ManagementSpeak: I have taken all your suggestions under advisement and will keep you posted on any developments.
Translation: Nothing you said has any value to me.
We’ve taken KJR Club member Larry Lipman’s translation under advisement.

I first discovered the business significance of AND logic while participating in the redesign of my then-employer’s capital approval process. Among our findings: A $25,000 proposal required at least five approvals — the immediate manager, followed by the department head, division head, CFO and CEO. All had to agree — AND logic at its finest.

The average $2.5 million proposal, in contrast, required only three — the division head, CFO and CEO. The practical consequence? My employer had 67% more opportunities to reject simple, low-risk, high-return investments than large, risky endeavors.

All in the name of control.

Organizations grow and thrive on YES decisions. YES is how they increase revenue, decrease costs, increase speed and agility, improve quality and add excellence.

YES decisions also create risk, because every one proposes a change of some kind. Change isn’t safe. It always includes the possibility that no matter how good it looked in the PowerPoint, and how carefully everyone involved with it planned, designed, engineered and built, it might not work out.

The typical mechanism organizations use to mitigate risk is the veto. It’s requiring some number of individuals to independently decide whether the risk is worthwhile, and if any one of them doesn’t think so then the proposed change never sees the light of day.

In practice, it comes down to getting signatures. And in practice, this usually means that the process designed to mitigate risk instead becomes the process through which the organization plays favorites. You know how it works: If the proposer is, or works for, someone who is in the inner circle or is one of their proteges, then signatures become rubber stamps.

If, instead, the proposer is unknown or works for an unknown then it receives scrutiny usually reserved for the scene of a murder on CSI. And if the proposer works for someone who has annoyed anyone whose signature is required, rejection is automatic.

What’s the solution? That depends on how you define the problem.

If your company’s goal is to make its investment decisions as fairly as possible, then its governance process should look a lot like how radio stations make hiring decisions for their announcers: Applicants speak behind a screen, so that if you have a “face for radio” it won’t bias the interviewer. Similarly, a fair governance process operates on paper, and all proposals are anonymous so that nobody has a chance to play favorites.

Fairness is, however, an overrated virtue. Among its defects are its speed, which can be glacial, and its expense. In business, you’re more likely to set a different goal — to invest in the most promising proposals. Fairness might be a means to this end, but often it isn’t.

If you don’t accept this, imagine you’re evaluating two competing proposals. One comes from an associate with whom you’ve worked for more than ten years — someone you know well, like, and trust. The other comes from an outside vendor — a company that’s unknown to you.

If you ran a fair process you’d perform the exact same due diligence on both proposals. But you’ve already performed ten years of due diligence on your trusted associate, so your first step is deciding whether considering the unknown company’s proposal is worth any time and effort at all.

That, rather than the apostrophe, is the crux of the biscuit: The only difference between trust and favoritism is whether you’re among the trusted few or the anonymous many.

Here’s a nit to pick: In business, trying to invest in the most promising proposals … the best ideas … is pointless, for two reasons: Uncertainty and multidimensionality.

Uncertainty is an issue because the business justification included in every proposal is, at best, an estimate with a sizable error bar. “Best” implies a level of precision that isn’t available to you.

Multidimensionality means that every proposal has more than one justification — more than one reason for pursuing it. These different reasons have different levels of importance for different decision-makers, so “best” depends on which chair you’re sitting in.

When it comes to corporate governance, it’s best to set the bar a bit lower. Just trying to make sure every funded and scheduled proposal is worth pursuing is tough enough.

To achieve even that requires an executive team that operates as a team — whose members like and trust each other and who have a common purpose — rather than a roomful of rivals.

As CIO, you can’t make this happen. That’s the CEO’s job.

If your company doesn’t have one of these you’ll have to work toward the next best thing: Making sure as many of the decision-makers as possible like and trust you.