Every industry is changing faster than it ever has before. There are two kids in a garage somewhere with an idea that will make your current business model obsolete. Don't believe me, ask a taxi driver.
A recent study asked participants to rate skills and behaviors necessary to be effective in the modern digital world. The top two were:
- The ability to embrace change (99% Very important/important)
- The ability to spot opportunities and adapt strategies quickly (96% Very important/important)*
How do you embrace change across an entire organization? How do you adapt a strategy quickly? It takes innovation on the organizational scale.
One of the keys to making organizations adaptable is the removal of bottlenecks. The most insidious bottlenecks is decision making. In most organizations, strategic decisions are made at the highest levels of the organization, and implementation is done at the lowest by individual contributors.
Rigid strategic decision structure.
In these organizations, the director, VP, or even a CxO is on the hook for the success or failure of a campaign, project and maybe even the company. In a rigid strategic decision structure decisions follow a predictable pattern:
- A decision is needed, and the low level individuals cannot make it.
- Work on that project stops. Or they work on less important things, which is just as bad. This causes delay.
- People up the line of command are all briefed on the topic, but they cannot make a decision. This all causes delay and increased cost because these people’s effective rate is higher than the teams’.
- Every person in this line of command can say, “No,” but none of them can say yes.
- Eventually, the decision maker, after they are briefed, makes the decision, and everyone down the line is informed of the decision. This person doesn’t have anywhere near the level of understanding of the people who originally asked the question. Generally the decision maker takes the input of the team members and goes along with their recommendation.
- Eventually the team gets the decision and can get back to work.
Consider how many hands had to touch that idea all up and down the line. The cost to the company in delay, as well as cost in the salary of these high level people is staggering.
Let’s consider a ridiculous alternative. The team flips a coin every time there is a decision that would have traditionally needed and executive to weigh in on. They will, on average, get 50% of the decisions correct in line with what the eventual decision maker would have decided.
They would have saved all that time, and they wouldn’t have involved those costly managers and executives. If they are working in short iterations, they will show their completed 50/50 work to the decision maker at the end of a short time frame. He/she will provide feedback, and they will have to fix some percentage of the items. They probably would not have to fix all 50% because the executive will probably compromise on a few of the items, even if they weren’t what he/she would have chosen if given the opportunity. Let’s say that percentage is 40%. Even with this 40% error rate, it would likely still cost the company LESS with this approach because the work would not be delayed, and all those high paid execs and managers wouldn’t be involved.
But it is even better than that. Your team isn’t made up of coin flippers. Your team is made up of smart people who know the product or service they are working on, they know the market and know the customers.
They will have a far better batting average than this. They may get only 5% of the decisions “wrong.” That is only 5% rework, and the company has saved a tremendous amount of time and money.
As you might have guessed, there is an alternative. Heck if there wasn’t, why would you be reading this article?
Nimble Strategic Decision Structure
The opposite of the rigid strategic decision structure is the nimble strategic decision structure. This alternative model relies on the fundamental belief that the people with the best information should make the decision. Those people are often the people who had the question in the first place. They had the question; they had an opinion of what the answer should be, but they were just not authorized to make the decision. So we authorize them. But here is the deal;
You cannot force someone to be empowered; you can only create opportunities for empowerment.
Making a switch like this isn’t easy. It is not a process change, it is culture change. How do you fix something as complex and intertwined as the culture of an organization? One thing is for sure:
You may have accidentally wandered into this problem, but you cannot wander your way out!
Event he very best organizations struggle. Changing culture is a battle and a lot of hard work, but it will be worth it. Successful organizations create a nimble plan and deliberately execute it with constant check-ins and accountability.
What is your organizational decision making structure, Rigid or Nimble? How much time and money is spent on decision making in your organization? Could that be reduced if the people who have the information were allowed to make the decisions?
Beginning today, tell the people you support that you want them to start making more of the decisions that you used to make. If they feel they have enough information to make the decision, let them. They won’t believe you and will come to you with decisions that they could/should make themselves, at least to begin with. That’s okay. Ask a lot of questions and see if you can get them to make the decision, or at least make a recommendation. If they feel they can make a recommendation, they have the information to make the decision. In the beginning, they simply lack the confidence and belief that they can be empowered.
Gather together your peers and share this article. Discuss with them the questions under “Think.” Kick around the idea of using a nimble decision structure for your part of the organization. Discuss how much money in direct costs (salaries and expenses) and indirect costs (disruption, opportunity cost, cost of delay) is being spent in continuing to
operate with a rigid decision structure.
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