Why ‘Slow’ Teams Aren’t Slow: Leonardo Freixas on Cost Structures and Inaction

In a recent LinkedIn post, Leonardo Freixas offers a counterintuitive perspective on why teams might appear to be moving slowly. Instead of attributing sluggishness to a lack of urgency or effort, Freixas argues that the underlying issue often lies in the ‘cost structure’ of action versus inaction within an organization.

Freixas begins by challenging the common perception of slow teams, stating:

Your team isn’t slow. They’re waiting for the cost of action to drop. Action got priced above failure.

According to Freixas, when the potential negative consequences of making a mistake (failure) are perceived as being higher than the risks associated with delaying a decision or action, inaction becomes the most logical choice for individuals within that system.

The Economics of Inaction

Freixas elaborates on this economic principle, suggesting that the decision to hesitate is often a rational response to the environment created by leadership. He points out:

When mistakes cost more than delay, inaction becomes optimal.

This, Freixas contends, leads to a single, critical decision point. Once the system is established where delay is safer than action, the resulting inaction is no longer a sign of resistance but a logical outcome of the established incentives. He emphasizes:

After that, inaction isn’t resistance. It’s the rational move inside the system.

Leadership’s Role in Enabling Action

The core of Freixas’s message is directed at leadership. He posits that effective leaders do not simply try to instill a sense of urgency in their teams to combat perceived slowness. Instead, he argues that the real solution lies in fundamentally altering the conditions that make hesitation a safe and rational strategy.

Rethinking the Cost of Failure

Freixas suggests that leaders must focus on reducing the ‘cost of action’ and, conversely, increasing the perceived cost of delay or inaction. This involves creating an environment where calculated risks are encouraged and where mistakes are viewed as learning opportunities rather than catastrophic failures. As Freixas concludes:

Leaders don’t fix slow teams with urgency. They fix the cost structure that made hesitation safe.

By reframing the problem from one of team motivation to one of systemic incentives, Leonardo Freixas provides a thought-provoking analysis for leaders seeking to foster a more agile and proactive organizational culture.