The Easiest Way to Make Smart Decisions and Build Better Buy-In

In a complex environment, wise leaders follow  The Google Golden Rule:

According to Google’s former chairman, Eric Schmidt, the Google Golden Rule affects the the behavior of managers. “At Google, the role of the manager is that of an aggregator of viewpoints, not the dictator of decisions.”

He is also acknowledges that while building a consensus sometimes takes longer, it always produces better decisions and a more committed team.

Collective Intelligence

“The many are smarter than the few” refers to the power of Collective Intelligence. What does that mean?

Leaders capture the ideas and opinions of a diverse group and synthesize the insights.

The oldest investment counseling firm in the U.S. used the Collective Intelligence approach as a new way to manage strategic planning.

The firm’s past strategic planning had used the traditional approach ─ the executive team worked off-site for a couple of days with a facilitator. They returned to the office with a plan, but it usually ended up in a binder on the shelf.

So, the firm tried something new: the 28-member co-located group ― counselors and professional staff ― tapped its members’ Collective Intelligence with an online collaboration system.

Each week the group met virtually in a one-hour online session. Over 90-days, the group shaped a strategy to transform their business. One of the group’s leaders described the process:

 The History of Collective Intelligence

There is an old saying that “two heads are better than one” and many heads are even better. There is ample evidence to support this ― over a century of documented examples of large, diverse groups producing amazingly accurate answers.

In 1906, a British researcher visited a livestock fair and witnessed an intriguing contest. An ox was on display, and the villagers were invited to guess the animal’s weight. Nearly 800 people participated, and the results were astonishing. The average of the 800 guesses was 1,197 pounds. That was only one pound less than the actual weight — 99.9% correct.

In his fascinating book, The Wisdom of Crowds, James Surowiecki explains why the power of Collective Intelligence is not widely recognized.

We often think of groups and crowds as stupid, feckless, and dominated by the lowest common denominator. But look around.

The crowd at a racetrack does an uncannily good job of forecasting the outcome, better in fact than just about any single bettor can do. Horses that go off at 3-to-1 odds win a quarter of the time, horses that go off at 6-to-1 win a seventh of the time, and so on.

Consider the role of Collective Intelligence on the TV game show Who Wants to Be a Millionaire? Contestants have the option to either call an expert or poll the audience to help them get the correct answer.

How often is the audience right compared to the expert? On average, the audience is correct 91% of the time, and the expert is right only 65% of the time. Why does the audience do so much better?

The Why of the Wisdom Effect

A series of social psychology studies at Columbia University found that the “wisdom effect” is a natural statistical outcome: a large sample of imperfect estimates tends to cancel out extreme errors and converge on the truth.

There are a variety of ways to produce the ‘Wisdom Effect’ for thinking, planning and execution decision-making. Here are three examples.

1. Prediction Markets

Many organizations have used internal Prediction Markets to improve their decisions in a variety of areas.

For years, Hewlett-Packard used this approach to fine-tune its sales campaigns. Best Buy’s “TagTrade” is an internal Prediction Market where rank-and-file employees buy or sell shares in proposed new products, giving management an early indication of which ideas should be most profitable.

Google conducted one of the largest corporate experiments with Prediction Markets. Participants began with an endowment of artificial currency (called “Goobles”). They used this currency to “purchase securities” that paid off in Goobles if a specified event occurred.

 2. The Delphi Method

In the aftermath of World War II, the U.S. military funded Project RAND to create a more accurate approach to forecasting than traditional methods. The result was The Delphi Method, a process in which a diverse group of experts answers a series of questions anonymously.

Since the 1950s, the Delphi method has been widely used in the private sector because it consistently increases forecasting accuracy. For example, the Delphi Method has predicted the sales of new products with an average accuracy of 96%–97%, compared with quantitative methods at 85%–90%, and traditional forecast methods at 80%.

How does the Delphi Method work?

•   A diverse group of experts responds anonymously to a set of questions.

•   A neutral facilitator processes the responses, filtering out irrelevant content and organizing the ideas by themes.

•   The participants receive the theme report and then comment on the themes.

•   At any time, participants are free to revise their earlier responses.

It is interesting to note that in typical meetings people tend to stick to their opinions, regardless of new information. Yet during Delphi sessions, they are far more flexible and willing to change their mind.

3. The GEO Method

For over two decades, our firm has designed and facilitated hundreds of Collective Intelligence sessions for CEO’s, business owners, and mission critical teams. We have witnessed countless examples of extraordinary results when leaders ensure ideal conditions. These conditions include:

•   Deliberate Diversity – Engaging a group with different areas of expertise, different ages, genders, ethnicity, life experiences, and thinking styles.

•   Psychologically Safety – Ensuring a risk-free environment that encouraged freedom of expression without fear of reprisals by leaders or colleagues.

•   Shared Cognitive Challenge – Creating a set of simple but profound questions for solving a complex problem or making an important decision.

•   Leveraging Technology – Providing a suite of digital collaboration tools to instantly collect responses and refine insights via rapid, iterative feedback cycles.

When a group thinks together under these conditions, Collective Intelligence naturally emerges.

Because of its combined knowledge, experience, and unique perspectives, the group is typically better than an elite few at all aspects of strategic thinking: exploring the future, solving complex problems, fostering innovation, and making strategic choices. 

The Execution Bonus: Better Buy-In

A basic tenet for effective execution is building buy-in for the plan. GEO has found that tapping Collective Intelligence has a natural consequence: broader engagement that leads to better buy-in.

Rather than engaging only a small group of leaders, with little or no input from the people who will be executing, we use a Full Engagement approach: a broad cross-section of people, who represent different parts of the organization, directly participate in the planning process.

In small organizations, the Full Engagement group could easily include everyone. In large organizations, we typically include representatives of various parts of the organization, including the informal leaders that people listen to and respect.

The Full Engagement approach has three important execution benefits:

• Commitment to execution increases because people who contribute their ideas during the planning process feel a sense of ownership.
• Everyone sees the importance of the plan succeeding as a whole, not just in their area. This minimizes silo-thinking and increases cross-boundary collaboration.
• When people understand the nuances of the planning decisions, they are better equipped to make smart course corrections when necessary.

There are, of course, challenges to overcome with Full Engagement approach. This was the case for Weyerhaeuser’s Industrial division.

One of the division’s leaders, Phil Leopold, recognized the importance of engaging their leadership stakeholders across all of the regions. He explained the cost and logistics challenge:

The challenge wasn’t so much in determining who should participate in the process. It was the excessive cost and logistical constraints of physically convening such a large number of participants from geographically dispersed locations. This was simply not feasible to do on an ongoing basis.

Weyerhaeuser’s solution was to use GEO’s WebCouncil™ Collaboration System. It enabled participants to come together in facilitated weekly virtual sessions.

In the virtual sessions, we quickly channeled the concerns of all the stakeholders. The fact that we could think and plan together in real-time, regardless of our geographic location, allowed us to sustain the speed and alignment we needed to succeed with the planning.

Twelve months after the initiative began, the division’s CEO reported the results:

• Sales were up 10 percent—the highest-ever rate of sales growth in a market that grew less than 3 percent.
• Net profits were up 58 percent.
• Return on assets was up 60 percent.
• Headcount was reduced by 10 percent.
• Total business investment held constant, despite growth.
• Share of key market segments increased.

Weyerhaeuser’s commitment to a collaborative, virtual approach led to a deep satisfaction with the overall direction and created momentum for change. After the project, Leopold concluded: