The Arithmetic of Life and Death (11 page)

The next morning, the CEO of the software company returned from an important business conference on the
island of Bora Bora. Being a man in a hurry, he immediately increased the gasoline budget by a factor of five, he fired the operator with the most flagrant tattoos, he offered large bonuses to the three remaining operators if they succeeded in removing the stump by ten A.M., and he threatened to terminate everyone if the stump was not vanquished by lunchtime.

Leaving the foreman shaken but in control, the CEO sped off to an early tee time with an investment banker. He returned at noon to find the bulldozers inactive, the operators at lunch, the loggers on strike, the foreman in a deep depression, and the stump resolutely in place. Furious, the CEO fired the remaining operators and called in a professional negotiator to buy off the loggers. Then he hired a demolition expert to deal with the stump, he ordered the foreman to closely observe the execution of the new plan, and he hired an Ivy League consultant to explain the delay to the board of directors.

Fearing the fate of the foreman, the demolition expert used a large quantity of explosives. The stump, and its immediate environs, were vaporized.

After several months of careful study and a number of field tests, the consultant was able to conclude that only 250 horsepower would have been needed to extract the stump. A single bulldozer, which used an estimated 50 horsepower to impel itself through the mud, would have been able to apply a net force of only about 150 horsepower to the stump. But two bulldozers pulling in the same direction with an aggregate application of 300 horsepower would have easily removed the stump.

With a total of 600 net horsepower, four bulldozers should have been able to do the job easily. But the operators
were more interested in competing than cooperating, so they all pulled in opposing directions. Thus, the net force applied to the stump was zero. The subsequent removal of the most artistic operator did not alter the result because two of the remaining three bulldozers continued to pull against each other. That caused the third to work alone against the stump, plus the mass and tension of the other two bulldozers.

Shortly after submitting his report to the board, the consultant was hired by the CEO to be the company’s new chief financial officer. Some time later, three of the bulldozer operators decided to start a coffee company, although they have yet to agree on a name. Following an extensive recuperation period, the foreman retired to Arizona.

The CEO, who never learned the importance of common cause, was eventually elected to Congress after brief stints as an author and investment banker. It is not expected that his blind spot will hinder his new career.

Although it is rare in Congress (except during wartime, if then), common cause is how small companies defeat big companies. Two people who work together will always defeat four people, or six people or six hundred people, who find a reason to work against each other. But commitment to common cause is not just the acceptance of a single, common goal. Common cause also requires the subordination of personal agendas, which can be much more difficult.

C
onsensus is an agreement tool for family and business which, some believe, was originally perfected by the Japanese. Through team concurrence, its objectives are to minimize the likelihood of error and to ensure personal commitment to the execution of group decisions. In general, these are laudable intentions. But the tool cuts two ways and therefore must be used with care.

When he was a younger and truer man, Reginald DeNiall was the CEO of a software company called Cryptogram, which had created an encryption system for the secure electronic transmission of financial transactions between banks. Six years after start-up, the company had managed to achieve a significant share of the interbank market. In order to keep growing, however, Reginald and
his management team knew that they would have to enter new markets.

Since he prided himself on being a modern business executive, Reginald assembled all seven members of his management team to brainstorm Cryptogram’s next step. In a brief, six-hour meeting, they managed to determine that Cryptogram could expand into three new vertical markets: retail stores, telecommunications, or the defense industry. Alternatively, the company could remain in banking but expand horizontally into authentication systems, firewalls, or security-system integration.

These were too many possible directions for the company to take at one time. Choices had to be made. Accordingly, Reginald asked each of his six line managers to thoroughly research one of the potential new markets. The seventh “man,” Cecilia Sharpe, who was Cryptogram’s controller at the time, was asked to determine how many new directions the company could afford to pursue at once. Because there was so much to be done, and because they still had a company to run, the team agreed to reconvene four weeks later.

At the ensuing meeting, each of the six line managers presented the case for his market. Reginald was gratified to learn that each of the new markets had outstanding potential, but he was dismayed to observe that each of his line managers had come to prefer his own proposal. After six hours of presentation and three hours of debate, each manager still held to his original position.

Hoping for relief, Reginald turned to Cecilia. She informed him, however, that the company could afford to enter only one new market. Cecilia also knew that, presented with six equal options, the odds of consensus among
the six line managers was approximately 1 in 8,000. (Unless suffering from a multiple personality disorder, one manager has a 100 percent probability of agreeing with himself. The odds of two managers agreeing on one of six equal choices is one in six, or 16.667 percent. Similarly, Reginald’s probability of a consensus selection of one alternative among six by a group of six managers was equal to 16.667 percent to the fifth power, or approximately 00.013 percent.)

Clearly, some reduction in the number of alternatives was necessary. So Cecilia suggested to Reginald that each manager assist her in completing a detailed, five-year revenue and profit forecast for each market opportunity. After more discussion, everyone decided in favor of Cecilia’s suggestion. Because there was so much to be done, and because they still had a company to run, they all agreed to get back together in one month.

The team reconvened on time, four weeks later. Each manager presented the business case for his market, including extensive financial forecasts that had been prepared by Cecilia. After a full day of presentations, discussion, and disappointment, the management team was able to reduce the number of potential choices to three:

At that point, Reginald decided to take a straw poll of the entire management team. The results were not what any of them had hoped for: Three line managers favored the high-growth option; Reginald and another manager favored the high-profit option; Cecilia and the final two managers favored the low-investment option.

Frustrated, Reginald asked the team for suggestions on how to continue. Cecilia, who had already calculated the odds of eight managers’ concurrence on one of three equal choices at about 1 in 2,200 (33.33 percent to the seventh power, or 00.046 percent), suggested that each manager rank the options in order of preference. Reginald, who was a career executive, instantly deduced that this would be a blatant circumvention of the consensus process. Lacking other viable suggestions but desperate to resolve the deadlock, he decided to bring in an expert from a major Boston consulting firm. Because the consultant would have so much to catch up on, and because the management team still had a company to run, they decided to get back together in a month.

Over the next four weeks, each member of the management team spent many hours with the outside consultant, who became well informed on each of the three remaining options. Each of Reginald’s managers also had plenty of time to campaign for his personal preference.

To kick off the next meeting, Reginald asked the consultant to present his findings. After five hours of detailed review and no small amount of spirited discussion, Reginald took another straw poll. Option one was still preferred by the same three line managers; option two was preferred by Reginald, one line manager, and the consultant; Cecilia
and the remaining two managers still preferred option three. Deadlock.

Once again, Cecilia suggested that each of them rank their preferences. The consultant, however, recommended a detailed, three-month study of the market. Knowing that the ninety-day period would be needed to construct the next year’s budgets anyway, Reginald decided in favor of the consultant. Because there was so much to be done, they agreed not to reconvene until the consultant had finished his study and they had finished their budgets.

Four months later, everyone got back together except for one of the original managers, who had been replaced. The consultant presented his findings in detail. Then, after a full day of review, questions, and discussion, the consultant took a third straw poll. Reginald, the consultant, and three line managers, including the new addition, now favored option one while Cecilia and the remaining three line managers favored option three. Option two, unfortunately, had been eliminated due to recent market entry by a major competitor.

With only two alternatives remaining, Reginald turned to Cecilia. She knew, however, that the probability of 100 percent consensus on one of two equal choices among nine people was about 1 in 250. And, since ranking by order of preference would no longer be of value, she had no suggestions. The consultant, however, felt strongly that the only conscientious way of dealing with the deadlock was a detailed survey of future customer requirements.

Pleased that the company had not made a major mistake by choosing option two, Reginald concurred. Cecilia and the line managers in charge of marketing, sales, and
customer service all agreed to assist with the study. Because there was so much to do, and because they still had a company to run, the team agreed to reconvene in three months.

Ninety days later, everyone met except the manager of marketing, who had resigned but had not been replaced. The consultant presented the findings of the customer survey in detail. After four hours of presentation and discussion, Reginald took another straw poll. Everyone now favored option one except Cecilia, who remained concerned that the high cost of a new software laboratory would put too much stress on the company’s limited financial reserves. Sympathetic to her position, the consultant offered to study the possibility of outsourcing software development. At that exact moment, Cecilia’s resistance collapsed. Reginald’s consensus, which had been ten months in the making, was complete.

A few weeks later, Reginald invited his management team and the consultant to the local racetrack for some quality bonding time. By the third race, everyone had learned how to read the form and they were all placing their bets with fervor. Then, fifteen minutes before the post of the ninth and final race of the day, and possibly after a tad too much bonded refreshment, Cecilia suggested that they all bet their next paycheck on the same horse, and only to win.