During a recent strategy meeting at Ternary Software Inc., a programmer criticized the chief executive's new incentive plan for employees. An hourlong discussion ensued, in which several participants, including the CEO, critiqued the proposal. Ultimately, all six participants agreed to handle incentives differently.

That part was crucial: Ternary runs itself as a democracy, and every decision must be unanimous. Any of Ternary's 13 other employees could have challenged the incentive decision and forced it to be revisited.

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