A CEO’s primary responsibility is to make the best decisions for a company and its stakeholders. In today’s increasingly complex and fast-changing business environment, CEOs need access to unbiased, unfiltered information, advice, and feedback to make good decisions.
Yet, many CEOs operate inside a limited bubble of information, and they do it for several reasons:
• They have blind spots, knowledge gaps or biases.
• They’re surrounded by people who have their own agenda (e.g., keeping the boss happy, job security, preserving a professional relationship).
• They have an inner circle of people who tend to see things from a similar perspective.
THE IMPORTANCE OF COGNITIVE DIVERSITY
A March 2017 article in Harvard Business Review explores the advantages of applying cognitive diversity to business problem solving. Cognitive diversity denotes the differences in perspective, experience, or information processing styles within a team. And the authors contend that teams with greater cognitive diversity solve problems faster and more accurately.
Here’s why: Cognitive diversity leads to an expanded perspective and a wider range of options, which enables leaders to make better decisions and solve problems more effectively.
COGNITIVE DIVERSITY AT WORK
Vistage CEO groups are based on cognitive diversity. Each group functions as a collective think tank of trusted advisors. When you put a dozen high-functioning, successful CEOs from different backgrounds and industries in a room and have them focus on each other’s challenges, they will expand their thinking and options, resulting in better decisions.
As a Vistage group facilitator, I regularly see the power of cognitive diversity. Often when members bring their biggest challenges and decisions to the group, the best advice comes from someone in a different industry or background. I’ve seen seasoned CEOs in their 50s and 60s gain invaluable perspectives from entrepreneurs in their 20s, and vice versa.
Cognitive diversity denotes the differences in perspective, experience, or information-processing styles within a team… Cognitive diversity leads to an expanded perspective and a wider range of options, which enables leaders to make better decisions and solve problems more effectively
CASE STUDY IN COGNITIVE DIVERSITY
Recently, a member brought up a sensitive issue: His 10-year-old company had experienced tremendous growth, but his CFO, who had been with the company since the beginning, no longer fit the role. He didn’t have the knowledge or experience to take the company to the next level.
The CFO also had a 40 percent equity stake in the company and was a longtime friend, complicating matters. The CEO was distressed, but couldn’t talk about it with anyone inside the company. Unsure, he procrastinated on acting for the next two years.
Several members of the group had similar experiences. They saw how the issue was stifling the company’s growth. They helped the CEO see the exigency of tackling the issue and offered several practical solutions.
With the group’s help, the CEO replaced his CFO and handled the equity and relationship issues with fairness and dignity. The group’s cognitive diversity helped the CEO develop a wider perspective, gain better options, and make better decisions.
THE KEY QUESTION
Where do you go for unbiased, unfiltered advice? Every CEO, no matter how smart or experienced, can benefit from the collective intelligence and cognitive diversity of a peer group.
Since 1996, Phil Glosserman has coached executives, business owners, salespeople and other professionals to build and grow their organizations, become more profitable, and become more effective leaders. He has worked with hundreds of individuals, companies, and teams in a variety of industries. He is also the author of two business/sales books, Sell the Feeling and The Referral Code. Phil became a Vistage Chair in 2014.