The New Business Strategy

By Margie Warrell

Warrell is a best-selling author, leadership advisor, and keynote speaker on courageous leadership. Her new book is The Courage Gap: 5 Steps to Braver Action.

March 26, 2025

In today’s rapidly evolving business landscape, organizations grapple with a broad range of external challenges—from generative-AI advancements to geopolitical instability and market fluctuations. But the most formidable threat is invisible and often originates from within. It’s when fear dominates a firm’s culture.

Fear, while a natural human emotion, can become detrimental when it dominates organizational culture—when it widens the gap between the potential of employees to lead change and add value and the actions they are willing to take. An environment in which employees fear ridicule, rejection, or marginalization leads to self-censorship, missed opportunities, and a decline in innovation. A Korn Ferry study revealed that 69 percent of employees withhold ideas due to fear of rejection or ridicule, which can result in competitors gaining ground.

What’s more, when fear prevails, disengagement becomes systemic, creating a cycle that’s difficult to break. Research indicates that 85 percent of employees don’t feel comfortable challenging their manager, even when pressured to act unethically. This invisible tax of fear hampers organizational performance, eroding engagement and leading to a slow leakage of value over time—initially invisible, but eventually irreversible.

Harvard psychologist Robert Kegan’s research reveals that employees often invest significant time and energy in striving to “look good” and not lose face. This self-protective behavior not only diverts their focus from more productive activities, but also inadvertently creates longer-term vulnerabilities.

There is, of course, another path, where organizations cultivate a culture of courage. Employees feel safe to voice ideas, challenge the status quo, and take calculated risks. And the results speak for themselves: Korn Ferry research finds that companies prioritizing these attributes report 30 percent higher levels of innovation and 40 percent greater employee engagement. But how to embed courage into organizational culture? A few steps for leaders would include:

Model how to fail well: After speaking at a regional sales conference a few years back, I sat in on a town hall meeting where an employee inquired about a recent failed upgrade of the company’s CRM system. The CEO responded defensively,
dismissing the question as trivial within the context of broader challenges. This reaction not only silenced the individual, but also signaled to others that discussing failures was unwelcome. Such leadership behavior discourages open dialogue and learning from mistakes, making employees reluctant to take risks in pursuit of improvement.

Make vulnerability safer: Creating an environment in which vulnerability is accepted and encouraged is crucial. This involves establishing psychological safety—a shared belief that the team is a safe place for interpersonal risk-taking. When employees feel secure, they are more likely to share ideas, admit mistakes, and challenge the status quo without fear of negative consequences.

Invest in developing courageous leaders: While fear is natural, courage is a learnable skill. Equipping leaders with the tools to model and reinforce courageous behaviors—from training in emotional intelligence to managing accountability and resolving conflicts—pays dividends well beyond quarterly earnings. No organization can “culture itself” into new behaviors; it has to “behave itself” into a new culture. If leaders aren’t exhibiting bravery often, little will change.

In today’s dynamic business landscape, courage isn’t optional—it’s nonnegotiable. Leaders who fail to foster courageous cultures risk being left behind, outperformed by organizations where bold thinking is celebrated. The ROI of courage is clear: stronger teams, smarter decisions, and sustainable success. But it requires leaders willing to set the tone and challenge—and de-risk—the status quo in order for others to follow suit. 

A “courage mindset” distinguishes the highest-performing enterprise leaders, enabling them to navigate uncertainty and drive innovation effectively. Investing in a culture that promotes courage and psychological safety yields tangible returns. Organizations that embrace these principles are better positioned to innovate, adapt to change, and maintain high levels of employee engagement.

Photo Credits: Retrorocket/Getty Images; Rob Dobi