Striking a balance

When CEOs set out to conquer new markets or undertake billion-dollar acquisitions, they typically seek some consensus from their trusted advisers.

However, a recent blog post from the Harvard Business Review has highlighted that the most innovative companies do not worry about consensus as, while it is worth the cost in the pursuit of big, bold moves, it is often crushing to small experimental ones.

It explains that one of the most significant challenges to managers looking to innovate is determining how to manage the “consensus tax”. This includes avoiding investment in mediocre ideas, but still acting with the speed and efficiency that increases return on investment.

Pointing to the uptick in the number of firms that have started to get wise about the value of systematically testing new ideas, the article highlights the importance of testing because it minimises the investment required to eliminate uncertainty. As a result, the speed of innovation increases and the cost of failure decreases.

The article stresses that although consensus can be a powerful tool when used to ensure multiple perspectives are looked at in any decision process, it is slow, messy and expensive and “eats away at the value of experimentation”.

It added that while individual entrepreneurs only need to persuade a few empowered parties that their ideas can be financially successful, the same benefits can be driven inside larger firms by seeking consensus only where necessary.

To read the full article, click here.