In 2001, Jay Steinfeld and his wife, Naomi, sold their custom blinds and drapery store in Houston and went exclusively online. A year later, Naomi died, and the grief-stricken CEO of Blinds.com began a period of intense soul-searching. "That was the beginning of my metamorphosis," says Steinfeld.

Realizing that Blinds.com had no corporate vision to speak of, he began to focus on employees. "Our purpose is to help people become the best that they can be," Steinfeld says. He does that by encouraging them to take risks. In January, Home Depot acquired Blinds.com, now the largest online retailer of window coverings, for an undisclosed sum. Steinfeld says his company never would have attracted the home-improvement giant's attention without a culture of openness. This is his advice on how to build one at your company.

1. Let employees know that the boss isn't always right. Being direct and candid is a core value at Blinds.com, so Steinfeld tells new employees that he expects them to question his decisions. For many, that takes some getting used to. "In general, most people won't do it," he says. To get them to open up, Steinfeld holds weekly "Say Jay" meetings to get the staff's honest feedback.

One complaint since the merger announcement has been the increased time employees are spending in meetings--something Steinfeld expects will improve. "If we want to get to the truth, we have to hear the truth," he says.

2. Visualize the way out of fear. "I'm risk averse; I hate making mistakes," says Steinfeld. He learned to overcome that fear by recognizing the consequences of failure are seldom catastrophic--a lesson he now shares with his employees. "'You don't have to fear the mistake. It will never kill you,' I tell them," he says.

Visual props help. At Blinds.com, two 5-foot-tall test tubes filled with marbles stand in the marketing department. Employees drop in a clear marble every time they try out a new idea. If it succeeds, they drop in a colored marble. "There are significantly more clear marbles," says Steinfeld.

3. Everyone is on a quest. All Blinds.com staff receive ongoing business coaching, with call-center employees getting instruction three to five times per week to improve their interactions with customers. But this quest for continuous improvement goes beyond the office. All employees are encouraged to write down their personal goals on the company's 8-foot-wide whiteboard--whether it's to lose weight, become a better cook, or learn how to parachute. "People in the company see that this idea of improving extends to themselves personally," says Steinfeld.

4. Share your history--rats and all. It's important to Steinfeld that everyone appreciate where Blinds.com has come from to understand where it's headed now. The company's early days weren't exactly glamorous. At the old office, employees had to walk through a seedy alleyway to the entrance. The company now has a nice, new office, but Steinfeld brought the alleyway with him. He had a re-creation of it built in the call center. "It's like a movie set," says Steinfeld. "It's my favorite part of the office. We even have two rubber rats in the alley, rattraps, and dangling wires. It's really cool."

From the May 2014 issue of Inc. magazine