When decision-making systems evolve piecemeal, they generate poor choices. Here’s how to get your firm’s decision-making ecosystem to work.
Decision-making systems drive organisations. But according to a McKinsey survey, “72% of leaders think bad strategic decisions are either as frequent as good ones or the prevailing norm in their organisations”.
Writing for Harvard Business Review, Ron Carucci says good decisions require good processes to guide them and inform everyone else about them.
Evolved decision-making systems create inefficiencies. Meetings are over long and lack focus and relevance; there’s no clear chain of command; the priorities keep changing; and some of your steering groups are still going long after they passed into irrelevance. Here’s how to fix all that.
HOW TO DESIGN A DECISION-MAKING SYSTEM
1) Sort decisions into three groups:
- Corporate decisions which set institutional goals, appoint leaders, deal with internal culture and external reputation.
- Strategic decisions about capital investments, customer targeting; decisions which affect all staff.
- Operational decisions which affect day-to-day operations. Budgeting, product development and launch, hiring and firing fall into this category.
2) Define levels of responsibility. Enterprise decision-making is made centrally, departmental decision-making is taken locally; team-level decisions are made at the individual level. Zero in on your chain of command, and make sure you identify decisions which require collaboration between functions and/or departments so that you can build processes to make them as seamless as possible.
3) Create connections. Decisions are not made in a vacuum. The firm needs decisions to follow a predictable schedule with short-term goals requiring more frequent meetings than long-term strategic decision making.“Schedule standing meetings and publish them on an annual governance calendar.”
4) Find a way to share meeting outputs. Outcomes from one meeting have implications for other decisions. “Defining how information moves between these groups, by whom, and in what time frame will help ensure that your organisation stays aligned.” Publish real-time updates via shared calendars and information-sharing technologies so everyone can see what’s being decided and understands why.
5) Feedback. Quality assess your decision-making processes and the decisions that result from them. Did people understand how and why decisions affecting them were made? Were employees able to contribute adequately to those choices?
Effective organisation-wide decision making is not an accident of evolution. Redesign your processes to make the right decisions by design.