WhenTeamscantDecide.pdf

hbr.org | November 2008 | Harvard Business Review 121

THE EXECUTIVE TEAM is deliberating about a critical stra-

tegic choice, but no matter how much time and effort the

team members expend, they cannot reach a satisfactory

decision. Then comes that uncomfortable moment when

all eyes turn to the CEO. The team waits for the boss to

make the fi nal call, yet when it’s made, few people like the

decision. Blame, though unspoken, is plentiful. The CEO

blames the executives for indecisiveness; they resent the

CEO for acting like a dictator. If this sounds familiar, you’ve

experienced what I call the dictator-by-default syndrome.

For decades this dynamic has been diagnosed as a prob-

lem of leadership or teamwork or both. To combat it, com-

panies use team-building and communications exercises

that teach executives how to have assertive conversations,

give and receive feedback, and establish mutual trust. In

doing so, they miss the real problem, which lies not with

the people but with the process. This sort of impasse is

inherent in the act of arriving at a collective preference on

the basis of individual preferences. Once leadership teams

understand that voting-system mathematics are the cul-

prit, they can stop wasting time on irrelevant psychological

exercises and instead adopt practical measures designed

to break the impasse. These measures, proven effective in

scores of strategy off-sites for companies of all sizes, enable

teams to move beyond the blame cycle to a no-fault style

of decision making.

When Teams Can’t Decide Are stalemates on your leadershipteam making you a dictator by default? Stop blaming your people – start fi xing the process.

Best PracticeBY BOB FRISCH

Jen

Hsi

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122 Harvard Business Review | November 2008 | hbr.org

Best Practice When Teams Can’t Decide

Asking the ImpossibleReaching collective decisions based on

individual preferences is an imperfect

science. Majority wishes can clash when

a group of three or more people at-

tempts to set priorities among three or

more items. This “voting paradox,” fi rst

noted in the eighteenth century by the

Marquis de Condorcet, a French math-

ematician and social theorist, arises

because different subsets of the group

can generate confl icting majorities for

all possible alternatives (see the exhibit

“The Boss Is Always Wrong”). A century

and a half later, renowned economist

Ken Arrow developed his impossibil-

ity theorem, which established a series

of mathematical proofs based on Con-

dorcet’s work.

Suppose a nine-person leadership

team that wants to cut costs is weighing

three options: (a) closing plants, (b) mov-

ing from a direct sales force to distribu-

tors, and (c) reducing benefi ts and pay.

While any individual executive may be

able to “rack and stack” her preferences,

it’s possible for a majority to be simulta-

neously found for each alternative. Five

members might prefer “closing plants”

to “moving sales to distributors” (a > b),

and a different set of fi ve might prefer

“moving sales” to “reducing benefi ts and

pay” (b > c). By the transitive property,

“closing plants” should be preferred to

“reducing benefi ts and pay” (a > c). But

the paradox is that fi ve members could

rank “reducing benefi ts and pay” over

“closing plants” (c > a). Instead of being

transitive, the preferences are circular.

When the CEO is fi nally forced to

choose an option, only a minority of

team members will agree with the de-

cision. No matter which option is se-

lected, it’s likely that different majorities

will prefer alternative outcomes. More-

over, as Arrow demonstrated, no voting

method – not allocation of points to al-

ternatives, not rank-ordering of choices,

nothing – can solve the problem. It can

be circumvented but not cured.

Although the concept is well under-

stood in political science and economics

and among some organizational theo-

rists, it hasn’t yet crossed over to prac-

tical management. Understanding this

paradox could greatly alter the way ex-

ecutive teams make decisions.

Acknowledging the ProblemTo circumvent the dictator-by-default

syndrome, CEOs and their teams must

fi rst understand the conditions that give

rise to it. The syndrome is perhaps most

obvious at executive off-sites, but it can

crop up in any executive committee

meeting of substance.

Most executive teams are, in effect,

legislatures. With the exception of the

CEO, each member represents a signifi –

cant constituency in the organization,

from marketing to operations to fi nance.

No matter how many times a CEO asks

team members to take off their func-

tional hats and view the organization

holistically, the executives fi nd it diffi cult

to divorce themselves from their func-

tional responsibilities. Because the team

often focuses on assigning resources and

setting priorities, members vie for allo-

cations and approval for favored proj-

ects. When more than two options are

on the table, the scene is set for the CEO

to become a dictator by default.

More insidiously, the problem exists

even when a team is considering an

either/or choice, despite the fact that

the voting paradox requires three or

more options. Framing strategy consid-

erations as binary choices – “We must

either aggressively enter this market

or get out of this line of business alto-

gether” – appears to avert the problem.

However, such choices always include

a third, implied alternative: “Neither of

the above.” In other words, there could

be circular majorities for entering the

market, for exiting the business, and for

doing neither.

Take, for example, the ubiquitous

business case, which usually offers a

single, affirmative recommendation:

“We should aggressively enter this mar-

ket now.” The only apparent alternative

is to forgo the market – but some team

members may want to enter it more ten-

tatively, others may want to enter an ad-

jacent market, and still others may want

to defer the decision until the market

potential becomes clearer.

The use of the business case, which

forces decisions into a yes-or-no frame-

work, is a tacit admission that groups are

not good at discussing and prioritizing

multiple options. Further, when a team

of analysts has spent six months work-

ing up the business case and only a half

hour has been allotted to the item on

the agenda, dissenting team members

may be reluctant to speak up. Questions

from the heads of sales and marketing,

who have spent only a day or two with a

briefi ng book and 20 minutes watching

a PowerPoint presentation, would most

likely be treated as comments tossed

from the peanut gallery. So the team

remains silent and unwittingly locked

in the voting paradox. Ultimately, in or-

der to move on to the next agenda item,

either the team appears to reach a

majority view or the CEO issues a fi at.

In reality, however, there may be com-

peting opinions, alternative majority

opinions, and dissatisfaction with the

outcome – all of them unstated.

Managing the ImpossibleOnce CEOs and their teams under-

stand why they have trouble making

decisions, they can adopt some straight-

IDEA IN BRIEF

When executive teams hit an ■

impasse deliberating on an important decision, they often look to the CEO to make the fi nal call, only to be displeased with the outcome.

The CEO blames the team ■

for indecisiveness; the team resents the CEO for acting like a dictator.

This problem arises because ■

groups try to reach consen-sus on the basis of individual preferences.

Use the tactics described here ■

to circumvent this dictator-by-default syndrome and create genuine team alignment.

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hbr.org | November 2008 | Harvard Business Review 123

forward tactics to minimize potential

dysfunction.

Articulate clearly what outcome you are seeking. It’s surprising how of-

ten executives assume that they are talk-

ing about the same thing when in fact

they are talking past one another. In a

discussion of growth, for instance, some

may be referring to revenue, others to

market share, and others to net income.

The discussion should begin with agree-

ment on what outcome the team is try-

ing to achieve. If it’s growth, then do all

the members agree on which measures

are most relevant?

In the absence of clearly articulated

goals, participants will choose options

based on unspoken, often widely differ-

ing, premises, creating a situation that is

ripe for the dictator-by-default syndrome.

One division of a major industrial com-

pany, for example, was running out of

manufacturing capacity for a commod-

ity product made in the United States

and a specialty product made in Western

Europe. Because costs of labor and raw

materials were high in both places, the

leadership team was considering what

seemed like an obvious choice: shutting

down the U.S. plant and building a plant

in China, where costs were lower and

raw materials were closer, to handle the

commodity business and any growth in

the specialty business. Most members of

the team assumed that the desired out-

come was to achieve the highest possible

return on net assets, which the move to

China might well have accomplished.

However, the CEO had been in dis-

cussions with corporate managers who

were primarily concerned with alloca-

tion of overhead throughout the enter-

prise. The move to China would mean

shutting down an additional plant that

supplied raw materials to the U.S. plant,

with implications for corporate earnings.

Once the division team fully understood

what outcome the parent company

desired – to minimize overhead costs

without taking a hit on earnings – it

could work on solving the capacity prob-

lem in a way that honored the parent’s

strictures.

It’s essential to keep discussion of the

desired outcome distinct from discus-

sion about how to achieve it. Sometimes,

simply articulating the desired outcome

will forestall or dissolve disagreement

about solutions because the options can

be tested against an accepted premise.

It may also help avert the political horse

trading that can occur when executives

try to protect their interests rather than

aiming for a common goal.

Provide a range of options for achieving outcomes. Once the team at

the industrial company had articulated

the desired outcome, it could break the

simplistic “accept,” “reject,” and “defer”

alternatives into a more nuanced range

of options: build a specialty plant in

China; beef up the plant in Western

Europe; or build a commodity plant in

China and gradually decommission the

U.S. plant.

Test fences and walls. When teams

are invited to think about options, they

almost immediately focus on what they

can’t do – especially at the divisional

level, where they may feel hemmed in

by corporate policies, real or imagined.

Often the entire team not only assumes

that a constraint is real but also shies

away when the discussion comes any-

where near it. When team members cite

a presumed boundary, my colleagues

and I encourage them to ask whether

it’s a wall, which can’t be moved, or a

fence, which can.

For example, one division of a glo-

bal provider of fi nancial services was

A management team is attempting to select a fl eet vehicle for its com-pany’s senior executives. When asked to rank three choices – BMW, Lexus, and Mercedes – the individual team mem- bers reach an impasse.

To break it, the CEO intervenes and picks BMW. But as the table shows, two-thirds of the team would have preferred a Lexus. Had he chosen Lexus, however, two-thirds of the team would have preferred

Mercedes. And had he chosen Mercedes, two-thirds of the team would have preferred BMW. Instead of being transi-tive – Lexus beats BMW; Mercedes beats Lexus; therefore Mercedes beats BMW – the choice is circular. Whatever decision the boss makes, the majority of his team is rooting for a different option. Unjustly, but not surprisingly, he is considered a dictator.

THE VOTING PARADOX

The Boss Is Always Wrong

It’s essential to keep discussion of the desired outcome distinct from discussion about how to achieve it.

First Choice Second Choice Third Choice

Lou BMW Mercedes Lexus

Sue Mercedes Lexus BMW

Stu Lexus BMW Mercedes

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124 Harvard Business Review | November 2008 | hbr.org

Best Practice When Teams Can’t Decide

looking at new avenues for growth. Al-

though expanding the division’s offer-

ings to include banking services was

a promising possibility, the executive

team never considered it, assuming

that corporate policy prohibited the

company from entering banking. When

the division head explicitly tested that

assumption with her boss, she found

that the real prohibition – the wall –

was against doing anything that would

bring certain types of new regulatory

requirements. With that knowledge, the

division’s executive team was able to

develop strategic options that included

some features of banking but avoided

any new regulations.

Surface preferences early. Like ju-

ries, executive teams can get an initial

sense of where they stand by taking

nonbinding votes early in the discus-

sion. They can also conduct surveys in

advance of meetings in order to identify

areas of agreement and disagreement as

well as the potential for deadlock.

A global credit card company was de-

ciding where to invest in growth. Ordi-

narily, executive team members would

have embarked on an open-ended dis-

cussion in which numerous countries

would be under consideration; that tac-

tic would have invited the possibility of

multiple majorities. Instead, they con-

ducted a straw poll, quickly eliminating

the countries that attracted no votes and

focusing their subsequent discussion on

the two places where there was the most

agreement.

Using weighted preferences is another

way to narrow the decision-making

fi eld and help prevent the dictator-by-

default syndrome. The life and annuities

division of a major insurance company

had developed a business plan that in-

cluded a growth in profi t of $360 mil-

lion. The executive team was trying to

determine which line of business would

deliver that growth. Instead of casting

equally weighted votes for various lines

of business, each executive was given

poker chips representing $360 million

and a grid with squares representing the

company’s products and channels. Team

members distributed their chips accord-

ing to where they thought the projected

growth was likely to be found. After

discussing the results they repeated the

exercise, fi nding that some agreement

emerged.

By the third and fi nal round of the ex-

ercise, this weighted voting had helped

them narrow their discussion to a hand-

ful of businesses and channels, and gen-

uine alignment began to develop among

team members. Equally weighted votes

might have locked the executive team

into the voting paradox, but this tech-

nique dissolved the false equality of al-

ternatives that is often at the root of the

problem. Proposing options early and

allowing people to tailor them reduces

the likelihood that executives will be

forced into a stalemate that the CEO

has to break.

State each option’s pros and cons. Rather than engaging in exercises about

giving feedback or learning how to have

assertive conversations, executives can

better spend their time making sure

that both sides of every option are force-

fully voiced. That may require a devil’s

advocate.

The concept of a devil’s advocate orig-

inated in the Roman Catholic Church’s

canonization process, in which a lawyer

Proposing options early and allowing people to tailor them reduces the likelihood of a stalemate.

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is appointed to argue against the can-

onization of a candidate – even the most

apparently saintly. Similarly, in law,

each side fi les its own brief; the defense

doesn’t simply respond off-the-cuff to

the plaintiff’s argument.

In business, however, an advocate for

a particular option typically delivers a

presentation that may contain some

discussion of risk but remains entirely

the work of someone who is sold on the

idea. Members of the executive team

are expected to agree with the business

case or attack it, although they may have

seen it only a few days before the meet-

ing and thus have no way of producing

an equally detailed rebuttal or offering

solid alternatives. Further, attacking the

business case is often perceived as at-

tacking the person who is presenting it.

Frequently the only executives with

open license to ask tough, probing ques-

tions are the CEO and the CFO, but even

they lack the detailed knowledge of the

team advocating the business case.

By breaking the false binary of a busi-

ness case into several explicit and im-

plicit alternatives and assigning a devil’s

advocate to critique each option, you

can depersonalize the discussion, mak-

ing thorough and dispassionate counter-

arguments an expected part of strategic

deliberations. This approach is espe-

cially valuable when the preferences of

the CEO or other powerful members

of the team are well known. If assign-

ing a devil’s advocate to each option

appears too cumbersome, try a sim-

pler variant: Have the CEO or a meet-

ing facilitator urge each team member

to offer two or three suggestions from

the perspective of his functional area.

Instead of unreasonably asking execu-

tives to think like a CEO, which usually

elicits silence or perfunctory comments,

this tactic puts team members on the

solid ground of their expertise and trans-

forms an unsatisfying false binary into

far more options for discussion.

A major internet entertainment com-

pany adopted a novel version of the

devil’s advocate approach. The company

maintains a council to consider its many

Change lives. Change organizations. Change the world.

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Best Practice When Teams Can’t Decide

potential investments, from upgrading

its server farms to adopting new tech-

nology to creating special entertainment

events on the web. In the past, each op-

portunity was presented to the council

as a business case by an advocate of the

investment, and each case was evaluated

in isolation.

Frustrated with this haphazard ap-

proach, the company established a new

system: The council now considers all in-

vestment proposals as a portfolio at its

monthly strategy meetings. All propos-

als follow an identical template, allow-

ing for easy comparison and a uniform

scoring system. Finally, each one needs

sign-off from an independent executive.

This system incorporates the devil’s

advocate role at two levels. For each

proposal the validating executive, not

wishing to be accountable for ground-

less optimism, considers carefully all

of the counterarguments, does a reality

check, and makes sure the sponsor ad-

justs the score accordingly. At the port-

folio level, the comparative-scoring system

reminds the team that the proposals are

competing for limited resources, which

prompts a more critical assessment.

Devise new options that preserve the best features of existing ones. Despite a team’s best efforts, executives

can still fi nd themselves at an impasse.

That is a measure of both the weighti-

ness of some strategic decisions and the

intractability of the voting paradox –

it’s not necessarily an index of executive

dysfunction.

Teams should continue to reframe

their options in ways that preserve their

original intent, be it a higher return

on net assets or greater growth. When

they feel the impulse to shoehorn deci-

sions into an either/or framework, they

should step back and generate a broader

range of options. For instance, the execu-

tive team of the property and casualty

division of a large insurer wanted to

grow either by signifi cantly increasing

the company’s share with existing agen-

cies or by increasing the total number of

agencies that sold its products. Before

the leadership team took either path, it

needed to decide whether to offer a full

line of products or a narrow line. As a

result, team members found themselves

considering four business models: (1) full

product line, existing large agencies;

(2) narrow product line, existing large

agencies; (3) full product line, more

small agencies; and (4) narrow prod-

uct line, more small agencies. Dissatis-

fi ed with those choices, they broke the

business down into 16 value attributes,

including brand, claim service, agency

compensation, price competitiveness,

breadth of product offering, and agency-

facing technology. Some of these value

attributes might apply to all four of the

original business models; others to three

or fewer. Agent-facing technology, for ex-

ample, is typical of working with many

small agencies, because their sheer num-

bers preclude high-touch relationships

with each one.

The team then graded its company

and several competitors on each attri-

bute to fi nd competitive openings that

fi t with the division’s willingness and

ability to invest. Instead of four static

choices, it now had a much larger num-

ber of choices based on different combi-

nations of value attributes. Ultimately, it

chose to bring several lagging attributes

up to market standard, elevate others

to above-market standard, and aggres-

sively emphasize still others. This turned

out to be a far less radical redirection

than the team had originally assumed

was needed.

Two Essential Ground RulesSo far, I have outlined several tactics that

leadership teams can use to circumvent

the dictator-by-default syndrome. These

tactics can be effective whether they are

used singly or in tandem. But if teams

are to thwart this syndrome, they must

adhere to two ground rules.

Deliberate confi dentially. A secure

climate for the conversation is essen-

tial to allow team members to fl oat

trial balloons and cut deals. An ex-

ecutive who knows that her speculative

remarks about closing plants may be cir-

culated throughout the company will be

reluctant to engage in the free play of

mind that unfettered strategy discus-

sion demands. Moreover, team mem-

bers whose priorities don’t prevail in

the deliberations must be able to save

face when the meeting is over. If they

are known to have “lost” or to have re-

linquished something dear to their con-

stituents, their future effectiveness as

leaders might be undermined.

Deliberate over an appropriate time frame. All too often the agendas

for strategy off-sites contain items like

“China market strategy,” with 45 minutes

allotted for the decision. The result is a

discussion that goes nowhere or an ar-

bitrary decision by the CEO that runs

roughshod over competing majorities

for other options. When new options

are devised or existing ones unbundled,

team members need time to study them

carefully and assess the counterargu-

ments. Breaking up the discussion into

several meetings spaced widely apart

and interspersed with additional analy-

sis and research gives people a chance

to reconsider their preferences. It also

gives them time to prepare their con-

stituencies for changes that are likely to

emerge as a result of a new strategy.

• • •

Leadership and communication exer-

cises have their merits. A team can’t

make effective decisions if its members

don’t trust one another or if they fail to

listen to one another. The problem I see

most often, however, is one that simply

cannot be fi xed with the psychological

tools so often touted in management lit-

erature. If executives employ the tactics

described here, which are designed to fi x

the decision-making process, they will

have far greater success in achieving real

alignment.

Bob Frisch (rfrisch@strategicoffsites.

com) is the managing partner of the

Strategic Offsites Group in Boston and

a coauthor of “Off-Sites That Work”

(HBR June 2006).

Reprint R0811JTo order, see page 139.

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