One of the biggest mistakes startups make: Democratic decision making! Why it is so & what to do instead

Recently a leader told me: “We make all our decisions democratically” My reply: “It’s one of the worst ways to make team decisions” Why is that & what to do instead… Most people believe that for a country, democracy is the best form of governance. So they assume it should be great for a company also. But companies are not countries. Companies are not geographically bound entities with guns & authority to imprison people, that people are born into. Scale, complexity & power dynamics of countries make democracy the safest option for citizens. But democratic decision making is rarely the best for teams and companies. In fact it’s one of 3 ineffective decision making styles that teams use: Democratic: → What: an option is proposed, everyone votes, majority wins → Why bad: it’s slow, muddles responsibility, rarely leads to innovative ideas, alienates minority & ensures people spend more time lobbying than working → Where I might use it: for non-core decisions like where should we go for lunch Consensus: → What: everyone involved has to agree. Even 1 veto, derails the proposal → Why bad: it discourages risk taking, leads to group-think & encourages quid-pro-quo (if you don’t veto my idea, I won’t veto yours) → Where I might use it: Rarest of cases when I need everyone to officially agree. Eg: a decision with legal consequences Authoritative: → What: One person will unilaterally make the decision & everyone has to comply → Why bad: Repeated use crushes motivation, robs autonomy & leads to bad decisions → Where I might use it: an emergency where there will be terrible consequences for delay. Think, fire in the building. What’s the alternative ? Participative decision making What: → 1 person owns the decision & will do everything to make it happen. → Others participate via defined & critical roles: Sharing expert input, reviewing recommendations, taking final decision Why I like it: It has single-point accountability AND encourages collaboration. This: → makes the hidden decision making process explicit → distributes power & speeds things up (clear roles for everyone) → leads to better ideas (heavy weightage to inputs of people with expertise & context) Research shows that a Participative decision making style leads to significantly faster & higher quality decisions with increased team satisfaction. In comments I’ll share the research and also how to implement it. I find this Nassim Taleb quote insightful: “I am, at the federal level, Libertarian; at the state level, Republican; at the local level, Democrat; and at the family and friends level, a socialist.“ Most people are so burned by bad experiences with Authoritative leaders (country or company) that they gravitate towards a democratic style. But 1 style can’t work for every kind of entity. Fast moving & high performing teams need an agile decision making model. Participative model is the best for that.

Some resources & research