Relaying a Message Is Lossy Compression

The last piece did the headline sum: trust is the cheapest deal structure. This one takes apart the second of the six dimensions of Full-mandate collaboration — Information. We ask three things of information: true, complete, in sync.

Our position first. Relaying is expensive, and the expense is in the loss, not in the time. Why? Because every retelling is a round of lossy compression. Each pass drops a little, and when it is done the message still looks intact.

The founder tells the executive. The executive tells the adviser. The adviser tells the investor. After three hands, how much is left? A rough version. The numbers are usually right. What drops out is tone, qualification and context. An investor takes a sentence with its qualifier missing, judges on it, gets it wrong, and repairing that then takes ten times as much talking — one sentence off, two weeks of calendar gone. What you saved comes back due, with interest.

Getting everyone in one room beats saying it ten times

In a complex deal the communication cost sits less in the information itself than in how it deforms passing through a chain of decision-makers. So we would rather have a meeting that is hard to arrange, and get everyone who should be there into one room at once: the information is given once, and objections are settled on the spot. The cost is coordinating one meeting. The gain is five or six rounds of explanation you never have to give — at an hour a round, a working day. Is two extra weeks of scheduling worth it? It is.

But not all communication batches. Objective information — product, finance, market — only needs saying once, and repeating it wastes capacity. The doubts inside each decision-maker's head are all different, and often the kind nobody wants to raise in front of others. Mix the two and the group session stays shallow while the one-on-ones repeat the obvious. So we make information delivery batched and trust-building bespoke. Done separately. Never mixed.

Consolidating is not monopolising

Our way is the plainer one: front-line information is consolidated in one place, and nobody relies on relaying. The operating numbers come from the front line. So does the progress. So do the problems. Consolidating means every party sees the same set of facts at the same moment. Whoever needs it takes the first-hand version, not a second-hand retelling. So is that holding the information in our own hands? No. Someone who holds it has no ruler. Only a hidden card.

Standing comes from the same place. With several advisers on a deal, nobody is exclusive on paper. But a company gives the newest and truest progress only to the one it trusts most. In other words, exclusivity is granted by information, not by a clause. On this one we feel fairly sure.

Is more frequent syncing better? No. What you sync is a change in the facts, not our mood. Three updates a week with nothing new in them leave the reader with one impression: this has stalled. So the rule is simple. If something changed, say it that day. If nothing changed, put the effort into making something change. Bad news is the exception. Bad news does not wait.

We paid real tuition on this. The most common slip is on the person leading: they have a thought and act on it themselves, sync too little, and nobody else can think alongside them. Open the discussion up and it changes within weeks. Stay above the detail and you are left reacting.

True means unretouched. Complete means not told selectively. In sync means no party finds out late. Three ordinary words. The difficulty is holding all three at once, over a long time. Hard does not mean discountable. As far as we can see, the only method that holds is one line: better ugly information than distorted information. Because trust bought with retouched information is a liability in the accounts from day one.

Before you next sit down at the table, it is worth asking one question: whose words are these, exactly?

(For the six dimensions in full, see "Full-mandate collaboration" in the Archive.)