The three signature rule

How many people does it take to make a decision..?

One? Two? Ten?

I can just imagine my startup friends smirking right now, and my corporate friends cringing in fear of what’s to come…

One of the best lessons that I was part of personally was at a large multinational organisation, implementing a ‘maximum of 3 signatures to make any decision’ rule…

Crippled by complexity, resulting in slow delivery, costs that never seem to decrease despite continued cost reduction programs and general stagnation on share price, this company? goes through various re-orgs, transformations, culture change programmes and the likes. With great aspirations and lofty goals.?

Charlie (name changed for protection), the CEO of this company, personally charges the way forward, sets the tone and pours in the energy necessary to swoop the company up in the change. The company is going digital. The company is going to innovate. The company is going to conquer the world…

But the reality is that as companies grow, they become more complex to protect themselves. Processes are put in place to safeguard the company against rogue employees. Contracts are put in place to defend against rogue suppliers. Committees are put in place to protect against individuals making self-enriching or short sighted decisions.

Great to protect the status quo. Horrible to promote innovation.

I know you’re thinking: was Charlie successful in implementing the 3 signature rule..? Yes.

More importantly, did it kill complexity? No. Three signatures simply resulted in the effort to align and coordinate going underground.

The reality is that complexity increases exponentially with the addition of every senior leader, product line, business unit, IT system, process. More people equals more communication required. More products or markets equals more factors that need to be considered. More profit at risk, more impact to careers and bonuses and therefore more politics.

So, is it even possible for large organisations to cut through these system conditions and innovate repeatedly and at scale??

My observation is that the probability of success is low.?

Of course there are single digit examples of companies that continuously innovate. There always are outliers. And of course every exec would think their company could be that outlier. But it rarely is.

Don’t get me wrong, this system condition is not necessarily because of bad people, or malpractices, it’s usually good people, good leaders with great intent, but as explained above, the weight of the internal complexity just crushes most new endeavours.

The best solution is to build new ventures at an arm's length - away from these killers of innovation.?

It’s not less signatures you need — if you want to innovate you will have to protect your ventures from your existing company.