Let's say you need to decide on what to include in the budget for the next FY. It'd be fastest and least painful to make the decision yourself on behalf of your team. If you get it right, you get the glory and time back in your day. Get it wrong though, and you're looking at 12 months of frustration and disapproving head shaking in the office.
So you decide to include everyone who could give you grief if they're not included, set a strict agenda and brace yourself for the inevitable arguments and logjams.
Am I the only one with this experience?!
While inviting perspectives and experience shares is essential in decision making, decision by consensus is fraught with danger. It can create adversarial situations where emotions flare; people strongly disagree and refuse to budge. It can also create a feeling of needing to please everyone to move forward. Inevitably a drawn-out process ensues, that results in a watered-down decision that placates all and satisfies none.
There must be a better way.
To combat this, we've been experimenting with a decision process. It's a set of steps that if followed, gives anyone in our team ownership over a decision. Anyone can make a decision as long as they seek advice from; everyone who will be meaningfully affected, and people with expertise in that area.
I first read about this idea in Reinventing Organisations, written by French author Frederic Laloux. It's like the French version of Jim Collins' classic Good to Great. Same approach in that he reviews a handful of companies in-depth but through a French rather than American lens. So more empathy and less chest-beating.
Reinventing Organisations is clear that the decision process is not decision by consensus. Instead, it's designed for decision-makers to put a decision forward, get input from those impacted and who have experience in this area and to make a decision then. In the knowledge that not everyone will be happy with the decision.
Advice received must be taken into consideration. The point is not to create a watered-down compromise that accommodates everybody's wishes. It is about accessing collective wisdom in pursuit of a sound decision. With all the advice and perspectives the decision-maker has received, they choose what they believe to be the best course of action.
Consensus may sound appealing, but it's not always most effective to give everybody veto power. In the advice process, power and responsibility rest with the decision-maker. Ergo, there is no power to block. Ownership of the issue stays clearly with one person: the decision-maker. If the decision-maker is convinced that they made the best possible decision, they can see things through with enthusiasm, and they can also accept responsibility for any mistakes. The advice (decision) process then transcends both top-down and consensus-based decision making. - Frederic Laloux, Reinventing Organisations
Decision to stop tracking time
Over the past six months, Yarnoers have made nine decisions using the decision process. One of these that involved the whole team was a decision to stop tracking time.
We introduced individual time tracking in early 2019 as a way to gain insight into where we were spending time, to help us calibrate our pricing and to determine customer profitability. Being a software platform, our expenses and effort amortise across all our customers. So we need to know that what we're individually asking our customers to pay, collectively makes commercial sense. Not everyone, however, was thrilled with the decision to start time tracking, but we agreed to experiment with it.
Six months in and there was considerable variance in how the team were tracking time. Accuracy in logging time became an issue as did variance in when people logged time. We also discovered that time tracking began to clash with one of our core principles of value outcomes over time spent.
After seeing and hearing challenges and frustrations that time tracking was creating, and since I introduced time tracking in the first place, I followed the decision process and put forward a decision to stop tracking time.
It turned out to be an illuminating experience. I created a Typeform survey to ask the team for their feedback privately before sharing with the broader team. It drew out some specific frustrations that I wasn't aware of and showed me that assumptions I'd made in the beginning weren't accurate. Solid reasons to continue time tracking also came to light.
Next, I organised a meeting to review the feedback and discuss the rationale that I'd set out in my decision document. We had a robust discussion, and while there were still valid reasons for and against, I weighed the possible outcomes and decided to stop time tracking. The decision was made within two weeks.
If I'd followed a consensus approach, I'm sure the for and against camps would still be arguing their positions today, with no end in sight.
Key ingredients for success
In my experience, getting the decision process up and running requires three elements.
When we began to consider implementing the decision process seriously, we recognised that to make confident decisions, the team needed to have the same commercial context that Mark and I do, being the business owners. So since 2019, we've shared our revenue, cost of sales, operating expenses and net profit with the team monthly.
Was this scary? Sure! Are we crazy? Possibly. Can we trust our team? Definitely. We believe that if we want Yarnoers to make decisions in the best interests of the team, then we should trust them.
I believe groupthink is a real threat to our business. Especially as the team spend more time together, I'm sure our perspectives and viewpoints are beginning to align. You could argue this is positive since we're on the same page and decision making is quick. However, it also makes us blind to signals and external threats that appear obvious to someone looking in.
To mitigate this, we encourage disagreement, especially when we're all in agreement. Since disagreeing doesn't come naturally to all of us (me especially), we experiment with nominating someone to play devil's advocate and take the counter position.
While for some, this can feel weird and disingenuous, switching sides in your mind and looking for holes in a position that you agree with is a powerful exercise. As Charlie Munger (Warren Buffet's investment partner) says "It's bad to have an opinion you're proud of if you can't state the arguments for the other side better than your opponents".
I think playing devil's advocate has levelled up my decision making and encouraged me to do the work to have an opinion by looking at different sides of an argument.
Support the decision Ultimately, the success of the decision process rests on the team, supporting the decision that's made. Whether they advocated for or against it. Without this support, there's no incentive for people to follow the process and make their own decisions. To counter this, the team need to buy-in to the process and want to see it succeed. With this buy-in, you're more likely to support decisions that are made by others, so you can be confident your decisions will be supported when your time comes.
I appreciate that following the decision process may appear easier for me being in a small team and an MD. However, I think the risk of consensus decision making is present no matter team size or role. And the principles behind it in sharing context and encouraging disagreement can be applied by anyone.
Lachy's our Managing Director. He's our resident rationalist and ideas man. He also reads way too many books for our liking.
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