How Companies Can Make Better Decisions

The speed of business in today's fast-paced and connected world can make or break a company. The traditional hierarchical organization chart with the few decision makers on top and the worker bees on the bottom does not fit well with a complex and adaptive nature required to compete in such a fast-paced environment. Why? It takes too long to make decisions.

Marcia Blenko, leader of Bain & Company's Global Organizational Practice, believes that the decision making process comprises the basic unit of an organization. In Marcia's interview with Harvard Business Review she discusses how companies can make better decisions faster. Her company proved their theory that making better decisions effectively increases financial performance across the scope of global corporations. In other words, businesses of all sizes and scope operate at a higher efficiency level when making the right decisions faster.

Marcia defines decision effectiveness by using four key points. These are:

• Quality - are you making good decisions?
• Speed - how fast is your decision making process?
• Yield - how well do you execute the decisions you make?
• Effort - how much effort does it take to implement your decisions?

Using these key points and answering the respective questions can create an idea on how well an organization makes decisions. A company can be great at making good business decisions, but it may take them for ever. Another company might be amazing at making important decisions quickly, but doesn't take the time to ensure they are making the right decisions. According to Marcia, in order to move towards an effective and efficient business model a company must function well in all four of the key points of decision making. Each key point can be dissected into many separate parts that make up the whole. Filtering out the processes that make up a quality decision or the speed of how it is made ultimately will enable an organization to become more effective in making good decisions faster.

The data gathered from Bain & Company's Global Organization Practice shows that organizations that fire on all cylinders in regards to making good decisions faster also have a high employee engagement as a result. A more complex and adaptive organization utilizes its many resources to make its decision making process. Employee involvement in this process rewards the efforts of everyone involved in making a good decision for the company, and keeps people engaged. There is a connection, or ownership, of the decision when employees are encouraged to do the research, make suggestions, and help to implement the decisions they make. 

There are obstacles to the decision making process in a complex organization. When you flatten out the traditional organizational structure it may become difficult to know who actually has the decision making power. Is the right information getting to the right people? Do the people making the decisions have the talent and capability to make the right call? Is the leadership behavior indicative of making good decisions? The answers to these questions could help an organization gain a true idea of how decisions are actually made, or pinpoint where changes would be helpful in the process.

Marcia describes five steps to making good decisions faster. The first step is to know where your organization is at with the decision making process. Taking a hard look at any barriers within the process will enable leadership to assess areas that may need to be changed. Secondly, can the company identify critical decisions? Not all decisions are huge, change-the-world type decisions. Identifying and prioritizing decisions can help speed up the process. Next, identify what the decision is, who has the ability to make it, why the decision should be implemented, and when. Understanding these aspects of making decisions can enable the right people to make the right decisions at the right time. This is followed up with a sound support structure. It is important for the decision makers to know they have the support they need to turn the decisions into action. And finally, how well is the decision executed and being followed. Supervising the outcome is a good way to ensure you are receiving the desired results of a decision.

My understanding from Marcia's research and thoughts is that how well a company makes decisions in an appropriate amount of time is a good benchmark for the operational ability of an organization. Nothing stifles innovation and making sound business decisions more than a bunch of red tape. Reducing the obstacles in the process is a good thing, and organizations that streamline their decision making processes will rise to the top. In my business world it is important for me to gather as much information as I can to make logical suggestions to the owner of the company. The better I become at presenting sound and logical decisions along with a game plan to implement and supervise the results the more freedom I will have to make the decisions for my store. There is a level of risk in making any decision. However, taking what Marcia Blenko describes as the keys to making better decisions faster I am better equipped to the make the right decisions quickly and effectively for my organization.

JP