Ultimately, a genuine leader is not a searcher for consensus, but a molder of consensus.

—MARTIN LUTHER KING JR.

Well, “irrelevant” may be somewhat harsh, but what you know is less important to the success of your organization than you might think. Several things are more important:

• What the people in the organization collectively know
• The speed at which they (and you) are learning
• How easily and quickly knowledge is shared across your organization
• How effectively knowledge is applied to make and implement decisions

Your knowledge matters only to the extent that you share it in conversations and use it to make decisions. As a leader, you must ensure that opportuni­ties and issues are analyzed thoroughly and dealt with decisively. In most cases, it will not be you who performs the analysis or takes the action—your people will. Because there is a limit to how much you know, conversations with your people that reveal and evaluate possibilities based on everyone’s collective knowledge will result in more effective decisions.

Humility requires you to acknowledge that you do not know everything. If you are thinking, “That’s politically correct, of course, but I know more than any of my people,” consider the leaders in the financial sector who believed they could not possibly make a mistake—until they pushed the world’s economy to the edge of oblivion and saw their companies flirt with bankruptcy. The blunt truth is that we are all quite capable of making huge mistakes despite our experience, accomplishments, and education. We individually know less than we need to know to perform at the highest levels of leadership.

Once you accept that you do not know everything and that leadership entails connecting and aligning with people instead of controlling them, it follows that your goal will be to fill key positions with highly qualified people, share your knowledge with them, and tap into their knowledge. As a leader, particularly in far-flung organizations, you will find it hard to stay in touch with all of your high potentials. But you can ensure that they know what you know about the big picture and the kind of developments they should bring to your attention. Trust their ability to get the job done. Whatever they may lack in the way of skill or knowledge is your responsibility as the leader to see that they learn.

Because you know just a sliver of what your organization collectively needs to know to be successful, you must be open to learning. People with technical backgrounds often are uncomfortable until they know most of what can be known. As a leader, you will regularly find yourself making decisions with less information than you would like to have. It is okay if some decisions are off the mark as long as you and your high potentials learn from the mistakes and improve your decision-making skills. If you repeat the same decisions (for example, categorically avoiding risky projects rather than evaluating risk versus reward case by case), you may feel safe, but you are limiting your organization’s potential. Allow painful events—declining budgets, relationship conflicts, service complaints, and the like—to teach you and your people how to make better decisions. Be willing to acknowledge a mistake—but do not get stuck there.

Engaging Your Team’s Knowledge

You may have already found that saying “I don’t know” leads to lively conversations in which almost everyone participates. In today’s age of real-time information, knowledge changes so fast that knowledge workers quickly become obsolete unless learning is part of the culture. That is true not only in technical fields like health care and information technology but also increasingly in retail, manufacturing, marketing, construction, and other fields. Knowledge-based organizations flourish when everyone understands what his or her colleagues are trying to accomplish. Therefore, ensure that your organization has a culture that encourages learning and teaching. Ask yourself and your people, “What must we learn to stay current?” and “What knowledge can we share so that we all will succeed?” Organizations that regularly examine those two questions are commonly referred to as learning organizations.

The foundation of a learning organization is a belief that the key to growth and the solution to issues lie within the collective knowledge of its members. It is a shift from the Industrial Age workplace where employees had a passive role in decision making to a workplace where people exchange ideas and challenge each other to improve. As a leader, you are building a learning organization when you tap your people’s knowledge, encourage critical thinking, and hold conversations to discuss new concepts. In The Fifth Discipline, Peter Senge, a pioneer in learning organizations, cites five dimensions that are vital in a learning organization:¹

• Systems thinking is a shift from operating separately to being interconnected, and from blaming something or someone else to taking responsibility to find a solution. The members of a learning organization understand the big picture and recognize patterns in what previously seemed to be unrelated events.
• Personal mastery is a commitment to continuous learning on the part of each member of a learning organization. Personal mastery means being realistic about one’s abilities and taking action to expand them.
• Mental models are instilled in a learning organization to stimulate insights and improve work practices. Mental models require people to evaluate their beliefs and how those beliefs influence the actions they take.
• Shared visions blend the personal visions of individuals with the vision for the future of the organization. When achieved, a shared vision produces commitment that is sustainable in good times and bad.
• Team learning requires everyone to learn individually and to come together to share his or her knowledge in a way that achieves the organization’s goals.

Taken together, these five dimensions fuel the conversations in a learning organization in ways that challenge everyone to apply his or her knowledge to grow the organization and simultaneously respond to the aspirations of individual members.

Benefits of a Learning Organization

Effective conversations are the core of a learning organization. Today’s business world changes so fast that being a learning organization is not a feel-good goal; it is a necessity to meet everyday challenges. In particular, yours is a learning organization if it exhibits the following characteristics and benefits:

• Responds rapidly to change. A learning organization naturally responds more easily and quickly to market, workforce, and workplace changes because change is viewed as an opportunity rather than a problem.
• Adapts to shifting priorities. When resources are scarce and priorities shift, a learning organization maintains effective alignment among customer needs, organizational goals, available resources, and individual needs.
• Fills information gaps. Knowledge flows smoothly from level to level in a learning organization to fill gaps caused by new technologies, retirements, and attrition. In addition, new hires get up to speed more quickly.
• Facilitates training. In a learning organization, everyone is responsible for learning, and everyone is a teacher. Even if training budgets are cut, a learning organization integrates training into daily mainstream activities.
• Builds teams. A learning organization helps recruit, train, and retain the people who fill knowledge-based positions.

Becoming a learning organization requires commitment from executives at all levels. You must be willing to create and communicate a shared vision for how operations will be conducted. The essential first step is to be transparent in conversations—making virtually all information accessible to everyone—which may be uncomfortable for you. Your people need to feel confident that their views will be considered and that they are empowered to take risks. Of equal importance, the organization must have a strategy for keeping information current, distributing increasing volumes of information quickly and efficiently, and cataloging historical knowledge. You must master the subtleties of moving from a hierarchical to a consensus-driven organization.

Group Decision Making

Most people think groups make better decisions than individuals, which may explain why there are so many meetings. Although research shows that groups make fewer bad decisions, the real value of group decisions is that when people participate in decision making, they become more willing to support the implementation of the decisions. The challenge, of course, is that when several people participate in making a decision, you must conduct the decision-making conversation with full consideration for such factors as

• The scope and significance of the decision to be made
• The time available to analyze alternatives and make a decision
• The number and type of people who will be affected by the decision
• The amount of buy-in that is required for successful implementation
• The attitude you want the group to have in regard to the decision

Understanding when it is appropriate to involve others in a decision, whom to involve, and how to handle the decision-making process is an important leadership skill.

It has been said that if three people debate a topic, four viewpoints will emerge: one from each person plus the group consensus. Melding the opinions of a group into an executable decision is challenging. People naturally see things differently because they have different experiences, roles, and needs. For example, you may have operations, sales, financial, HR, and IT people on your staff. Each of them focuses on a specific aspect of a decision—the part he understands and for which he has responsibility. One purpose of engaging multiple people in decision-making conversations is to expose them to diverse viewpoints.

For example, Todd, a new first-line manager, diligently researched two investment opportunities in his area and presented them during his first strategic planning workshop. After opportunities were presented in all areas and return-on-investment analyses were performed, neither of his opportunities was put in the budget for the coming year. When the process finished, he exclaimed: “I had no idea how many good ideas there are for our company. I’m disappointed, but I see why my investments ideas are on the back burner this year. I’ll be back next year with new ideas.” For Todd, it was a shocking baptism into today’s business world, where bigger and bigger decisions must be made with less and less information—and more cooperation. That is why effective decision-making conversations are vital for success.

If a decision must be made quickly, the time required for group decision making can be a liability. Furthermore, when few people have relevant knowledge to contribute, involving a large number of people in a decision-making conversation is inefficient—other than as a learning experience. Your role as the leader is to decide who will participate in the conversation and how the decision will be presented to others.

How Much Consensus Do You Really Have?

We have seen leaders who, even after conducting a thorough decision-making conversation, begin implementation only to discover that they never really had consensus. To avoid this potentially explosive situation, use a simple polling technique to quickly test the degree of consensus and identify those who may have reservations about the decision. After a decision has been reached, ask members of the group to reflect on how they feel about the course of action that has been adopted. Then ask them to signal their degree of support by raising zero to five fingers to indicate one of the following:

Quickly tabulate the responses. Fives and fours signify strong support; if you are a good facilitator (or lucky), everyone will fall into these categories. Threes and twos are not committed, and it would be beneficial to discuss what could be changed to address their doubts. Unfortunately, ones and zeros indicate hard-core objectors—people who may actively resist implementation. The value of this technique is that it allows people to express their doubts without appearing to be hostile or uncooperative. Ask the people who raised fewer than four fingers to say what it would take for them to be able to support the decision. The give-and-take conversations stimulated by that question will improve the decision, gain supporters, and potentially identify new alternatives.

Consensus polling is an iterative technique that can be used to evaluate attitude shifts after each round of conversation. Polling does not guarantee that you will ever reach 100 percent consensus—deadlock is always a possible outcome. A strong negative position taken by even a single person can be enough to block consensus—especially when the conversation did not include discussions in the second and third perspectives. If the group is hopelessly deadlocked, polling should reveal the reasons. Typically, decision-making conversations motivate people to explore alternatives to resolve everyone’s concerns. If consensus cannot be reached, you may be forced to make an executive decision. In any case, be sure that your people understand from the start that you will make a decision unilaterally if there is no consensus—take stonewalling off the list of options.

Finding the Third Alternative

Which alternative is best—yours or theirs? You could argue about it for days or weeks without adding value. But what if there were a third alternative that is superior to both? The third alternative, a concept popularized by Stephen Covey in The 7 Habits of Highly Effective People, is not a compromise—rather it is an innovative decision that everyone embraces. The key to finding the third alternative is to stop defending your position and start looking for an option that integrates your best ideas with those of others. Figure 17.1 suggests that focusing on what is best instead of who is right points conversations toward the third alternative.

FIGURE 17.1. Aligning Behind a Shared Decision.

The probability of success increases when everyone aligns behind what is right rather than who is right.

For example, an upscale community near Washington, D.C., has nine hundred homes worth more than a million dollars on average. During zoning negotiations, the developer was outraged when the county government demanded that he build one low-income house for each luxury house. An expensive legal battle raged for months until the builder suggested a third alternative. He offered to build all-brick, four-bedroom homes for low-income buyers and subsidize construction with a surcharge on luxury homeowners. Delighted with the new approach, the county willingly agreed to significantly reduce the number of low-income homes that had to be built.

Interest in the new homes among low-income buyers was so great that a lottery was required. One in thirty applicants won the lottery and purchased a house for $75,000. The sales contract included a clause that prohibited low-income homeowners from selling their houses for twenty years. When the twenty-year moratorium expired, the low-income houses sold for nearly $500,000. The county, the developer, and two classes of homeowners achieved their objectives through this third alternative.

To find the third alternative, you must believe that such an alternative exists, commit to looking for it, and be willing to let go of the alternative you have been advocating. You are seeking to combine your objectives with those of the other party. The solution to a problem and the approach to an opportunity exist along a continuum of possibilities. If you force people to pick one of the conflicting options, you may miss other great possibilities.

Are the conversations in your organization characterized by collaboration or confrontation? When they are confrontational, issues can become so emotionally charged that people defend differences without even considering that there could be other possibilities. The third alternative can only be found when people seek to understand the objectives of others—that is, engage in the second conversational perspective. In collaborative conversations, everyone accepts that there are at least three alternatives: one that feels right to you, one that feels right to them, and a better one that you have not discovered yet. When you understand what others want and help them get it, you will achieve your goals as a by-product of the collaboration.

Successful people are generally top-notch collaborators. They know that if they have part of the answer to a daunting challenge, collaboration is the fastest and easiest way to find the missing parts. Collaboration has always been important; but today, going it alone can be fatal in a world where no organization or leader can always be on top of rapidly changing customer needs and emerging technologies. Therefore, your goal as a leader is to build a collaborative team, make collaboration a value, and conduct leadership conversations in a way that encourages the search for the third alternative.

What If a Third Alternative Does Not Exist?

If you are thinking that a third alternative does not always exist, you are missing the point: a third alternative always exists. It may be hard to find, but your job is to lead the search to find it. The third alternative is the opposite of a win-lose decision. In a win-lose decision, one party gets what she wants (wins) and the other goes home disappointed (loses). In the long run, such decisions do not benefit either side. While the winner celebrates victory, resentments build in the loser, which adversely affect future transactions. The third alternative is not a compromise, because both parties give up something in a compromise; you could make a case that compromises are really lose-lose transactions.

The third alternative synergistically yields a result that is advantageous for both you and your potential adversary. Everyone who joins in a third alternative feels like a winner. Unfortunately, some executives still believe that finding the third alternative is an idealistic objective that wastes time. But great leaders know differently. They look for the third alternative in every negotiation and do not stop until they find an approach that exceeds the expectations that people had when negotiations started.

Stop yourself the next time you become willing to support an alternative that is merely defensible rather than ideal. Refuse to settle for a course of action that is “good enough.” Lead people toward the third alternative by announcing at the beginning that the goal is to find an approach that (1) meets everyone’s needs and (2) everyone can support unconditionally. Do not end the search until such an alternative is found. Start by asking the group, “If someone offers an option that is better than yours, will you abandon your option and adopt theirs?” Most people will quickly answer yes, and that establishes their willingness to join in the search for an ideal solution. If they say no, a different conversation needs to be held.

After you define the issue and everyone puts his or her ideas on the table, spend an additional ten minutes or so exploring wild and creative options. Use the full ten minutes; otherwise you will find the group thinking for a few seconds and saying, “There aren’t any other possibilities.” Also, be sure that no one judges any idea to be ridiculous, impossible, or unrealistic. Exploring new ideas can be awkward at times, but do not allow that to end the process prematurely. We challenge you to pursue the third alternative in your next negotiation conversation; we believe that you will produce better results than with any other approach.

Promoting Teamwork

In most cases, teamwork is essential to achieving objectives. Yet when a diverse group of people works together, team members inevitably have different ideas about how things should be done. The problem with compromise as a decision-making technique is that everyone settles for a solution that is merely acceptable, which produces halfhearted execution and sets the stage for future conflict. Leaders need a strategy to diffuse conflict. Seeking the third alternative is a good one because respect becomes a team value, and everyone is challenged to avoid becoming entrenched in a particular viewpoint. Consider the following practices that also promote teamwork:

• Prevent conflict. Nipping conflict in the bud saves time and reduces anxiety. Before interactions begin, review the purpose of the conversation and set ground rules that define acceptable and unacceptable behaviors.
• Exhibit emotional intelligence. When people are in conflict, encourage them to acknowledge their feelings and decide what to do with them. Whether or not they feel anger is their choice, but responsibly reducing the tension caused by anger and replacing it with a feeling of challenge will move your team forward.
• Express needs. When disagreement emerges, take time to have each party express his needs. This practice allows people to feel heard and helps them understand the needs of others—essential prerequisites to finding an approach that meets everyone’s needs.
• Accept only win-win solutions. Unchecked, conflict becomes a contest with winners and losers. To ensure a win-win outcome, have each person say how she sees the issue and cite actions (or inactions) on her part that may have contributed to the conflict. Letting go of one position enables people to find a new one.

Disagreements are common when an issue is urgent and the stakes are high. As the leader, you will find these four practices useful in directing the energy of conflict toward finding innovative solutions that everyone supports.

It’s Not About Winning

The third alternative is a foreign concept to people who feel compelled to win at all costs. Seeking the third alternative is realistic only when people have the courage to express their needs and empathize with the needs of others. Those who push to win no matter what are usually oblivious to the needs of others. Win-lose transactions breed mistrust, competition, and resentment, and make it nearly impossible to find the third alternative. No matter how competent win-at-all-costs people are, on balance they limit the team’s success. Coach them to recognize how damaging their win-lose behaviors are to the team; you may want to replace them if they persist in such behaviors. Similarly, those who always seek to please others can also be a liability to the team. They whine about not having their needs met, even as they consistently abandon those needs to appease others—an ineffective decision-making dynamic.

During your next conversation, look for the following behaviors as indicators that people are genuinely looking for the third alternative in their decision making. If these indicators are not present, step in and change the direction of the conversation:

• Sincere intent. The tone shows sincere intent to present viewpoints in a nonthreatening manner, to listen to the views of others, and to seek a solution that meets everyone’s needs.
• Creativity. The ideas that are presented are entirely new—or are a new angle on existing processes or long-standing challenges.
• Courage. Everyone participates in the conversation and offers his or her views with clarity, conviction, transparency, and respect.
• Openness. People are willing to hear and suggest new ideas, even if those ideas are controversial, risky, unproven, or incomplete.
• Desire to understand. People ask insightful questions at appropriate times and listen carefully to the responses.

When your team cannot find the third alternative, be willing to end the conversation and walk away. You might have a difficult time walking away from a workable solution when it only fails to meet a few people’s needs. If a creative third alternative eludes your team, then walking away becomes the third alternative. The ground rule is that there must be a win-win decision for everyone or no deal. In our experience, leaders who walk away make a clear statement: “The third alternative is the only decision we accept in this organization.” You will be amazed at how well the next decision-making conversation will go after you have walked away from the previous one.