Why the CEO is here to stayFebruary 23, 2012: 11:50 AM ET
Team-based decision-making has become the mantra of many executive coaches, but these arrangements often lead to disaster. Here's why.
By Bob Frisch, guest contributor
FORTUNE -- In a recent post on Fortune.com, Doreen Lorenzo, the president of frog, raised a provocative question: Are we living in a post-CEO world? The short answer is no, and here's why.
Lorenzo argues that handling the complexity and challenges of running a modern corporation now exceeds the capacity of a single individual. I couldn't agree more that well functioning senior teams are critical to business success and that activities like collaboration, coordination, and innovation are growing more important.
But Lorenzo's claim that team-based decision making will emerge as a logical alternative to CEOs running enterprises gives me pause. Lorenzo argues that "even if team leadership isn't a management goal, group versus solo decision-making is increasingly necessary and falling into place."
Going from team leadership to team decision-making is a big leap. A number of people have made this leap before. Team-based decision-making has become the mantra of many executive coaches, organization development professionals, trainers, and facilitators around the globe. But few have made the case as boldly as Lorenzo has that co-CEOs or team-based decision-making will ultimately displace the current model.
There are a few examples of co-CEOs running sizable companies today. Some companies, like Motorola, have installed co-CEOs as a temporary situation -- in this case, Sanjay Jha was named co-CEO in advance of the spin-off of Motorola Mobility (MMI). Although you can find examples of permanent co-CEOs, they don't seem to fare too well. RIM's (RIMM) co-CEO arrangement collapsed. Whole Foods (WFM) put in a co-CEO following a scandal involving CEO John Mackey. Archie Comics co-CEO Nancy Silberkleit got slapped with a restraining order last month, keeping her from entering the corporate headquarters. SAP (SAP) is using a co-CEO model as well, and we'll see how that goes. These examples suggest that, for companies at scale, the co-CEO model is an oddity, not a bold new experiment.
The timeless truth is that the best-led organizations are those that are run by individual leaders who are held accountable for making the big decisions. Teams are great at debating, advising, implementing, inventing, creating, and communicating. But they are inherently weak at making decisions. Time and again, four common conflicts prove the accuracy of this principle:
1. Mission Control versus Knights of the Roundtable
In team discussions, members are often torn between the functional expertise that brought them to their places at the table and the leader's desire that they take an organization-wide, holistic perspective. This is a conflict between what the leader expects of them and what they know.
2. The team versus the legislature
It's called a team, but it more closely resembles a legislature. Each team member represents a significant constituency that isn't present at senior management team meetings. Meanwhile, the CEO expects team members to act in the best interests of the overall enterprise. This is a conflict of accountability.
3. The House versus the Senate
Because it's unclear what kind of legislature the team resembles, deliberations are clouded with ambiguity. Is it a group like the U.S. Senate where every state has equal weight, or is it more like the U.S. House of Representatives, in which the most populous states have the most clout? This is a conflict over the balance of power within the team.
4. The majority versus the majority
The voting paradox, first identified by 18th century French mathematician and social theorist the Marquis de Condorcet, shows that no matter what choice a group makes, other alternatives can simultaneously command a majority of the group's preferences. This is a conflict over consensus.
None of the first three of these conflicts can be easily resolved -- and the voting paradox cannot be resolved at all. Even in instances where decisions are delegated to teams, there is almost always a closure mechanism -- a way to end debate if the team deadlocks or can't reach consensus. That mechanism is usually one individual making the call -- either the boss or a designated "leader among equals." In the executive suite or the corridors of power, there is simply no room for a hung jury.
Are teams at the top important? Absolutely. Increasingly so? Unquestionably. Will they replace individuals as leaders of organizations except in rare and exceptional circumstances? Not a chance.
It is unrealistic and unreasonably idealistic to think that modern corporations will abandon the time-tested model of placing their trust in individuals to lead them in favor of utopian experiments in management-by-committee.
Bob Frisch is managing partner of The Strategic Offsites Group and the author of Who's In The Room? How Great Leaders Organize and Manage the Teams Around Them.