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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.

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Don’t worry. This isn’t a partisan political column, nor is it irrelevant to your corporate role. We’ll get there — be patient. You can learn a lot from current events if you know where to look. For example:

Let’s imagine you’re disturbed by current events. Perhaps you’re reacting to the recently passed laws allowing “harsh interrogation” and the suspension of habeas corpus, or judicial activism, or environmental and energy issues, or the war in Iraq, or illegal immigration, or the bipartisan gerrymandering of districts to make as many incumbents as possible safe, or taxing and spending, or not taxing and spending anyway, or Roe vs Wade, or the growing influence of religious groups vs Roe vs Wade, or the ownership of both major political parties by big business. What should you do about it?

A peculiarity of American politics is the persistence of third parties (and fourth, and fifth, and so on).

To the extent third party candidates have any impact at all, it’s usually to help elect whichever major party candidates hold the views least compatible with their own. And that’s in a good year. Mostly, third parties provide an outlet for those who want to participate in the political process without having to experience the sausage-factory ugliness of the political process itself. They provide an opportunity to say, “I told you so.”

Imagine that Perot, Nader, or both had spent all of their energy and influence working to modify the electoral process to allow “instant run-offs,” where voters list candidates in order of preference. Instant run-off would mean that Texans who like Kinky Friedman best for governor, but still would prefer Chris Bell over Rick Perry could vote their preference. If the Kinkster came in third, their votes would automatically shift to Bell.

Instant run-off would instantly remove the single biggest barrier to any third-party candidate — the perception that voting for one is a wasted vote. Had Perot lobbied for instant run-off in Texas in 1992, it very well might have happened, and having happened in Texas it very well might have spread — an enduring change that would have fostered the Independence Party he founded.

It’s worth asking why he and Nader decided to lead third parties instead of infiltrating the Democrats or Republicans, and why, having formed new parties, they chose to squander their time, energy and resources running for president instead of for instant run-off or some other tactic that would have had laid a strong foundation to build on. Three factors probably played important roles: An unwillingness to dirty their hands; a preference for being the big frog in a small pond instead of just one big frog among many in a lake; and a desire for the limelight.

The result: Their hands remained clean, they became big frogs in small ponds, they got the limelight … and they had little or no impact, other than as spoilers.

Which brings us to you and your role in corporate America.

Corporate politics, like national politics, is a multi-player chess game. The higher you rise, the more your personal effectiveness depends on your political skills. You choose tactics that can win given the situation as it is, not as you wish it was. While corporate politics rarely descends to the kinds of tactics used in national politics, on an average day you still find yourself faced with choices that are morally ambiguous at best.

Politics means getting your hands dirty, trading your support on one issue for someone else’s on another; building alliances with people you don’t necessarily admire or like; flattering, cajoling, and at times threatening. It isn’t a game for the finicky, and as a general rule, the nastiness of the tactics needed to win correlate with the size of the lake you’re ribbetting in.

Your choices are the same as those that were available to Ross Perot and Ralph Nader. If you find politics distasteful or lack the aptitude for it, but still want to play a leadership role, choose a smaller pond … a small-to-mid-size company.

But don’t turn up your nose at those who swim in the big lakes. They are the same as you and me. They just play the game better. Many are very ethical people, too. In their code of ethics, unlike the code of third-party candidates, achieving the least of the available evils counts as a moral victory.

* * *

Speaking of politics, election day is approaching. Given the issues at stake it’s as important a mid-term election as any of us have seen in decades. One of the candidates that’s running for each office and has a chance of being elected is a better choice than the others who also have a chance, even if you don’t much like any of them. Your vote is your influence, and even if you’re just choosing the lesser of two or three evils, you’re responsible for doing so.

Many disagree. To me, that says it’s just fine to allow the greater of two evils when you could prevent it, so long as you are able to wash your hands of the responsibility.

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