It turns out that, back in 2009, the Fed had commissioned Columbia Business School Professor and former banker David Beim to conduct a study to get to the bottom of the agency’s failure to regulate the banks and prevent the financial collapse of 2008.
What did Beim discover? Were the economics too sophisticated to understand? The markets too complicated? No.
As it turns out, the regulatory failure was in fact due to a lack of psychological safety that would have allowed Fed employees to share their observations and concerns.
Building Block 1: A supportive learning environment.
An environment that supports learning has four distinguishing characteristics.
To learn, employees cannot fear being belittled or marginalized when they disagree with peers or authority figures, ask naive questions, own up to mistakes, or present a minority viewpoint. Instead, they must be comfortable expressing their thoughts about the work at hand.