Your organization is full of people who make decisions based on purpose. To invest or invest, to raise prices or not, to launch a product, or to attract another. Their decisions collectively determine the success or failure of the organization.
People are complex, and so are organizations. So are the groups. Whether the decision is made by consensus, a majority vote, or a party leader, the process is complicated, which means that problems arise easily.
McKinsey’s 2018 survey of 1,200 global business leaders showed that “inefficient decision-making costs the average Fortune 500 company 530,000 days of management time each year, equivalent to about $250 million in annual salaries.” When it comes to your business, about 20% of any executive’s time can be wasted due to poor decision-making.
Compelling decisions
To avoid problems in decision-making, you need compelling decisions. Those that the team can see the merits of and will work hard to deliver. They are driven by a clear vision and purpose and inspire action and confidence in a chosen course of action. Strategic decisions are examples of compelling decisions that follow a rigorous process.
However, the many thousands of decisions made through your strategy do not follow the same process. Teams need to be aware of the quality of their normal decision-making pattern.
Group communication
Teams with well-connected team members make more compelling decisions. In 1991, researchers separated the more noticeable aspects of good team performance, such as communication and feedback, from the less noticeable aspects, such as how the team integrates tasks and adapts to situations. They explain that groups integrate and adapt by anticipating the future needs and actions of group members and by predicting future levels of demand. To do so, team members “tap into the invisible knowledge base” of how well the team is performing.
Research also shows that teams that move from preconceived patterns, based on an abstract knowledge base, to a shared mental model of their decision-making pattern are top performers.
Team process
The team needs to map their processes to move away from a shared mental model. It sounds easy, and in the end, it should be easy. However, the first teams must be open and deep so that nothing critical is missed.
Putting a clear process in front of the team, and going wider and deeper, is much easier to identify issues or factors that lead to bad or weak decisions. Decisions that often lead to reactivity are another form of prevention. Once the process is well understood, it can be integrated back into the core.
Decision making
With weak points identified, teams can improve the quality and speed of decision making by reviewing decision rights and designing decision support tools.
In some decisions, the need for consensus or consultation and collaboration may override the need for speed. Others will ensure independent decision-makers. Sometimes there will be a need for layers of decision rights, sometimes these layers can be removed.
Decision support tools range from simple decision trees and risk assessment checklists to advanced data models. Developed by the right people with the right starting point, tested and refined, the quality of decisions and the reduction of rework can be profound. As the team becomes more comfortable with themselves, bottlenecks are eliminated and the flow of decisions is faster.
Strengthening the decision flow
CEOs hold the weight of making big decisions. CEOs also need to understand the complexity of the constraints in the decision-making process. And the impact of constraints on general group decisions.
By mapping the process, issues can be identified and proactive, long-term solutions can be found to unlock the quality and speed that leaders desire.
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