Two Heads Are Better Than One...Right?

Everybody knows that two heads are better than one. We’ve known it since kindergarten, where we were taught that cooperation, collaboration, and teamwork are not just socially desirable behaviors—they also help produce better decisions. And while we all know that two or more people working together are more likely to solve a problem or identify an opportunity better than one person doing it alone, it turns out that’s only true sometimes.

Ideally, a group’s collective intelligence, its ability to aggregate and interpret information, has the potential to be greater than the sum of the intelligence of the individual group members.  In the 4th Century B.C. Aristotle, in Book III of his political philosophy treatise Politics, described it this way:

…when there are many who contribute to the process of deliberation, each can bring his share of goodness and moral prudence…some appreciate one part, some another, and all together appreciate all.

But that’s not necessarily how it works in all groups, as anyone who has ever served on a committee and witnessed groupthink in action can probably testify.

Groups are as prone to irrational biases as individuals are, and the idea that a group can somehow correct for or cure the individual biases is false, according to Cass Sunstein, Harvard Law School professor and author (with Reid Hastie) of Wiser: Getting Beyond Groupthink to Make Groups Smarter. Interviewed by Sarah Green on the HBR Ideacast in December 2014, Sunstein said individual biases can lead to mistakes, but that “…groups are often just as bad as individuals and sometimes they are even worse.” Biases can get amplified in groups. According to Sunstein, as group members talk with each other “they make themselves more confident and clear-headed in the biases with which they started.” The result? Groups can quickly get to a place where they have more confidence and conviction about a position than the individuals within the group do. They often lock in on that position and resist contrary information or viewpoints.

Researcher Julie A. Minson, co-author (with Jennifer S. Mueller) of The Cost of Collaboration: Why Joint Decision Making Exacerbates Rejection of Outside Information agrees, suggesting that people who make decisions by working with others are more confident in those decisions, and that the process of making a judgment collaboratively rather than individually contributes to “myopic underweighting of external viewpoints.” And even though collaboration can be an expensive, time-consuming process, it is routinely over-utilized in business decision making simply because many managers believe that if two heads are better than one, ten heads must be even better. Minson disagrees:

Mathematically, you get the biggest bang from the buck going from one decision-maker to two. For each additional person, that benefit drops off in a downward sloping curve.

Of course group decision making isn’t simply a business challenge--our political and judicial systems rely and depend upon groups of people such as elected officials and jurors to deliberate and collaborate and make important decisions. Jack Soll and Richard Larrick, in their Scientific American article You Know More than You Think observed that while crowds are not always wise, they are more likely to be wise when two principles are followed:

The first principle is that groups should be composed of people with knowledge relevant to a topic. The second principle is that the group needs to hold diverse perspectives and bring different knowledge to bear on a topic. 

Cass Sunstein takes it further, saying for a group to operate effectively as a decision-making body (a jury, for instance) it must consist of:

• A diverse pool of people
• Who have different life experiences
• Who are willing to listen to the evidence
• Who are willing to listen to each other
• Who act independently
• Who refuse to be silenced

Does that sound like a typical decision-making group to you? When I heard that description, I immediately thought of Juror 8 (Henry Fonda) in 12 Angry Men--a principled and courageous character who singlehandedly guided his fractious jury to a just verdict. It is much harder for me to imagine our elected officials, or jury pool members, or even the unfortunate folks dragooned into serving on a committee or task force at work, as sharing those same characteristics.

The good news is that two heads are definitely better than one when those heads are equally capable and they communicate freely, at least according to Dr. Bahador Bahrami of the Institute of Cognitive Neuroscience at University College London, author of Optically Interacting Minds. He observed:

To come to an optimal joint decision, individuals must share information with each other and, importantly, weigh that information by its reliability 

Think of your last group decision-making experience. Did the group consist of capable, knowledgeable, eager listeners with diverse viewpoints and life experiences, and a shared commitment to evidence-based decision making and open communication? Probably not, but sub-optimal group behavior and decisions can occur even in the best of groups. In their Harvard Business Review article Making Dumb Groups Smarter, Sunstein and Hastie suggest that botched informational signals and reputational pressures are to blame:

Groups err for two main reasons. The first involves informational signals. Naturally enough, people learn from one another; the problem is that groups often go wrong when some members receive incorrect signals from other members. The second involves reputational pressures, which lead people to silence themselves or change their views in order to avoid some penalty—often, merely the disapproval of others. But if those others have special authority or wield power, their disapproval can produce serious personal consequences.

On the topic of “special authority” interfering with optimal decision making, I recently heard a clever term used to describe a form of influence that is often at work in a decision-making group. The HiPPO (“Highest Paid Person’s Opinion”) effect refers to the unfortunate tendency for lower-paid employees to defer to higher-paid employees in group decision-making situations. Not too surprising, then, that the first item on Sunstein and Hastie’s list of things to do to make groups wiser is “Silence the Leader.”

So exactly how do botched informational signals and reputational pressures lead groups into making poor decisions? Sunstein and Hastie again:

• Groups do not merely fail to correct the errors of their members; they amplify them.
• They fall victim to cascade effects, as group members follow the statements and actions of those who spoke or acted first.
• They become polarized, taking up positions more extreme than those they held before deliberations.
• They focus on what everybody knows already—and thus don’t take into account critical information that only one or a few people have.

Next time you are on the verge of convening a roomful of people to make a decision, stop and think about what it takes to position any group to make effective decisions. You might be better off taking Julie Minson’s advice, electing to choose just one other person to partner with you to make the decision instead. Seldom Seen Smith, the river guide character in The Monkey Wrench Game by Edward Abbey, was obviously a skeptic when it came to group decision making, but he may have been on to something when he declared:

One man alone can be pretty dumb sometimes, but for real bona fide stupidity, there ain't nothin' can beat teamwork. 

Dean K. Harring, CPCU, CIC is a retired insurance executive who now enjoys his time as an advisor, board member, educator and watercolor artist.  He can be reached at dean.harring@gmail.com or through LinkedIn or Twitter or Harring Watercolors

What Got You Here Won't Get You There

 
That’s the catchy title of a 2007 book by Dr. Marshall Goldsmith, an award winning author, business thought leader, professor and executive coach who heads the Marshall Goldsmith Group of consultants (mission: to help successful leaders get even better) and maintains the free Marshall Goldsmith Library. He has written and/or edited 35 books, mostly about leadership, learning, change and personal improvement. I found a copy of this book at a library sale recently, and I recommend it, but that’s just background.

Some weeks earlier, I had agreed to help kick off a senior management meeting at a company run by some former colleagues of mine who had escaped from an insurance company claims environment nearly 20 years earlier to start up their own specialty claims business. Over the years their business flourished, expanding in scope and size to the point where the founders knew it was time to pull together their management team and discuss what needed to be done to move the company to the next level. They wanted me to help set the proper tone for their meeting by talking about change challenges and reviewing some of the things successful companies do, and don’t do.

Since I was heading off on vacation, I thought I would spend some of my leisure time preparing by re-reading my favorite articles about successful companies, and by reviewing some of the many notebooks I had filled over the years with on-topic material. I also brought along Goldsmith’s book, and read it through one rainy day. If you haven’t read it, I think I can give a quick overview without spoiling it for you. The theme is that most of us have bad habits, and even if those bad habits somehow helped to get us to a certain level, they might just prevent us from moving to or being successful at the next level. When I read through the habits (like delusional thinking, denial, overconfidence, failing to listen, dismissing feedback, failing to plan, blaming failures on external, uncontrollable factors, and allowing distractions to interfere with achieving objectives) I started feeling a bit uneasy, even embarrassed, because at one time or another in my career I knew I was probably guilty of all of them.

But then it hit me—Goldsmith was writing about personal, individual habits, but companies are collections of people so they have their own habits and ways of doing things (their culture.) Entrepreneurs imprint their own habits on their company, so they directly influence their company’s success through their imagination and insights, their willingness to take chances, their resiliency, their commitment, and the unique set of skills, behaviors and attitudes they bring to the effort. Through scrambling, innovating, scraping by, doing without, overextending and even overpromising, the successful ones keep their businesses going, and growing. Of course it’s not a linear path to success--they lurch, they make mistakes, then they recover and learn from them. But one fine day they realize they are actually making it, competing successfully in whatever business niche they selected. At that point one of two things can happen:

• They celebrate, relax, and begin to suffer from the “complacent lethargy” that Jim Collins and Jerry I. Porras (Built to Last) called the “We’ve Arrived Syndrome”
• They start to dream about expanding their business, diversifying into other products and services, entering new markets, making acquisitions...you know, taking their business to the next level.

Maybe both things happen. But if they get past the dreaming and start in on the planning, they often realize that the skills and behaviors they used to get their business going and help it survive may not be the ones they need to make it thrive at the next level. So what’s a company to do at that point? Of course that’s what my former colleagues wanted to get into at their meeting.

So at the management meeting I ended up sharing with the group some of the most impactful (to me) things I have learned about successful companies, such as their tendency to operate with three perspectives simultaneously: strategic, governance and control, and execution. Sounds reasonable, but juggling those three can be complicated and counterintuitive at a smaller company, where managers often prefer to stay within their comfort zone and focus on execution. But even with flawless execution, a company still needs both a winning strategy and a capable governance/risk management protocol in place to ensure long term success.

Successful companies tend to share certain characteristics:

• They have strategic clarity
• They have objectives and performance metrics that encourage behavior that supports their strategy
• Their rewards are aligned with achievement of those objectives and performance metrics
• They provide regular, constructive feedback to individuals regarding performance against objectives and metrics

Successful companies share certain capabilities:

• Talent (knowledge, skill and will)
• Speed (capacity for rapid, meaningful change)
• Learning (across silos and boundaries)
• Shared mindset (on the same page)
• Accountability (willingness to accept responsibility for behaviors and results)
• Collaboration (leveraging relationships, sharing work and responsibility)

I had the management team do a quick capability self-assessment from two perspectives, rating themselves as a management team, and then rating their company as a whole on a scale of 1 to 10 in each of those six capability areas (1 means no capability and 10 means industry leading capability) and flip-charted the results. That’s an easy and quick exercise that often produces interesting insights into potential conflicts and barriers to success.

We also unpacked the three performance categories often associated with talent in a knowledge-intensive business: KNOWLEDGE, SKILL and WILL.

• In the claims service business, KNOWLEDGE involves understanding the law, regulations, contracts and policy forms, as well as understanding what customers want and knowing how to deliver it within necessary margins of compliance, speed, service and accuracy.

• SKILL usually refers to doing, not knowing. Employing best practices, interpreting complicated coverage situations, correctly calculating a business income loss or reinsurance penalty, investigating, evaluating, negotiating, resolution, recovery, communicating with stakeholders, etc.

• WILL refers to the commitment, desire, discipline, or motivation to do something and do it well.

Finally, I urged them to accomplish four things in their meeting:

• Create strategic clarity. Agree on what business they are in, and what business they want to be in, and articulate what they need to know and be able to do in order to be successful.
• Complete a stakeholder needs analysis and develop a shared view of who their stakeholders are (potentially anyone with a vested interest in how well they operate their business) and what those stakeholders need in order to be successful and content.
• Take another look at the capability self-assessment summary (the flipchart) and do an honest and critical assessment of their capabilities, particularly their talent. Do they really have the talent and the ability to meet stakeholder needs better, faster and cheaper than their competitors? If not, where are the capability gaps and how will they close them?
• Carefully consider the WILL component of talent within the framework of change and business evolution. Determine what steps to take to influence attitudes and motivation and move their management team, and their company, from compliance to commitment.

I enjoyed seeing my colleagues again, and meeting their management team, and I heard later that their meeting went well. A few days after that meeting I came across this quote I used in an earlier article, attributed to German writer and politician Johann Wolfgang von Goethe (and also, variously, to Leonardo Da Vinci and Bruce Lee):

Knowing is not enough; we must apply. Being willing is not enough; we must do.

In the talent context, it sounds like whoever said this believed in execution. Knowledge and will alone were not enough—he considered skill, the ability to do the necessary things well, to be the critical component of talent. I see it a bit differently, believing that success in almost any human undertaking requires all three elements of talent (knowledge, skill and will.) To me, skill is derivative, developed through the combination of knowledge (understanding what needs to be done, when and how) and will (practicing and perfecting) but I suppose that’s one of the reasons why people find the talent topic so fascinating.

For a thoughtful look at talent management in the 21^st century, check out this Harvard Business Review article from professor Peter Capelli. And for an interesting overview of how taking a strategic approach to talent management can help power innovation, growth and market advantage, take a look at this Talent To Win whitepaper from PwC.


Dean K. Harring, CPCU, CIC is a retired insurance executive who now enjoys his time as an advisor, board member, educator and watercolor artist.  He can be reached at dean.harring@gmail.com or through LinkedIn or Twitter or Harring Watercolors