Business Transition Consulting LLC

A meeting is a critical conversation involving a group. Meetings have a broad range of purposes, but generally a meeting is held to provide the group with a common experience. Those present will perceive the experience and not have to be told about the experience from another’s perspective. This communication function makes the meeting the primary communication tool in business.

Meetings are frequently held for the stated purpose of making a decision. This function of the meeting is not always an effective use of the meeting conversation. An examination of this use of the meeting requires an investigation of the decision-making process.

In The Wisdom of Crowds, James Surowiecki, provides the argument that “under the right circumstances, groups are remarkably intelligent, and are often smarter than the smartest people in them. Groups do not need to be dominated by exceptionally intelligent people in order to be smart. Even if most of the people within a group are not especially well-informed or rational, it can still reach a collectively wise decision. This is a good thing, since human beings are not perfectly designed decision makers. Instead, we are what the economist Herbert Simon called ‘boundedly rational.’ We generally have less information than we’d like. We have limited foresight into the future. Most of us lack the ability – and the desire – to make sophisticated cost-benefit calculations. Instead of insisting on finding the best possible decision, we will often accept one that seems good enough. And we often let emotion affect our judgment. Yet despite all these limitations, when our imperfect judgments are aggregated in the right way, our collective intelligence is often excellent. . . . This intelligence, or what I’ll call ‘the wisdom of crowds,’ is at work in the world in many different guises.”

Surowiecki identifies three types of problems. Cognition problems are problems that have or will have definitive solutions. Examples: Who will win the Super Bowl this year? Will the new drug be approved by the FDA? Where is the best place to build the swimming pool? Coordination problems require members of a group to figure out how to coordinate their behavior with each other, knowing that everyone else is trying to do the same. How do buyers and sellers find each other and trade at a fair price? How do companies organize their operations? How can you drive safely and reach your destination in heavy traffic? Cooperation problems involve getting self-interested individuals to work together. Examples: Paying taxes; preventing pollution; and agreeing on compensation.

Surowiecki also identifies conditions that are necessary for the crowd to be wise. Diversity requires a diverse set of possible solutions as well the ability to distinguish good decisions from bad decisions. Diversity adds perspectives that would otherwise be absent and it takes away some of the destructive characteristics of group decision making. Independence is important for two reasons. It keeps mistakes that people make from being correlated. Errors in individual judgment will not wreck the group’s collective judgment as long as those errors are not systematically pointing in the same direction. One of the quickest ways to make people’s judgment systematically biased is to make them dependent on each other for information. Independent individuals are more likely to have new information rather than the same old data with which everyone is already familiar. Decentralization exists where power does not fully reside in one central location and many of the important decisions are made by individuals based on their own local and specific knowledge (tacit knowledge) rather than by an omniscient or farseeing planner. Decentralization’s great strength is that it encourages independence and specialization on the one hand while still allowing people to coordinate their activities and solve difficult problems on the other. Decentralization’s great weakness is that there is no guarantee that valuable information which is uncovered in one part of the system will find its way through the rest of the system. Finally, there must a procedure for turning (or aggregating) private judgments into a collective decision.

To make the best decision-making process in the business succession planning process, a small group of diversely informed individuals should aggregate their judgments. This process of decision-making should include the elements of diversity, independence, and decentralization. Is this group the owners? Can the meeting be the way the judgments are aggregated?

This inquiry can be best answered by an examination of what occurs at most owners’ meetings. Generally there is a dominant or majority owner, who will preside at the meeting. There may or may not be a written agenda, but the dominant owner will control the topics discussed. The purpose of the meeting will be stated to make a decision on a certain topic. This topic will be discussed at the meeting with the dominant owner’s opinion stated. There may be discussion and dissent but at some point the dominant owner will state something like, “I think we are all on the same page,” and the meeting will conclude. Some might call this consensus decision-making, in that at the end of the meeting no expressed opposition existed to the action taken. It is often the case that the dominant owner used the meeting not as a part of the decision-making process, but to communicate the decision that the dominant owner had already made unilaterally. The danger of making a decision at a meeting is that the polling of the hopefully diverse, independent and decentralized individuals may be flawed. To say it another way, the means by which information is received from the group members may be influenced by the method of collection of information – the meeting environment.

At a meeting a number of dynamics are present. Participants in a meeting are affected by the appearance of other parties, their placement in the room, their physical state at the time of the meaning, their own personality traits (for example, being extroverted or introverted), and their individual skill in orally articulating thoughts on a subject. Individuals do not have the same capacity to absorb oral information, and the failure to document thoughts in a written format often indicates a less than thorough thinking process.

In certain circumstances, a meeting is appropriately used as a formal method of polling – the vote counting process. In the business ownership setting, if the plan is not fully supported by all of the owners, its viability will be in question. This suggests that in the business succession planning procedure polling (aggregating judgments) should be done informally and outside any meeting.

Ignoring for a moment the concerns of the meeting format, the compelling question is what process can be envisioned for the owners’ group to make the best decisions possible in a strategic planning process? The constituency of the group is fixed to the owners. With this group it is necessary to stress that the factors of diversity, independence, and decentralization are valued. A reporter can carefully poll this group to encourage diverse, independent, and unique thoughts on the decision to be made, and document these thoughts in writing. Before any meeting occurs a summary of the thinking should be circulated to all owners. This summary need not attribute the thinking or make a conclusion about the thoughts expressed. The owners should be encouraged to discuss the summary with the other owners and begin to formulate their own positions in accordance with their values and the information derived from the other owners. From this summary and the discussions, a draft plan document can be created. After this document has been reviewed, the areas of disagreement among the owners will be understood. At this point, a direct group discussion may be helpful, and the proper forum for this discussion may be a meeting. This meeting will be a critical, and probably difficult, conversation, and the skills each owner develops in having critical conversations will be helpful in the conduct of the meeting.

The succession plan may be viewed as a series of decisions. These decisions are best made by the owners exhibiting diversity, independence, and decentralization and articulating solutions to planning problems in accordance with each owner’s personal values. If each owner has taken the time to define and articulate that owner’s personal values and then applies those values to determine solutions to planning problems in writing, and then applies the principles of critical conversations to engage the other owners in dialogue concerning their solutions, the best decisions will be made to create the succession plan.