How To Overcome The Peer-Group Syndrome
What To Do When You Cannot Make a Decision? Try The Revolving Door Test.
In his book, “Only the Paranoid Survive”, Andy Grove (former Chairman and CEO of Intel) described how he and Gordon Moore (Founder, former CEO, and Chairman of Intel)made the crucial decision to get out of the memory business.
I looked out the window at the Ferris wheel of the Great America amusement park revolving in the distance, then I turned back to Gordon and I asked, “If we got kicked out and the board brought in a new CEO, what do you think he would do?” Gordon answered without hesitation, “He would get us out of memories.” I stared at him, then said, “Why shouldn’t you and I walk out the door, come back and do it ourselves?”
This is what Chip Heath (Professor, Stanford Graduate School of Business) called the “Revolving Door Test”. Changing perspective from an insider to an outsider helped Andy and Gordon see the big picture clearly. And this is also a good example of how not to let your emotions make your decisions. Most of us probably won’t have to make a dramatic decision as the one Gordon and Andy did. But we can still learn from Andy on the art of making business decisions.
Let’s take a look at some of Andy Grove’s advice from his book “High Output Management.” In the fifth chapter of his book, Andy talks about making decisions from his experience at Intel.
Unlike traditional industries, Andy viewed the high tech industry as a know-how business. Therefore, the authority to make the decision cannot be solely based on position. It should include people who are familiar with the latest technology. And he introduced the concept of an ideal model of the decision-making process in a know-how business. Please see the picture below.
The Ideal Decision-Making Process
The first stage of the ideal decision-making process should be free discussion, in which all viewpoints and different aspects of an issue are openly debated. The greater the disagreement and the controversy, the more important becomes the word free. Typically, in a heated discussion, participants hang back, trying to sense the direction of things, saying nothing until they see what view is likely to prevail. They then throw their support behind that view to avoid being associated with a losing position.
Some organizations actually encourage such behavior. If knowledgeable people withhold opinions, whatever is decided will be based on information and insight less complete than it could have been otherwise. So how do we prevent this type of behavior? With many good leaders, they will not express or show their preference until everyone has a chance to speak or express their opinions. This will allow everyone to talk freely without being afraid of being on the losing side.
The next stage is reaching a clear decision. In fact, extra effort should be taken to frame the terms of the decision with utter clarity. Again, our tendency is to do just the opposite: when we know a decision is controversial, we want to obscure matters to avoid an argument. The consequence is people who don’t like the decision will get madder if they don’t get a prompt and straight story about it.
Finally, everyone involved must give the decision reached by the group's full support. This does not necessarily mean agreement: so long as the participants commit to back the decision, that is a satisfactory outcome. But an organization does not live by its members agreeing with one another at all times about everything. It lives instead of people committing to support the decision and the moves of the business.
Another desirable and important feature of the model is that any decision is worked out and reached the lowest competent level. The reason is that this is where it will be made by people who are closest to the situation and know the most about it.
To make a decision, if you can’t find people with both qualities, you should aim to get the best possible mix of participants available. For the high tech industry, if we don’t link the engineers with the managers in such a way as to get good decisions, we cannot succeed in our industry.
The Peer-Group Syndrome
The ideal decision-making model is hard to implement because anybody who makes a business decision also possesses emotions such as pride, ambition, fear, and insecurity. The most common problem is something we call the peer-group syndrome. Peers tend to look for a more senior manager, even if he is not the most competent or knowledgeable person involved, to take over and shape a meeting. Why? Because most people are afraid to stick their necks out.
The faster the change in the know-how on which the business depends or the faster the change in customer preferences, the greater the divergence between knowledge and position power is likely to be. You can overcome the peer-group syndrome if each of the members has self-confidence, which stems in part from being familiar with the issue under consideration and from experience. But in the end, self-confidence mostly comes from a gut-level realization that nobody has ever died from making a wrong business decision.
If the peer-group syndrome manifests itself, and the meeting has no formal chairman, the person who has the most at stake should take charge. If that doesn’t work, one can always ask the senior person present to assume control. One thing that paralyzes both knowledge and position power possessors is the fear of simply sounding dumb. For the senior person, this is likely to keep him from asking the questions he should ask. For lower-level people, they have to overcome the fear of being overruled, which might mean embarrassment as the junior manager might lose face in front of her peers. To be effective, we have to overcome our fear of sounding dumb or of being overruled.
But some issues are so complex that those called upon to make a decision honestly aren’t really sure how they feel. When knowledge and position power are separated, the sense of uncertainty can become especially acute, because the knowledge people are often not comfortable with the purely business-related factors that might influence a decision.
Striving for the Output
Sometimes, we could be talking in circles for a long time and not reaching a consensus, yet the time for a decision has clearly arrived. The most senior person has no other option but to make a decision herself. If you either enter the decision-making stage too early or wait too long, you won’t derive the full benefit of open discussion.
The most important thing is don’t push for a decision prematurely. But if you feel that you have already heard everything, that all sides of the issue have been raised, it is time to push for a consensus and failing that, to step in and make a decision.
The decision-making process will generate high-quality output in a timely fashion if the process is defined clearly. Here are the six important questions Andy recommended asking before jumping into any decision-making process.
- What decision needs to be made?
- When does it have to be made?
- Who will decide?
- Who will need to be consulted prior to making the decision?
- Who will ratify or veto the decision?
- Who will need to be informed of the decision?
Being consistent in the decision-making process has value beyond simply expediting the decision-making itself. The last question is especially important if the final word has to be dramatically different from the expectations of the people who participated in the decision-making process, make your announcement but don’t just walk away from the issue and make sure the people who need to know are informed of the final decision.
Making decisions is not always easy. If you know of any good suggestions, please feel free to share them by responding to this article.
Ben Horowitz’s Three Steps Guide To Hiring -Don’t judge a book by its cover
Wisdom From Great Leaders. Part 1.
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Wisdom From Great Leaders. Part 2.
What You Must Know About Objectives and Key Results (OKRs)To Be Successful At All Levels
Wisdom From Great Leaders. Part 3.