Organize for Innovation
Private ordering for effective innovation in (interdisciplinary) teams
Why This Appendix Exists
Everything this book asks you to do is easy alone and hard in a group.
Suspend judgment for the length of a divergence, when you can already see which idea is best. Come back from a conversation and report the part that went badly. Say out loud that the concept you argued for last week did not survive the screening matrix. Write down, before you field a test, the result that would make you abandon the pain statement you wrote, and then honor it when that result arrives.
Each of those is a small act of self-exposure. Alone they cost nothing, because there is nobody to lose standing in front of. On a team they cost whatever the team charges for being wrong out loud.
Which matters more than it sounds, because a team that charges a high price does not fail loudly. It runs the expedition, fills in every artifact, and hands you a pain statement, a screening matrix, and a test result that look exactly like good ones. What is missing is invisible. The objection nobody raised. The disconfirming quote that stayed in somebody’s notebook. The concept that survived convergence because its author had the most to lose. The machinery keeps producing output long after it has stopped producing evidence.
So this is not a chapter about being kind to each other. A team’s capacity to disagree is a condition of the method in the same way that reach is a condition of Diamond 1. Without it the process still turns and the readings are fiction.
The concept behind the Halo Alert demonstration came from a real innovation project that had done the work: a community, a validated pain, concepts screened against the women’s own requirements, and two solution tests with real customers. No test ever found it wanting. It died anyway, because the team could not work together, and it died on the drawing board, where nobody outside the team ever found out whether it would have worked.
That is the ordinary ending for these. The market rarely gets the chance to reject them.1
Interdisciplinary teams carry both halves of this at once. The diversity of skill that lets a team see a problem from several sides is the same diversity that makes its members misread each other, and the early weeks tend to hide it: formation has a honeymoon, full of optimism and deference, and the honeymoon is not evidence that the team can disagree. It is evidence that nothing has been at stake yet.
What follows moves from description to instrument. Teams pass through predictable stages, and there is one most of them get stuck in. The thing that traps them there has a name. Psychological safety is the condition for getting out. And two documents, one informal and one binding, let a team settle its rules while it still wants to.
The Stages of Team Development
Just like individuals, teams evolve through distinct stages, progressing from formation to high performance.2 Understanding these stages is crucial for steering your team toward success. Let’s explore these stages and how they can inform your approach to team management.
Forming
The journey begins with the forming stage. It’s a time of high hopes and some self-doubt. Team members are generally enthusiastic but may also question their fit within the group. It’s crucial to encourage open communication, assess each other’s skills, and clarify the team’s goals and individual roles. Remember, even the most qualified members might battle the imposter syndrome, so fostering a supportive environment is key.3
Storming
Next comes the storming stage, marked by the reality check. Initial excitement might give way to frustration and tension as team members grapple with unmet expectations. Conflicts and criticism can arise, challenging the team’s harmony. To navigate this phase, revisit and realign your team’s purpose and goals with the emerging realities.
Norming
As the team enters the norming stage, conflicts begin to resolve. A sense of collaboration and psychological safety starts to solidify. Team members understand each other better, leading to more productive and fulfilling teamwork. Clear communication and a collective focus on common goals replace the initial struggles, setting the stage for the team to start realizing its true potential.
Performing
In the performing stage, the team hits its stride. Members work not just as individuals but as a cohesive unit, leveraging each other’s strengths. The focus shifts from individual achievements to collective success. The team, now more than the sum of its parts, solves problems and navigates conflicts efficiently, truly embodying the essence of collaborative innovation.
Advocacy vs. Inquiry
Teams in the performing stage are characterized by the collaboration of team members. Collaboration can increase the amount and quality of work produced by leveraging diverse expertise and enhancing creativity.
The path to this performing stage goes through storming and some teams get stuck in storming, never progressing to performing through collaboration. The team can devolve into unproductive conflicts and competitiveness, hindering the creative process.
The key to continued progress is to engage in inquiry rather than advocacy.4 Consider the distinctions between these two approaches for a variety of team activities.
| Advocacy | Inquiry | |
|---|---|---|
| Concept of decision making | a contest | collaborative problem solving |
| Purpose of discussion | persuasion and lobbying | testing and evaluation |
| Participant’s role | spokespeople | critical thinkers |
| Patterns of behavior |
|
|
| Minority views | discouraged or dismissed | cultivated and valued |
| Outcome | winners and losers | collective ownership |
In the innovation process detailed in this book, I have never seen a team succeed that was also highly engaged in advocacy. If you want to succeed with high probability, embrace inquiry. Instead, prioritize your team members, your customers, and the team’s innovation over yourself. If you do, you will be more likely to succeed personally and do it while enjoying the emotional benefits of helping others succeed.
Advocacy: Competition to Win within the Team
In an advocacy-driven team, members focus on asserting their ideas and achieving personal dominance. This competitive mindset fosters an environment where members are more concerned with winning arguments than finding the best solutions. It often leads to a situation where the loudest, most persuasive, or most dominant voices prevail, rather than the best ideas.
Inquiry: Collaboration to Win for the Customer
In contrast, inquiry-based teams prioritize a more open and cooperative approach. Here, the objective is to explore multiple alternatives, exchange ideas freely, and collectively work towards well-considered solutions. This approach is characterized by a focus on mutual problem-solving rather than individual victories.
Conflict in Advocacy vs. Inquiry
Note that conflict is present in both approaches. However, the nature of conflict in inquiry is constructive, aimed at evaluating and improving ideas. In advocacy, conflict often degenerates into personal attacks and self-aggrandizement, sidelining the process of idea generation and selection.
The tendency towards advocacy can be a major pitfall for teams, leading to suboptimal outcomes and strained dynamics. Recognizing the signs of an advocacy-dominated environment is crucial, as is knowing strategies to steer the team towards more productive, inquiry-based collaboration.
Psychological Safety
While interdisciplinary teams have the potential to harness diverse skills for innovative solutions, this diversity can also be a source of conflict if not managed correctly. One of the most critical aspects of managing this diversity effectively is by ensuring psychological safety within the team.5
Protecting the psychological safety of team members is not just about ensuring comfort; it’s about creating an environment where every member can contribute their best ideas without fear. This section delves into the practices and measures that can build and maintain psychological safety within a team.
The Concept of Psychological Safety
Google studied the keys to success in 180 teams and published the startling result that the key to effective teams lies not in the individual capabilities of team members but in how they interact, structure their work, and view their contributions.6 Central to this is the concept of psychological safety, defined as a shared belief among team members that the team is safe for interpersonal risk-taking. This environment allows team members to present ideas and questions without fear of negative consequences, fostering a culture of open collaboration and collective problem-solving.
Building Psychological Safety: Practical Steps
Building psychological safety is a deliberate process, requiring conscious effort to create an environment that encourages open and honest communication. Some effective practices include:
- Demonstrating Engagement: Actively participate in discussions, showing genuine interest in teammates’ ideas, and listening attentively.
- Showing Understanding: Validate others’ contributions, focusing on understanding rather than blaming.
- Inclusivity in Interpersonal Settings: Share your preferences, express gratitude, and defend team members against undue criticism.
- Inclusivity in Decision-Making: Actively seek and acknowledge everyone’s input in team decisions.
- Balancing Confidence and Flexibility: Exhibit confidence in your ideas while remaining open to others’ perspectives and avoiding rigidity.
Assessing Psychological Safety
To gauge the level of psychological safety within a team, conducting anonymous surveys can be invaluable. These surveys can cover various aspects of team dynamics, including confidence in feedback mechanisms, dependability, clarity, meaning, and impact. Survey questions might include:
Psychological safety
- How comfortable do you feel brainstorming with your team?
- How confident are you that you could fail openly without being shunned?
Dependability
- When team members say they will get something done, how reliably does it get done?
- How well do team members flag delays early and take responsibility for them?
Clarity
- Do you know what the team’s goals are and how you contribute to them?
- Do you have autonomy and ownership of your tasks?
Meaning
- Does the work give you a sense of personal and professional fulfillment?
- Is work assigned to you on the basis of both your skills and your interests?
Impact
- Do you see your work creating change for the better?
- Does your work matter for goals larger than the task?
- Do the team’s processes improve your well-being or erode it?
By focusing on these aspects, teams can move beyond just coexistence to truly collaborative and innovative problem-solving. Psychological safety is the bedrock upon which successful interdisciplinary teams are built. It enables team members to leverage their diverse skills fully, leading to more innovative and effective solutions. The commitment to nurturing an environment of psychological safety can transform the potential of an interdisciplinary team into a reality of creative and impactful innovation. This approach ensures that team members not only contribute their best but also feel valued and supported in the process.
Creating a culture of cooperation takes conscious effort from everyone on the team, and effort alone will not carry it, because the moment you need the culture most is the moment it is hardest to summon. A team under pressure does not rise to its intentions. It falls back to its rules.
Private Ordering
So write the rules while you still agree on them. That is private ordering: a team settling its own terms in advance rather than discovering them in an argument. It rests on one observation, uncomfortable and reliable. Agreements reached while things are calm are legitimate. Agreements reached while things are at stake are negotiations, and somebody loses a negotiation. The time to decide what happens when a member disengages is a month before anyone disengages, while nobody knows whether it will be them.
If that reasoning sounds familiar, it should. It is the same move as writing down what would change your mind before you field a pain test, rather than after you have seen the answers. Both bind a future self who will have a motive, and in both cases the sentence is worthless if written afterward, because from the inside the two feel identical.
Teams have two instruments for this, and they do different work. The team charter governs behavior: how you will communicate, how you will decide, what happens when somebody does not deliver. It binds no one legally, which is not a defect, because its value is the conversation it forces. A team that has argued its way to a charter has already rehearsed disagreeing about something small.
The operating agreement governs ownership and control: who holds what, who decides, and what becomes of a departing member’s stake. It is a legal document and it is enforceable, and it does the one thing a charter cannot. It takes the profit out of advocacy.
The Team Charter
A practical tool for nurturing psychological safety is the creation and utilization of a team charter. A team charter is a contract among team members, establishing the team’s purpose, roles, rules, and procedures, thereby guiding its collaborative efforts. It can outline agreed-upon norms and practices that promote psychological safety, ensuring every team member knows what to expect and what is expected of them.
A team charter is not just a formality; it’s a crucial tool for fostering a collaborative culture. It lays the groundwork for teamwork and innovation by clarifying team objectives and processes. The charter may evolve over time, adapting to the team’s changing purpose and methods.
Elements of a Team Charter
The team charter should cover several key areas to ensure effective team functioning. While the specific contents will vary based on the team’s needs, some core elements are generally useful:
1. Project Objective Statement
A clear and concise statement of the team’s project and goals, providing direction and unity. It should outline the project’s scope, schedule, and resources. A well-defined objective statement serves as a mission, guiding the team amidst complex details. It should describe what will be done (scope of the project), when it will be done (schedule of the project), and how much it will cost (resources needed for the project). The resources for the project should include the expertise of the team members, tools, and budget required to accomplish the scope of the project on schedule.
Here is an example of a project objective statement for a project developing a human-powered drill for digging water wells:7
Design, build, and test a human-powered drill that reaches underground potable water at depths of 250 ft in all soil types by March 25, 2011 with a prototyping budget of $2,800 USD for less than 1,700 hours of development.
2. Roles and Responsibilities
Clearly defined roles and responsibilities for each team member enhance clarity and accountability. The charter should also be flexible enough to adapt to new tasks and changing team dynamics. You should revisit the roles and responsibilities as you learn more about the work to be done and the skills and preferences of the team members. When a new task needs to be done, assign it as a responsibility to a team member with the approval of the team.
3. Decision-Making Process
Establish how the team will make decisions. Consider differentiating between day-to-day decisions (simple majority) and major decisions (super-majority). Ensure the process supports inquiry rather than advocacy. Do not fall into the trap of consensus: it is slow to build and the last person to agree effectively has as many votes as the rest of the team put together because the last person can kill whatever proposal is being considered.
When new decision categories emerge, add them to the simple majority list or the super majority list as you choose. For example, you may specify that tasks, assignments, and other day-to-day decisions that are below a financial threshold can be settled by a simple majority while bigger decisions, such as hiring new executive officers, selling the company, acquiring funding, or budgeting, require the super majority. Be sure to focus on inquiry and collaboration so that no one is perpetually outvoted and then loses interest.
You should also specify what decisions a team member can make while fulfilling their tasks and what decisions need to be brought back to the team for consideration.
4. Ground Rules
Lay out specific protocols for communication, participation, work products, conflict management, and attendance. These guidelines will help maintain order and ensure productive team interactions.
Communication: How will you communicate with each other? How often? With whom? Will you use e-mail, telephones, text, or a social platform? Is there a time of day or night that is off-limits for calling a team member? Do some team members respond better and faster to e-mail than phone mail? You should consider the following questions in developing a team communication protocol.
Participation: We expect all members to participate equally and actively in all team activities and work.
Work Products: All members will contribute their share of the work, delivering end products complete and on time. The team will use project management processes to assign tasks and require accountability.
Conflict Management: We encourage healthy debate about content within the meetings; however, the facilitator will directly address conflict that disrupts the team. Anyone who feels a conflict exists that is not being addressed has the responsibility to bring it to the facilitator or team for resolution.
Preparation: All members must be aware of agenda items for the day and have their portions of the work completed before the meeting starts.
Attendance: We require attendance at all team meetings. If an unexpected conflict arises, the member is responsible for sending in his or her work for the day and for notifying the team.
5. Addressing Violations
Develop a tiered response to rule violations, balancing accountability with constructive outcomes. This approach helps maintain discipline while being fair and proportionate to the nature of the violation.
Guidelines for Developing the Team Charter
- The charter should be a collaborative effort, reflecting the input of all team members.
- Avoid delegating the charter creation to a single individual; use inclusive methods like whiteboard sessions or notecard pooling.
- All members should sign the charter to formalize their commitment.
- Schedule regular reviews of the charter to adapt to the team’s evolving needs.
- Display the charter prominently to reinforce its importance and remind team members of their commitments.
Managing Tasks and Accountability
Apply project management principles to assign tasks and manage accountability effectively. This structured approach ensures that the team’s efforts in navigating the uncertainties of innovation lead to success.
The Operating Agreement
A charter is enough while the only thing at stake is effort. It stops being enough the moment the team holds something worth owning: a validated pain, a concept that survived screening, a customer who said yes and meant it. From then on, every disagreement about the work is entangled with a disagreement about standing, and goodwill does not untangle them. A document does, by answering the ownership question in advance so that the argument in front of you is free to be about the evidence.
That document is an operating agreement, the contract among the owners of a company setting out who holds what, who decides, and what becomes of a departing member’s stake. It is the formal half of private ordering, and for most teams it comes due at the same moment as the first real asset.
Why This Belongs in a Book About Exploration
An operating agreement looks like corporate housekeeping, and it would be, except for what this method asks a team to do.
The expedition runs on abandonment. You refrigerate communities you had good reasons to like. You kill pain statements that failed the test you wrote for them before you ran it. You eliminate concepts in convergence, including the one you brought in. Every one of those acts destroys something a specific person argued for in front of everyone else.
So ask what abandonment costs under two different ownership rules.
If ownership tracks what people have already contributed, then killing an idea takes something real away from whoever brought it. The central act of the method becomes an attack on a teammate, and teammates defend themselves. The defense will not announce itself as a defense. It will arrive as a careful argument about whether the evidence really supports that conclusion, and the person making it will believe every word.
If ownership tracks what people do next, abandoning your own concept costs you nothing, and doing it early and cleanly may be the clearest demonstration of your value the team has seen. The argument about the evidence is then free to be about the evidence.
Read that way, vesting is not a retention device. It is the financial instrument that makes abandonment affordable.
Two Principles
Every clause worth arguing over follows from two ideas.
Reward Future Contribution, Not Past Effort
Equity is an incentive, not a trophy. It is also the main thing a young company can pay with, which means spending it on the past spends it twice: once on work already done, and again on the work it can no longer buy.8
Early on you do not know who will end up contributing the most. That is not poor judgment on your part. The information does not exist yet. There are three common ways of handling that, and only one of them survives contact with a team that changes.
- Allocate all the equity immediately, so there is nothing left to fight about. This trades a fight now for a worse one later, when the allocation turns out to be wrong and cannot be undone.
- Wait until contributions are legible and then allocate. This is fair, and it leaves everyone uncompensated and anxious through exactly the period when the hardest work happens.
- Allocate a small amount for participation and the rest against contribution over time. Only this one pays people as they go while keeping most of the incentive still ahead of them.
The mechanics can be simple. One unit per member for each month of active participation compensates everyone for what they actually do, keeps the issued total small enough that nobody is defending a windfall, and leaves the bulk of the ownership to be earned once it is clearer what earning means. Vesting schedules, milestone grants, and grants triggered by outside investment do the same job with more precision.
Settle Fairness While the Stakes Are Low
There is a perverse arithmetic in a venture that starts to work. The more the thing is worth, the harder it becomes to agree about who deserves what, because now every position has a number attached to it and every concession is a real loss. Success makes renegotiation more necessary and less possible at the same time.
So the terms have to be set while they are still nearly hypothetical. A rule you agree to when the company is worth nothing feels like housekeeping. The same rule proposed a year later feels like a raid, whatever its merits, and the team spends its attention litigating instead of exploring.
That is the whole argument for doing this early, and it is why the awkwardness of the conversation is the point rather than a reason to postpone it. The comfortable short-term choice, which is almost always to leave it vague for now, is the one that turns out to be dangerous later.9
The Decisions Only You Can Make
A lawyer can draft the document. A lawyer cannot make any of these decisions for you, because all of them are downstream of how your team actually works. Settle them first and the drafting is short, cheap, and largely a matter of writing down what you already agreed.
Who owns, and with what voice?
- Who is a full-time builder, and who is contributing part-time or advising?
- Do the part-time contributors vote? Splitting ownership into a voting class and a non-voting class lets you compensate somebody generously without handing them a say over decisions they are not close enough to make.
How is ownership earned?
- What triggers a grant: time, milestones, outside investment, or some mixture?
- Is there a period at the start during which a departing member keeps nothing? How long is it?
Who decides?
- Which decisions can an individual make inside their own responsibilities?
- Which take a simple majority, and which take a super-majority?
- If the team deadlocks, what breaks the tie? A small board, one to three people, is the usual answer, and it exists mainly so that a convergence cannot stall forever.
What happens when somebody leaves?
- Does unearned ownership return to the company automatically?
- Can the company buy back what a departing member already earned, and at what price?
- What becomes of a member’s stake if they die or are no longer able to participate?
Formation
- What is the company’s name, and is it available where you will register?
- Who receives legal notices on the company’s behalf?
Notice what the departure questions are really for. They are how a team changes its composition without dissolving, which is the ordinary case rather than the sad one. People take jobs, move, and lose interest. A team with no way to let somebody go ends up carrying members who hold a vote and do no work.
What a Drafted Agreement Looks Like
An example operating agreement is included here, drafted by law faculty for early-stage teams and prepopulated so that a team supplies only four things: its name, its registered agent, its initial ownership, and its board of managers. It carries both principles above in its actual clauses, including vesting, voting and non-voting units, and the company’s right to buy back the ownership of a member who stops contributing.
What this example is, and is not
It is one drafting of these decisions, for one entity type, under one state’s law. It is not legal advice, it is not your agreement, and it is not a form to sign. Jurisdictions differ in ways that matter, and a document that is enforceable in one place can be inert in another.
Use it the way you use the demonstration in this book: as evidence of form rather than of fact. It shows you what these decisions look like once somebody has written them down properly. The reasoning travels. The clauses do not.
Take your answers from the worksheet above to a lawyer where you are. The worksheet is the expensive part, and it is the part nobody can do for you.
What Organizing Buys You
Four things have to hold for a team to run this method rather than perform it.
The team has to get through storming instead of settling there, which takes time that enthusiasm cannot shorten. It has to treat decisions as inquiry rather than as a contest, so that ideas are weighed on their merits and not on who brought them. It has to be safe enough that somebody will say the inconvenient thing out loud while there is still time to act on it. And it has to have settled its rules, the behavioral ones and the binding ones both, back when settling them was cheap.
The fourth is what holds the other three in place. Stages pass, intentions fade under pressure, and the membership changes. A rule agreed while nobody had a motive keeps working after everybody has one, and that is the only kind of rule that survives the week you need it.
None of this guarantees a good expedition. A team can be safe, well governed, and wrong about the market. What it buys is narrower than that and worth more than it sounds: when the evidence says something nobody wants to hear, somebody will say it anyway, and saying it will not cost them anything they cannot afford.
This is the strong version of the claim, and it is Noam Wasserman’s: across a decade of research on nearly ten thousand founders, people problems rather than market or technology problems are the leading cause of startup failure, and the decisions that cause them are made early, made quickly, and are hard to undo (Wasserman 2012).↩︎
For more detail on the stages of team development, see the work of Bruce Tuckman (1965).↩︎
Even qualified team members can sometimes suffer from the imposter syndrome that can make them cautious about sharing their skills and insights for fear of being exposed as a fraud. (Gardner et al. (2019)).↩︎
For more detail on making decisions with inquiry rather than advocacy, see Garvin and Roberto (2001).↩︎
There is a stream of research on psychological safety that began with the pioneering work of Amy Edmondson (1999).↩︎
Julia Rozovsky, who led the study, reported the findings in Google’s own write-up (2015); for popular accounts see Duhigg (2016) and Tamiru (2023).↩︎
Splitting the equity is the decision Wasserman treats as the most consequential of the early ones, precisely because founding teams tend to settle it fast, settle it on the basis of what has happened so far, and then find it nearly impossible to revisit once the company is worth something (Wasserman 2012).↩︎
The pattern recurs throughout Wasserman’s cases: the easy early choice and the durable one are rarely the same choice (Wasserman 2012).↩︎