Why trust speeds up organizations

Founder's Mentality - Why trust speeds up organizationsIn my last blog post, I wrote about a founder’s panel I attended, where individual founders discussed how selling a company to a large corporate buyer could increase or decrease its “speed.” One of them talked about the difference between a culture of buy-in and a culture of trust, a topic worth exploring further.

This founder (we’ll call him Bob) noted that while the buy-in culture espoused by his new parent company looked good on paper, it actually amounted to a massive brake on the speed of decision making. “I’m told to get two people to approve every decision now, which is more than I’m used to, but at least it’s straightforward,” he explained. “Then I’m advised that I should really get the buy-in of a dozen more players because that will smooth things. To be frank, it often sounds like what the corporate parent is saying is, ‘A dozen more players don’t trust you to make the right decisions for the greater firm.’ And that slows me down.” The distinction he was drawing between “good buy-in” and “bad buy-in” is a crucial one for growing organizations hoping to maintain the speed and alacrity that are important components of the Founder’s Mentality℠. We generally see three kinds of good buy-in:

1. Buy-in from people you need to talk to from a good governance perspective. Managers don’t just need to make fast decisions; they need to make good decisions fast. As we’ve mentioned several times, a critical goal for any good organizational design is that it creates conflict. You want some leaders worried obsessively about delivering to customers the benefits of difference (propositions tailored for their individual needs), and you want some leaders just as worried about delivering the benefits of sameness (propositions that cut costs by sharing common elements). A good decision-making process, then, forces debate about these very real conflicts—even at the cost of speed. Good practice, for instance, would require that a local guy get the buy-in of the global head of supply chain before committing to a major change in design to serve a local customer. That’s smart business, and smart business executives would accept a little added process that leads to a better, albeit slower, decision. Good companies work hard to lock in the right decision-making processes, so everyone knows who recommends specific decisions, who decides and who needs to agree. We call this process RAPID and have written extensively about it.

2. Buy-in from people you need to talk to make a better decision. Beyond the folks you need to get on board with your decision, it’s often important to seek out others to advise you on the decision. You are not doing this for the sake of the culture. You’re doing it because you believe firmly that the decision itself will be better if you seek that person’s advice. Here again, you are sacrificing an element of speed, but gaining a higher-quality decision. This happens hourly in companies, often accompanied by a phrase like this: “Great question, Mary! Before I make a call on that, give me a couple days to call around and get some advice on the best course here.” And Mary is more than happy to wait 48 hours since she knows your decision will be better.

3. Buy-in that amounts to an investment in better decisions later. Frequently, decision makers know that getting certain folks on board now will help in making other decisions down the road. One example: You are making a decision about how to respond to a competitive price war in the US. This competitor is also your company’s No. 1 competitor in China. Even though none of your decision-making processes requires that you talk to the head of China and the head of China has no real advice to offer, it is in your interest (and that of your company) to talk to her about the decision. You do this because if you need a decision from China later regarding this competitor, you want her in the loop and ready to respond. That actually has the effect of speeding up decisions over time, because now the head of China and you can make faster, better decisions across both markets when the time comes. It is an investment in time now that will be rewarded with speed later.

Bad buy-in, the kind Bob (the founder) was referring to, isn’t about an investment in better decisions now or later. Typically, it is about forcing a decision maker to endure a lengthy process because he or she isn’t actually trusted. No company would ever acknowledge that such a process exists. But when the founder hears this: “Bob, I think you should bring Joe and Ellen on board with this because they’ll give you some good advice and it will help you down the road” it really is just corporate speak for this: “Look Bob, Joe and Ellen are difficult characters. If you don’t seek out their approval on stuff, they’ll make your life miserable.”

From Bob’s perspective, this is bad buy-in, because it imposes a cost on the organization that is unaccounted for (lost speed) and is driven culturally for the wrong reason. “You can dress it up any way you want,” he said. “But many elements of your buy-in culture are driven by the fact that you don’t trust each other, and this slows you down.”

But it gets worse. Bob was also saying that such a culture rewards the wrong folks. The culture is actually enabling Joe and Ellen by expanding their decision authority to decisions where they add no value! You can be absolutely positive that those above and around Joe and Ellen are watching this and realizing that being obstinate and untrusting leads to more, not less, power. Joe and Ellen are what we call “energy vampires” and, in effect, the culture is willingly searching out fresh necks for them—all in the spirit of a positive buy-in culture.

If you turn this issue around, as Bob did, you see that a culture built on trust is a massive accelerator. We can speed things up if we trust the decision maker to go through the right governance process, seek out the right advice and consider future decisions when making today’s decisions. The same is true if we penalize, rather than reward, the energy vampires that slow things down by demanding a role in decisions where they add no value.

Those who trust should be rewarded. Building a culture of trust enables speed and good decision making. Using lofty and noble terms about the virtues of a buy-in culture, when, really, you are rewarding bureaucracy and distrust, robs companies of a critical asset: speed.

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