At Menlo, PMs foster a fear-free culture by thanking developers who report budget or time overruns. This counter-intuitive reaction encourages early and honest communication, allowing the PM to manage issues proactively with the client instead of having them surface unexpectedly later.

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People won't bring you problems if they fear your reaction. To build trust, leaders must not only control their emotions but actively thank the messenger. This reframes problem-reporting from a negative event to a positive act that helps you see reality more clearly.

Surprising your manager with a major failure is one of the worst mistakes you can make. You must proactively communicate risks as soon as they arise. This gives your leader time to manage expectations up the chain and prevents them from being blindsided.

When giving challenging news, leaders cannot just "drop the bombshell and walk out." A successful approach requires three steps: 1) be clear and direct with the news, 2) provide the context and rationale behind it, and 3) stay to connect with the team, showing commitment and outlining next steps.

In a supportive culture, managing underperformance starts with co-authored goals upstream. When results falter, the conversation should be a diagnostic inquiry focused on removing roadblocks. This shifts the focus from the person's failure to the problem that's hindering their success, making tough conversations productive.

Instead of avoiding risk, teams build trust by creating a 'safe danger' zone for manageable risks, like sharing a half-baked idea. This process of successfully navigating small vulnerabilities rewires fear into trust and encourages creative thinking, proving that safety and danger are more like 'dance partners' than opposites.

Consistently investing in your team on a personal level builds a reservoir of trust and goodwill called "emotional equity." This makes them more receptive to difficult changes like price increases or new strategies, as they believe you have their best interests at heart.

To prevent resentment in high-pressure teams, implement a scheduled forum for fearless feedback, like a "Sunday SmackDown." This creates a predictable, safe container for airing grievances—personal or professional. By separating critique from daily operations, it allows team members to be open and constructive without the awkwardness or fear of disrupting morale, thereby preventing small issues from escalating.

Don't hide from errors. Steve Munn found that when he made a mistake, taking ownership and handling it well actually enhanced client "stickiness" and deepened the relationship. Clients saw he cared and was accountable, building more trust than if the error never happened.

Menlo's culture operates on the principle that when mistakes happen, the system is at fault, not the individual. This approach removes fear and blame, encouraging the team to analyze and improve the processes that allowed the error to occur, fostering a culture of continuous improvement.

To foster psychological safety for innovation, leaders must publicly celebrate the effort and learning from failed projects, not just successful outcomes. Putting a team on a pedestal for a six-month project that didn't ship sends a stronger signal than any monetary award.