Founder's Mentality Blog
When it comes to discussing effective decision-making processes, my Bain colleague Jimmy Allen has a favorite parable: He talks about an early job working as a “clearer” for the deputy assistant of international trade within the US Department of Commerce.
The clearer existed to collect approvals for the stream of official documents passed around Washington. Typically, some policy guy would draft a document and then staple a yellow sheet of paper on the front with 50 or more names and titles on it. Jimmy’s job was to shuffle between offices up and down the Washington Mall seeking signatures and fixes. Any adjustments would mean a second draft and another trip around the mall in the sticky summer heat.
The three elements of the Founder's Mentality help companies sustain performance while avoiding the inevitable crises of growth.
The moral of the story, of course, is that complex “clearance processes” often amount to the epitome of bureaucratic inefficiency. But during a recent trip to India to meet with company founders, I found Jimmy agreeing with me as I described the virtues of nemawashi, the mother of all consensus-building techniques.
In essence, according to Rochelle Kopp of Japan Intercultural Consulting, nemawashi works this way:
“[Nemawashi] is typically done as a more low-key alternative to the standard western-style meeting filled with debate and clashing positions. It involves conversations, either one-on-one or in very small groups, to avoid the public display of differences of opinion. And its goal is persuasion.”
Kopp goes on to explain that the process begins when a promoter of a given idea seeks out key constituents and tries to gauge their reaction.
“Do they completely hate it? Like some parts and not others? Do they have specific suggestions for improving it, or improving the chances that it will be accepted? Based on the feedback from your nemawashi meeting, you’ll want to refine your course of action. … After an iterative process of successive nemawashi meetings and refinements to your plan, you’ll either have something sure to succeed or will understand why your idea is unlikely to be approved.”
Our Bain colleague in Japan, Toshihiko (Toshi) Hiura, explained that nemawashi grew out of a number of Japanese cultural factors: “First, Japanese executives knew they were going to have career-long relationships with each other,” he said. “They would grow up in the company taking on different roles and retire together. No one would have absolute power, and sometimes the CEO would actually be junior to others. So you needed to get along and invest in relationships. Everyone had a ‘balance sheet’ and you invested in it or drew from it with each decision. Nemawashi helped facilitate this.”
Another factor, Toshi said, was that Japanese companies initially focused on what we call the “kings” of the organization—those responsible for delivering strategy at the front line. Nemawashi lent prominence to the voices of these frontline people in ways their titles might not suggest. That ensured that the customer’s voice found its way into the decision-making process.
Having worked and lived in Japan for years, I’ve seen nemawashi in action many times. While the initial consensus-building process is incredibly slow, execution can happen incredibly fast. A good example that resonated with the founders we met with in India was my experience at a major Japanese company that was trying to implement an aggressive voluntary retirement program, something rare in Japan.
The company was steeped in nemawashi, meaning any decision of consequence required many painful one-on-one meetings and group discussions about why we had to do this, how we were proposing to design the process and how we would deal with the related challenges. Few companies outside of Japan would go through such a process. The difference, however, was that once the decision was made, the execution was rapid and flawless. Having also worked in the US, where coming to a decision takes 30% of the time and aligning the organization to implement it takes 70%, I had been preparing myself for lots of complications and pushback. But at this company, the pattern was almost the opposite: 90% of the time was spent getting to the decision and 10% was spent implementing it.
As we listened to the Indian founders, it became clear they had been experiencing the worst of all worlds: They typically invested little time to align the organization around specific decisions, but they also didn’t adjust or adapt the decision during execution. The result was that initial decisions came quickly and execution was often slow or flawed. My message was “go slow to go fast,” noting that more investment upfront in aligning the senior team on decisions will lead to faster and better executions. Building consensus nemawashi-style also involves seeking input from the front line, which is always a good thing.
As we’ve written in these blog posts, an insurgent’s main asset is speed—and the greatest enemy of speed is runaway complexity and administrative processes put in place for their own sake. But there’s nothing fast about making bad decisions or suffering through a faulty implementation. Paradoxically, slowing down on the front end to gather the insights of those closest to the customer can end up creating the most speed when it counts.