“Consensus is a powerful tool. When CEOs set out to conquer new markets or undertake billion-dollar acquisitions, we’d hope they’d at least sought out some consensus from their trusted advisors. We hope they’d be as sure as possible that their teams are ready, that their strategies are sound, and that they’d done their diligence,” writes Maxwell Wessell.
“The problem with consensus is that it’s expensive. And while it’s worth the cost of consensus in the pursuit of big, bold moves, it’s often crushing to small experimental ones.”
“So the challenge to managers is determining how to manage the consensus tax. How do you avoid investing in mediocre ideas, but still act with the speed and efficiency that helps you increase your ROI and get more at bats?”
Some of Wessell’s ideas:
1. Acknowledge that not all investments are the same: “Managers in the modern organization need different processes for different types of investments. If your organization has one pathway for funding you’re doing it wrong. Either, you’re not considering the complex investments deeply enough or you’re crushing the small ones.”
2. Push decision authority as low as possible: “To push decisions down, you need to limit your downside. Make sure that you hire smart people who you’d trust to make a good decision (not just order-takers). Make sure that you clearly define what success is for an experiment. And make your corporate mission and boundaries well known and well defined. If you do each of those things and distinguish between experimental investments and more meaningful operational investments, you’re already going to be in a good spot.”
3. Don’t punish failure. Punish waste: “If you truly want to innovate, it’s important not to punish failure. Similarly, it’s not alright simply not to punish people at all. The type of punishment that I’ve seen work well is punishing waste; those who waste resources by failing twice the same way or those who waste time by being satisfied sitting in meeting after meeting without getting anything done.”