The challenge

The B Team is a very successful investment team based in Cambridge however, at the time of working with them, only two team members (the old hands) had experienced a significant and prolonged negative market event such as the tech bubble bursting and subprime housing crisis. Their investment process had been built in fairly benign market conditions with a team that worked exceedingly well together. The CIO worried that they were getting too comfortable with each other’s views resulting in a lack of robust challenge.

Data gathering

After a morning of observing them tackle several decision-making challenges, the Decide team was able to see that the old hands considered themselves as the team guardians and guides and so had a larger share of the team’s voice than the others, despite insisting that everyone was equally heard. Others waited for them to take the lead and deferred very naturally to their experience. There’s nothing wrong with that if you’re training a new team however the B team was a mature team where everyone was expected to step up to increased responsibilities. The CIO worried that their desire to maintain convivial working relationships was preventing them from truly challenging each other’s ideas which would, eventually, impact their investment performance.

Solutions

Together we explored changes that occur in the dopamine pathways in our brain when we collaborate as a team. How feeling part of a close-knit team reduces stress and increases feelings of well-being and how this results in the desire to maintain team harmony. We also explored how disagreement and direct challenge from our team-mates travels along the same neurological pathways as physical pain. A handy explanation for why we tend to avoid giving and receiving challenge. Our experience of working with English teams is that they can be exceedingly polite at the expense of effective challenge and robust decision-making. A trait that we found manifest in Japanese and Singaporean teams, too, but for slightly different cultural reasons.

Having little experience of effectively challenging one another and carrying concealed cultural baggage equating challenge with aggression, meant that this team had to learn how to challenge ideas effectively and so, to trust each other even more. To trust that a challenge was out of loyalty to the process and their collective outcomes rather than personal.

Why not simply designate a devil’s advocate at each meeting? In fact, this is never a good idea because of the toll that it inflicts on an individual. It’s physically taxing to challenge others, even if it’s specifically asked of you. If you are not naturally inclined to pull someone’s argument apart it can create mental dissonance, increase stress levels and feelings of not belonging in your team. It simply doesn’t work in the long run. Instead of dropping in a devil’s advocate, the B Team formalised their decision-making process and introduced some decision-making protocols.

New decision protocols

Instead of only presenting one investment idea at a time, each analysis was asked to present two at the same time early on in the process so as to reduce the potential of sunk cost, loss aversion and ownership bias. The team as a whole would then decide on which idea to explore further. The analyst that proposed it was then tasked with presenting both the merits and demerits of the investment. This allowed a robust debate within the team about the negative information that the analyst himself presented. In this situation both agreement and disagreement are positive. Allowing the entire team to form a balanced view of the investment opportunity rather than see it through the rosy lens of the analyst advocating for it.

Of course, a similar strategy would work with most investments or projects.