they do, they do. And I—I mean, so when you're growth-oriented, it's not just—although we knew conceptually we gotta get to the goal and those things, but it's really the training and the embracing of how we're handling that every level of the organization.

Dave Sharrock: 26:52 So I just wanted to ask Peter, what's your experience been in terms of cultural change from top-down or bottom-up? Because what Hannah, you're describing this—every level of the organization, and one I think one of the really hard things is knowing where to start that. So Peter, I don't know if you've got a...

Peter Maddison: 27:11 Well, we were talking about this a little bit recently too. One of the pieces is the leadership at the top has to be on board because they can very easily kibosh anything that they're not in agreement with if they don't—if they're not aligned to the fact that change needs to happen. And then you will very quickly find that yeah, it might happen in part of the organization, but it's certainly not going to happen broadly across the organization.

You definitely need to have your—as we like to describe, the permafrost layer in the middle has to be aligned. And very often where that starts to fall apart is when we think of incentives. You said that this division over here has to make X amount million dollars, but they've got to make that same amount this year, but we need them to make changes. So they're gonna—if I already know as a leader that for me to meet my targets, I've got to do what I did the year before, so I'm just gonna do what I did the year before. I'm not gonna take on all this new stuff and all this change because that might prevent me from meeting the target you've asked me to meet.

So you can automatically create friction between what they're being asked to do if you're not thinking through what is the alignment here, what is the direction of the change. You also need, of course, the bottom-up support. You need people bought into the vision that "this is how we're going to be operating, this is the change that needs to come into the organization." So yeah, leadership at all layers needs to come in to change, and you need to also have alignment across those.

Very often—well, we've talked about this too—that alignment needs to be outside the performative drivers of the organization too. So this is where we talk about the alignment of the structure of the organization shouldn't necessarily directly correlate to performance. Performance is a measure of like, "Are we hitting our revenue? Are we hitting our targets? Are we managing our operational costs? Are we managing our risk? Are we looking after these aspects of the organization?" as how you measure performance.

Whereas what we're aligned to try and achieve—are we hitting our next goal? Are we measuring towards—are we moving in the right direction? Are we delivering on the targets that we're looking to deliver? These two things often are best measured independently of each other. There you go! Did I cover everything there, Dave? What would you—

Dave Sharrock: 29:35 No, I'm trying to tie it together with Hannah, what you were describing around the growth mindset. So we use these terms all the time. And a growth mindset, of course—I never find a team that doesn't recognize themselves as being, first of all, growth-oriented. Nobody says, "No, it's not for me."

Peter Maddison: 29:54 "No, I don't never learn."

Dave Sharrock: 29:56 But there's something that is—and I love Hannah what you were describing, which is a big part of the growth mindset is how you're handling learning moments, failures, things that go wrong, the shipment that goes in the wrong direction out to the wrong people, or whatever it might be, the software changes—the configuration changes that fail and cause an outage or some distraction for some time because something, somebody somewhere made a misstep. How that is dealt with, how that is recognized, how it comes out is probably one of the primary things around the difference between a growth mindset or, you know, that calls out a growth mindset.

Because we have to feel safe for something to go wrong. But it's incredibly difficult. If you're the CEO and a significant kind of order fails for whatever reason, it's costly to the organization. How do you balance the two things? Because it's easy to say we're a growth-oriented—really difficult in the moment to be growth-oriented.

Hanna Bauer: 31:13 Oh, it's always difficult. I mean, that's why we have to—that's why we talk about resilience, right? I mean, if you don't have resilience, you won't be able to take those growth opportunities because they're—in that's where you do have to build that resilience specifically for those times because things will go wrong. I mean, anytime you're gonna do something, I mean, if nothing's going wrong, you're not—we say over here, "We ain't doing anything." Like something's gonna be going wrong, right? I mean, so you gotta build that resilience. So that resilience consistently has to be built.

I like Peter what you said—absolutely. It takes the top, it also has to have the support. For us, one of the things is, for example, project charters. I don't know if you're familiar with project charters, but every project charter had, you know, you have your sponsor, you have your champion, you have the lead, you have who are the people there. But it's very—it brings a lot of clarity and it's something that is not checked from just at the beginning and then at the end. There's like milestones, there's checkpoints.

And I think a lot of times those problems that happen with the shipment, perhaps, or something else, because there was no additional checkpoints. Because people get busy, and "Oh you know, just you just do your thing. I know I trust you." This whole "I trust you" is because maybe I'm not gonna be taking the time, and we're not—we're changing—I mean, we're fastly changing, we're changing the way that we talk with each other. We're changing like—if one day we're using Slack, the next day we're using Teams. Then we're—the way that we disperse communications for company. I mean, it's like every single week there was, you know, there's something that is changing.

So in real time, how—and it is difficult, but you have to be committed to it. I remember I did have a problem with shipping. We were having very high return rates in our manufacturing facility. So guess what? Guess who was getting the grunt? "How, you know, like okay, like do you all not know how to do the shipping? I mean, that's what you do, that's what we can count on you to do."

Come to realize that the real problem, once I take a look at it again, utilizing—once we had the Six Sigma principle—is that the shipping problem wasn't at the shipping point, it was really at the sales representative point. The solution was a very simple thing. We were having the wrong zip codes to the city. There was no at the time, like the software that we check—it would have been a very low-cost solution to just put the software to check to confirm and verify the address before it goes to shipping. But that wasn't looked at.

It also went from there—it went from the salesperson, went to customer service. Well, customer service just approved everything, approves. There was no second point of looking at it. However, the ones that were getting reprimanded, disciplined, and all that were the people in manufacturing.

So I think as a leader, you have to realize because it—we—it's easy again as a CEO to trying to put all that pressure, you know, "We just need to get a whole new crew, we just need to change whoever is there." And you didn't really take a look at, "Well, what were the different inputs that were coming in here?"

And that's what I'm talking about the learning moments, because for me that was a huge lesson. It's like, "Okay, it wasn't even—it was just an error here, and it wasn't just something that—of course I don't expect my salespeople to know the zip code of every single city in the US, but what tool can I get for them?" And that was a conversation I need to happen with IT. Like, "That's it. I just need to talk to IT, like, 'Oh, okay, we can do that.' Yeah, it's that much—okay, let's do that," you know.

But again, there have been such chaos for a long time with that particular group. So I think with the leader, yes, they're costing mistakes, it was costing us a lot, but being committed to, "Okay, are we—if you're getting your growth committed, let's take a look at the input. You know, what have we done to try to fix the problem? Okay, how do I know that they know? How do I know that this is how this is supposed to be done?" That question, "How do they know? How do I know that they know?" What are the markers? What are my milestones? What are the places? Where am I checking with people?

Because I've seen it, I've seen it really easily. "Oh, you're the expert. Okay, here you go. Here's your baby, you go run with it," and then they do.

Dave Sharrock: 35:31 Yeah, and then it costs.

Hanna Bauer: 35:32 You live with the consequences. Then it's like, "What were you thinking?" Well, that's a little late to do that. I mean, like you had somebody that may have been super excited to be on the job, they had definitely the expertise, and now they're being felt like this big because now whatever they've done has now cost the company so much—reputation and all this stuff. But again, it's because there's a difference with that in how we delegate, and that's something that we do have to continuously learn. Not only what we say, but even the tools. How are we doing it? How are we communicating? What—how is this delegation happening? If it's through a project charter, if it's through communication that happens through Slack, if it's ClickUp, if it's, you know, all these things that we have to have a clear way with every project, and it takes work.

Peter Maddison: 36:18 There's a piece there of sort of like limiting the radius of damage that happens from mistakes that get made. There's one—one of the parts you were talking about there is that where you started from the point of view that, "Well, we do need the error. Errors provide the opportunity for learning." So if we don't see any errors, that means we're not learning and we're not pushing ourselves. It's a common topic used in SREs, the concept of an error budget. And the concept is if you're not using your error budget, that means you're not pushing the system hard enough. You're not—so you should be using up that error budget. You don't want to exceed it, but the reason it's there is to provide you the ability to learn, to experiment, to see how should I move forward, what sort of things should I try next. But the goal is to limit the blast radius of any potential damage or change that you make so that you don't end up destroying the entire company as a consequence of a single mistake.

Hanna Bauer: 37:15 Yeah, one of the things I like is that—that fold—the failure mode analysis, because you also understand some mistakes are very impactful, right, to the organization, some are not. And also the response from a leader, like you don't need to be like "Ahh!" on everything, but I mean understanding the impact and even the people matching the right work with the failure is—FMEA, the failure mode analysis, where we're able to see if this fails, how do we catch it? You know, when this—if this fails, you know, what is the impact to the overall project? What's the impact to the overall mission and vision?

Having a leader in any level, not just the CEO, the leader at every level to really understand that—helps with delegation, it helps also, you know, what is the level of oversight that I need to have in certain projects? You know, which ones am I okay? I know there's gonna be failures, I mean it's just gonna happen, but which ones am I okay? What's the level? Kind of like if you do the stock market, I mean like what's the percentage you're willing to lose? Right? You already know. If you have an unlimited—you already know, "Hey, if I lose a thousand dollars here, I'm okay with that," but you already have your cap. "This is the maximum, it doesn't go beyond that."

Well, we treat it the same way. "This is my cap, okay. I know there's gonna be, you know, some range here and there," but using it the same way so that I am able to address those failures that have the big impact, or I'm able to quickly respond and give direction to where it needs to go in a timely matter when it's happening.

Peter Maddison: 38:48 Yeah, accountability and agency—two of the pieces that you get into there.

Dave Sharrock: 38:54 I've really enjoyed your example, Hannah, as you're going through that, because it actually speaks to the importance of psychological safety at the leadership level as well as at the team level. In that if you're in charge of manufacturing and you have this error—within error budget or outside of error budget that's coming in—I know of a lot of organizations where you cannot afford to show, effectively show weakness at that management level. Because nobody on the other side of the aisle, like in customer service or in sales, pre-sales and sales, is going to put their hand up and say, "Hold on, you're shipping to an address that we are capturing or modifying. Let's explore this. Maybe there's—maybe the error isn't there, it's here."

And that takes—that is not an easy place for a leader to be to say, "Maybe it's my team." And so I really—because this growth mindset is a tough one to get to, but like I said, we can all agree to it until we have to put it into action, and then it gets very difficult.

Now I felt that coming to the point where we go, "Okay, no, we really need that psychological safety." And we often, when we talk of psychological safety, it's often "How do I create it in my team?" It's the natural—it's maybe an assumption. But it's very different to say, "How do we make sure that the leaders, us as, you know, powerful, influential leaders in our organization with our own responsibilities and goals and so on, how do we have enough psychological safety that I'm open-minded enough to say, 'Peter, what you're experiencing, maybe there's—maybe it's coming from my team,' instead of just saying, 'Obviously, it's not my team. My team are amazing. But you know, Peter's team, let's just—we'll talk about that a different time.'" You know, I mean it's a different thing. It's a very natural, or at least it's very difficult to break those boundaries.

Peter Maddison: 40:52 Yeah, you get very defensive because you've—especially if you've tried, and after you've tried a couple of times, yeah, you just constantly get shut down. Eventually it's like, "Okay, I'm just gonna look after my world, and the rest of you just go do whatever you do, because it's just my space now."

Hanna Bauer: 41:08 Yeah! So this is where we're like, "Oh, then why can't we all just get along and talk to each other?"

Peter Maddison: 41:12 Exactly!

Hanna Bauer: 41:14 But it's reality, it's true. I mean, we just need to be able to talk to one another. I can't tell you how many companies I go—still, although we all know silos are not good, they're siloed. I mean, literally, even to like the department store—they don't know what happens outside of like their little place right there. They have no clue. And it's like, "You work here, like you're here." Like they have really like, "No, this is my one spot, this is all I know, that's it." Like, so it's very siloed still.

So I would say a couple of ways. Well, one that I see—360, you know, where you, as far as the articles—I think when you get the evaluation, where you get to see, you know, what your direct reports think of you, what your peers look for you. And that's something that we started implementing too. And then you know, your supervisor, your senior manager, whoever's there, because that starts building on it. It's not enough, but it's a great start.

The other one I highly advocate all the time. I mean, the cross-functional groups, right? I mean, we do that all the time. The work—we work with cross-functional groups, but how much time do we, outside of debriefing a project, which should be a part of it—I mean, how much time do we advocate to debrief those projects? But that would be another good practice with cross-functional groups.

But the other one that I really like is the total quality management groups, right? Where you have a quality group where you have different representatives from each place, and it's not always the same. I mean, like where you get to vote, where it has to feel like, "Hey, this is an honor to be able to participate in that." Again, to get the conversation started, because that's where it really—it boils down to, like when you start listening, it's like, "Okay, well, you know, this is how we deal with it," or "this is what we're doing," and you start finding the quality issues in there.

But having that—any size business and or having meetings specifically for that, for it, and you have to. I mean, you have to because either change is gonna happen, right? I mean, change—there's change that happens to us, it's change that we go and do. Better one is the one that we go and do, right, instead of like responding to everything else.

But that's the truth of a leader, right? I mean, that's a leader—has to see things faster, a leader has to be able to see things further away. So this is something for also that visionary leader that we need to have, because you see things that are coming down the pipe. And those conversations very much need to be talked to in with the cross-functional teams with the different functions of the business. And even if they're not the people that are only—I mean, we're talking about your contract, your main contract workers, your main vendors, people that can start talking into what are the solutions, what are some of the things that are coming up, some of the changes.

Peter Maddison: 43:49 Well, thank you, Hanna. It's been—I mean, it's a fantastic conversation. I think we're sort of getting to the sort of towards the end. So this point in our conversations, we like to sort of wrap it up with a point from each of us. And since you're the guest, you get to go first! So what would you like our listeners to take away from this?

Hanna Bauer: 44:08 Oh, well, I think the last part, you know, the importance of the psychological safety is a big deal. Having support and gain support is something that my mentor says—John Maxwell—is that influence—leadership is influence, nothing more, nothing less. And you can be influential wherever you're at. You don't have to have the position, you don't have to have the title, you just have to have the will to be an influential person.

And we need more people in the business, in the organizations to raise up and use your influence. Because when you use that influence, you will be able to help create the psychological safety. You will be able to help and advocate for your team and advocate for the projects and advocate for your clients, the people that you want to see. And so, especially in the time of uncertainty.

So for me, 100%, wherever you're at, whatever position you're in, you are always and can always use your influence. Be a person of influence, and that makes you a leader wherever you're at.

Peter Maddison: 45:06 Awesome! I like it.

Dave Sharrock: 45:07 You're going first. Normally I steal your idea. Let's see if I'm stealing your idea again! So I'm just going to touch on a phrase, Hannah, that you used right at the end of the conversation we were having, which is total quality management. And I mentioned that because what I've felt—and this conversation has just helped remind me—of the many giants on whose shoulders we stand. And there's not one giant we're standing on the shoulders of—there are many over decades and decades.

And I re-mentioned total quality management because, you know, I work in Agile, DevOps transformation, digital transformation, and that's built on top of Lean. And of course, total quality management is one of those founding principles that fed into Lean. There is so much we can learn by looking backwards at some of those giants that we've been just hinting at in this conversation. I just think that's a great reminder to say it isn't, you know, current state isn't always the only place to look.

Peter Maddison: 46:12 I think that's a very good point. The number of times I've walked in and had conversations with organizations and they're effectively reinventing something that has been around for like 40 years, is—it just came across, you know, like, "Oh well, yeah. At least you're moving forward, you're learning. And let's build on that. Here's some ideas that might help build on that that you can maybe start from and maybe accelerate your journey there."

I think it was a great conversation. There's a lot of pieces there that we covered—a lot of different topics. I like one of the pieces we were touching on there around—I always hate saying "celebrate failure" because I mean really what it is is, "What can I learn from this?" The focus on the work is a critical part of this. Like when we see this a lot in operations—and of course Dave knows I'm always likely to talk about operations at some point—but in an operations role, the one of the worst things you can do is yell at people when something goes wrong. Because apart from them—you're already being annoyed that something went wrong, yeah, now you're not really even helping at that point.

So understanding like, "So why did this happen so we can understand what the work is and what could we do differently potentially?" Is there something that needs doing differently, or is this just a completely anomalous case? Like, is this part of a pattern? Are we looking for other ways in which the work might be going on? This type of analysis that is coming on, which focuses not on the people involved, but focuses on the work and how the work is happening—so I think that's an important part of it.

Well, awesome! Thank you very much, Hanna. It's been a pleasure. And Dave, thank you as always, and look forward until next time.

Dave Sharrock: 48:04 And Hanna, thanks a lot for the conversation. Peter, always a pleasure.

Hanna Bauer: 48:08 Thank you, thank you both. I loved it!

Peter Maddison: 48:10 You've been listening to Definitely Maybe Agile, the podcast where your hosts, Peter Maddison and Dave Sharrock, focus on the art and science of digital, agile, and DevOps at scale.