The reorganization was over.
A new CxO was in charge and seven VPs now sat at the leadership table.
Each knew one or two of their new leadership team; others were less familiar. But together, they needed to cut the expense base by millions.
To reach the target cost reduction, all seven VPs had to play their part. Each needed to cut costs in their reorganized function over the next three years.
The problem? They were lean before the reorganization. They weren’t cutting fat anymore. This would go deep – through muscle and into bone.
And that’s when doubts began to creep in.
Some thought, “If I make these cuts, what’s stopping the CxO from handing my savings to another VP to ‘invest’ in their promised future savings.”
After all, it had happened before in prior cost-reduction programs. You make the difficult decisions, you deliver, and someone else gets to use your budget for their shiny new project. The cycle was familiar.
Why make the sacrifice if someone else gets the reward?
So, each VP faced a choice.
Work hard and make the painful cost reductions in their area and hope the other VPs do the same.
Or produce some reduction but nothing material and, when asked, have good reasons for why “reduction in my area was just not possible this year.”
After all, what’s the worst that could happen? If everyone is half-hearted, no one VP will be blamed.
The Prisoner’s Dilemma in action.
It is one of the hardest-to-detect reasons why good decisions aren’t successful decisions.
Collaboration and coordinated action don’t reach the required level.
Well-meaning people pulled in different directions, having to choose between conflicting motivations.
In this case, the VPs found themselves stuck in a cycle. No one wanted to go first.
So they each waited and watched.
And at the end of year one, the result was predictable.
No cost reduction. No tangible progress.
The CxO was left holding the same cost basis in one hand.
In the other, his VPs’ perfectly rational, logical, and compelling excuses for why the targets couldn’t be met so soon after the reorganization.
Things had to change. Fast.
They still had two years left in their three-year cost reduction plan.
Their HR Business Partner suggested they use the SchellingPoint process.
A process designed to ensure collaborative actions have the assets for success without the liabilities preventing it.
In two hours, the process surfaced their Prisoner’s Dilemma.
Along with six other unseen obstacles.
They spent six hours designing mitigations for each.
No, they couldn’t retrieve the millions lost in year one, but now they had a formula for full collaboration.
They set themselves up for a successful year two.
This wasn’t just about cost-cutting.
It was about cutting through the implementation noise, finding the signals, and leading them to the root barriers holding them back.
Easier to do before you declare a decision has been made and action can start.
By looking at each goal and asking where conflicting motivations within those necessary for their attainment could compromise them.
You escape a Prisoner’s Dilemma by discussing it and making collaboration the best choice.
You agree on what cooperation and defection look like.
You determine how to incent cooperation and deter defection.
And that if anyone defers, they’ll suffer tit-for-tat.
Successful decisions require a foundation decision.
Whether or not you will identify and mitigate the often ugly negatives in the same conversation where you will design a positive, attractive future.
Do you want limited local benefit or the collective optimum?
The SchellingPoint process enables the latter.
This post relates to the article, What the Prisoner’s Dilemma Teaches Us About Human Behavior, in which Michael Taylor was quoted.
