Stop Trying to Achieve Consensus
Many investment firms strive to achieve consensus group decisions. The desire to have unanimous agreement is understandable. There’s a certain comfort level when everyone agrees.
But seeking consensus is a mistake, even though it feels right.
Investment markets are too uncertain and unpredictable to expect unanimous agreement. The goal is not comfortability. The goal is to make the right decision. And that means getting every idea out on the table, debating and disagreeing, and then making a probability-based decision, knowing that 100% certainty is unachievable.
Disagreement is a necessary condition because no one knows the investment future. Opinions and ideas will differ.
Most organizations set the expectation that anything less than consensus is a problem to be eradicated. Disagreement is viewed as a flaw, rather than a feature, of group decision making. Because investments are uncertain, there isn’t a solution to disagreement. Nor should there be. It’s an inherent and positive condition of the investment process. It’s not an issue to be solved.
Yet organizations continue to press for consensus. So what happens?
People don’t advocate for their ideas to avoid offending others. They agree just to get meetings over with and move on. Leaders make a blended decision to please everyone and end up with a terrible decision that benefits no one. People give up finding the best solution and instead settle on the quickest, easiest, and least controversial solution.
Consensus forces people to play it safe. Forces compliance. Forces risk avoidance. Consensus pressures teams to align with the group’s existing or assumed beliefs. We’ve been trained that disagreement is such a terrible thing that we can’t fathom the possibility that its perfectly acceptable to reach a decision that some people oppose.
A consensus-focused team will look to the leader to set the consensus with the subtle expectation for everyone to fall in line. Or the most outspoken and articulate person will set consensus and any differing views are dismissed. Consensus shuts down discussion because it’s the antithesis of what a discussion should be – an exchange of independent, conflicting ideas.
Consensus makes comfortable groupthink the path of least resistance.
It’s not a concern when teams have different views on where to invest the next dollar. Or where to add or reduce risk. Or what manager to hire or fire. Or any of the other major decisions investment firms make. Disagreement is valuable because it uncovers alternative views and arguments that can then be discussed, evaluated, and ultimately incorporated into a final decision. In no part of that process does consensus need to be achieved.
Consensus advocates are afraid of dissent and offending people. Consensus builders prioritize harmony and peace over making the right decision. Organizations need to reteach and train their teams that disagreement is not a negative. You never know for sure in investing, so the idea that everyone will agree is nonsensical. Instead, embrace disagreement as a natural and valuable tool to make thoughtful investment decisions.