Q&A: Allow employees to make mistakes

WASHINGTON — Santiago Levy wants the Inter-American Development Bank to be the best development institution in Latin America and the Caribbean, and fostering top talent is a big part of that plan. The now-retired vice president of sectors and knowledge served 10 years at the bank. Levy said he stressed the importance of treating people with respect and honesty to create a work environment in which people work their hardest. He sees a promising future at IDB for young people at the top of their fields who want to make a difference in the region. Levy said it is just as important to have someone who’s just finished their doctorate. — who knows the latest econometric techniques — as it is to have someone with decades of experience — who knows the institutional context and needs of a particular country. Levy sat down with Devex recently in Washington, D.C., to discuss his legacy and approach to creating meaningful careers and attracting top talent to IDB. Central to that mission? Allowing people to make mistakes. This conversation has been edited for length and clarity. Was bringing in younger and more diverse voices to the bank a conscious decision? The bank is an agglomeration of very talented people who come from very different backgrounds, and they each have something to add. If you pay attention you learn something, and that’s not necessarily correlated with age. It’s just different knowledge and they’re all needed. No one is better than another. The trick here is to understand what is it that each person can add, and to create an environment in which they can add as much as they can. The other element is they’re all professionals. These are all people who have master’s degrees, Ph.Ds, sometimes in economics, environmental science, sometimes in accounting, finance, law. These are all very, talented and well-educated people. If you make it hierarchical, what you’re going to do is stifle dissent. And if you stifle dissent, you’re in trouble. We know that nobody knows everything. You want to stimulate different points of view. You’ve got to respect different viewpoints. “If you stifle dissent, you’re in trouble. We know that nobody knows everything. You want to stimulate different points of view. You’ve got to respect different viewpoints.” --— How does the bank find the balance between how employees spend their time on knowledge generation or loan generation? It’s ongoing. It’s not that we got it perfectly right. If effectually the overall sensation is too much into today, and not enough into tomorrow, you correct, you go a little too far, you correct again. As long as you have a mechanism to correct the notion that you’re going to get the perfect allocation of people’s times and financial resources, you can adjust. If you’re flexible, it’s kind of like a sailboat. You want to go where the wind pushes you. We have this mechanism in the bank to do project completion reports, which are written once a loan is fully dispersed — an effort of saying what worked and what didn’t work — take all the bureaucracy aside because everybody wants to look like everybody did everything perfectly — but if you foster some self-criticism, these project completion reports can be useful in the sense that “next time I’m going to do a project like this, I should learn this.” That doesn’t mean that mistakes were made, it’s just that later we learned that a better way of doing it was at hand. Did you find the bank structured in a way that it had the agility to apply those lessons in real time? Before I came, there were three separate regions and each region had a self-contained sectoral department. So the experience of the people who were in region 1 doing subway loans was not necessarily shared with the experience of people in region 3 doing subway loans. Now, you put everybody together. One of the advantages of the current organizational structure of the bank is that all the people who worked on the Lima subway are going to overlap quite substantially with the people who work on the Quito subway because they’re all in the same transportation division and there’s only one division chief. The knowledge is rapidly shared so there’s a kind of informal learning. That is a really strong advantage of IDB, that all the people working on a particular area sit in the same division and have one division chief so that the externalities of their knowledge can be internalized fairly quickly. “What really, really matters is to support people when things did not work. If you want to kill an institution, punish people when they make mistakes.” --— How does the bank encourage these people to put everything into their work? The division chiefs are extremely motivated people. These are not bureaucrats that are just earning their salary. These are guys who know about their area, they’re passionate about their area, and they really want to do well as an internal pride. It’s what makes them tick. The incentives to do well from the technical and substantive point of view are very strong. I would argue the ethos of the vice presidency is “I should try to do as best as I can.” And people are motivated. There’s always an innovation and there’s always something different that they’re doing. Our people are motivated, they’re supported, they want to do the best, and they’re really proud of what they’re doing. It’s great fun. How does fostering that sort of culture at the bank help you attract top talent? It’s kind of a virtuous circle. The first thing you want to tell people is “look, the bank really wants to increase its quality.” And that’s what IDB President Luis Moreno told me that he wanted. So you need a commitment from the board and a commitment from the president of the bank, that yes, we want to be a top quality development institution. The objective is the best development institution in Latin America and the Caribbean. Not top. The best. Then, you’ve got to make this message credible. To make this message credible you’ve got to create the conditions for that quality to be there. Part of it is training people, because the people that are there are good but maybe they can be trained more. Give them the conditions for them to actually be creative, give them some freedom. You’ve got to get people the space to make mistakes. This is really, really, really important. If you don’t allow people to make mistakes, you don’t allow people to experiment. The thought that everything new is going to work, it’s not like that. When you start new things sometimes they work and sometimes they don’t work. What really, really matters is to support people when things did not work. If you want to kill an institution, punish people when they make mistakes.