Decision making is the process of making a choice. Defining a process is the first step in any process improvement initiative. Improve decision making by understanding the types of decisions and then applying process improvement concepts. The decision making process starts by categorizing decisions by impact, complexity and responsibility. This indicates who and how you can improve your decision making process.
A 2019 article by McKinsey & Company, Three Keys to Better Decisions outlines three decision types, who is responsible and how to make them better.
|Decision Type||Who Makes Decision||Best Practices|
|Big-bet Decisions – Infrequent, high risk, future shaping||Top management||Productive debate, designated advocates, for and against|
|Cross Cutting Decisions – Frequent, collaborative, various risk profiles||Business Unit Heads, Senior Mangers||Process focused, clarify objectives, measures and targets|
|Delegated Decisions – Frequent, low risk, day-to-day||Individuals, working teams||Decisions made by those closest to work. Develop commitment not just consensus.|
Classifying decisions into one of the three types starts the decision making process by identifying who is responsible. Subsequently, follow best practices to improve decision making.
Big-bet decisions set the direction for the company. Examples include:
- Should we buy a company or sell a division?
- Should we enter a new market?
- Do I need to hire a new executive leader to delegate a major function?
The business owner and/or top management of a company make best-bet decisions. Although you may have meetings to discuss pro’s and con’s, big-bet decisions are not made by consensus. A good leader will seek input from multiple sources and consult up and down the organization to explore assumptions and alternatives.
We recommend that you document the decision making process. The Option Evaluation Template documents the options evaluated, pro’s and cons as well as the ultimate recommendation. Although the template looks simplistic, adapt the form to the specific requirements of the decision.
Cross Cutting Decisions
Cross cutting decisions impact multiple departments. Accordingly, cross functional teams ensure a decision does not negatively impact other departments. Cross cutting decisions mean that multiple departments need to collaborate. Larger organizations use committees while smaller organizations create projects or teams to tackle specific problems.
Suggesting a new committee or team results in a collective groan from the thought of more meetings. Meetings are not only a necessary part of business, but when planned and executed efficiently, meetings become a timesaver and an accelerator for solving problems.
- Setup your project for success. Create a framework that has clearly defined objections, metrics and resources. Define roles and responsibilities for each team member.
- Empower individuals with the requisite knowledge from each department. Provide the team clear guidelines for keeping leadership informed and an escalation framework for decision making.
- Ensure excellent meeting discipline by following well defined meeting management techniques.
- Every meeting should have an objective and every participant should have a reason for attending.
- Meetings should have a time bound agenda and everyone should be punctual and prepared in advance.
Accompany cross cutting decisions with a well documented business processes. Every business process has defined inputs, actions and outputs which produce value. Understanding of how one departments actions affect others and produce value is critical to process improvement. The Existing Process Design template helps document the current business process.
On a project to improve the effectiveness of meter reading for a large electric utility I asked the new team if they knew why we were meeting. I was shocked to get the answer “to punish us” when the purpose was to help them solve their own problem. Too often, front line employees do nothing out of fear of retribution.
Delegated decisions are best made by those closest to the issue. Because these decisions recurring and routine, The Compound Effect informs us that small changes often have huge results. However, to create change front line employees must be empowered with more than words. People require the training and/or coaching along with the latitude to try new things. Telling a team they have the authority to make changes without providing the guidance on expectations is not empowering enough! A leader makes certain the individual or team has the data, process knowledge and support to achieve the objective.
Empowering delegated decision requires a willingness to let go of the decision making with trust in those you are delegating to. Trust is built with ongoing communication and by removing the fear of failure by demonstrating support with more than just words.
Making the Best Decisions
There is no “best way” to make every decision. Focus on improving the decision making process by better understanding the type of decision being made and tailoring the process to the current decision. Decision making, like problem solving, is more of an art than a science. The science includes the tools, techniques and processes. The art includes knowing which questions to ask and how to hear the answers.
At I-BN our job is solving problems.
- We do not have one way for executing every project.
- We utilize a specific methodology per engagement type and then tailor it to each engagement.
- We recognize that every client and every problem is unique.
Our experience helps us choose the best tools, ask the right questions and make suggestions for solving the problem. However, each client’s unique circumstances require unique solutions. It is our job to help customers improve their decisions with art and science.
If you need help with Digital Transformation, System Selection, or want an editable copy of the forms in the article or Fractional CxO to help you solve a specific problem with a fractional executive Contact Us!