One of the characteristics that makes us uniquely human is our ability to process information, make decisions and learn from the results of those decisions. However, the advent of the digital age has introduced a radical new element into the decision-making equation especially in the corporate environment.
Today it is possible to access a seemingly limitless amount of data almost instantaneously. However, along with the need to wade through the daily media blitz comes the need to convert information into decisions and then into action at the "speed of thought." In this high-speed unforgiving environment, decision success or failure often falls straight to the bottom line.
How are managers and workers coping with the need for greater speed in decision making? And how are companies balancing the requirement for speed with the concomitant need for quality?
To answer these questions, Kepner-Tregoe, Inc., a management consulting firm specializing in strategic and operational decision making, worked with Yankelovich Partners to complete a study surveying 818 employees, 479 managers and 339 workers nationwide.
Overall it was clear from their responses that, on all levels and across all industries, U.S. decision-makers are under pressure to keep up but are, too often, sacrificing the quality of decision making in the process. Digital age decision-makers are not making the most of what is available. Decision-makers are often unable to gather sufficient information, they're doing a poor job of sharing that information and they're failing to involve the right people in the decision process.
Here are some of the key findings of the survey:
More decisions are being made in less time. Both managers and workers are being called upon to make an increasing number of decisions in the same or less time. Sixty-five percent of workers and 77 percent of managers say that they are being called upon to make more decisions in any given workday. At the same time, most also agree that the amount of time they have to make these decisions has either decreased on stayed the same.
Respondents say they are missing opportunities. Despite the pressure to make speedy decisions, nearly three-quarters of workers and four-fifths of managers say they miss opportunities because they don't make decisions quickly enough. Most also agree that decisions are frequently not implemented in a timely fashion.
Many feel as if they are losing the race. When asked to compare the speed of their organization's decision making to that of rivals, only one-quarter of workers and less than one-third of managers said they are moving faster than their competition.
Many of the barriers to speed are human barriers. When asked to identify the most common factors that retard decision making, workers and managers were in close agreement, citing the need for multiple approvals as the most frequently encountered barrier. Other common roadblocks are organizational politics, changing priorities and getting people to agree up front on what they want the decision to accomplish.
Information technology (IT) clearly has a widespread influence. When asked specifically where IT has become the most important source of information for decision making, both workers and managers listed budgeting/finance, purchasing and customer service followed closely by daily product management, quality/productivity, personnel/human resources and process improvement.
Sources of information are constantly changing. When asked where they get the information upon which they base their decisions today (compared to three years ago), both workers and managers described a major shift from real to virtual sources. Not surprisingly, the most dramatic change has been in the increased use of e-mail. Most also agree that not only has the quantity of information increased, but the quality of the information has increased as well.
Decision-making amnesia is rampant. Organizations are not very effective at preserving their decision- making experiences. Of those who said that their organizations do have a system in place to house decision criteria, 77 percent of workers and 82 percent of managers said they couldn't assess the utility of their database.
Of course, while speed is a challenge to all, some companies are coping even thriving. We focused our qualitative research on the bright spots of the decision-making landscape. Based on their stellar financial performance, continual growth and excellent reputations all indications of consistently superior decision making we selected 12 Decision-Leaders: The AES (Applied Energy Systems) Corporation; Robert Bosch GmbH, Australia; Citigroup Inc.; Corning Incorporated; DaimlerChrysler AG; Fuji Photo Film, U.S.A., Inc.; The Home Depot, Inc.; Honeywell; Intel Corporation; Johnson & Johnson; Novell Inc.; and Oracle Corporation.
In-depth interviews with key decision-makers at each of these companies were conducted to determine precisely how they have been able to hold in dynamic tension the often- conflicting requirements of speed and quality. From this research, we isolated seven preconditions, each of which is common to several or all of our Decision- Leaders. Together, they provide an integrated approach to dealing with the challenges of decision making in the digital age.
Vision- Driven Decision Making
Decision making can be a gut-wrenching and time- consuming process, especially when it occurs in a vacuum. Vision helps define the playing field. When everyone in an organization is clear about the products and services it will offer, the customers it will serve and the kinds of relationships it seeks to build, there is no need to continually revisit that edgy, time-consuming question, "Why?"
When Oracle Corporation's chairman Larry Ellison announced his intent to make Oracle Corporation an e- business, the transformation involved a complete redesign of the value chain, starting with the corporation itself and then moving out to the customer. Everything in between had to be realigned and restructured. As Paul Burrin, senior vice president of Oracle Marketing, said, "People have to understand the bigger picture the strategy behind the changes so that when decisions are made, they are made in support of that strategy."
In an ideal world, decision- makers would never have to sacrifice quality to gain speed. But in the real world, trade-offs must be made. Sometimes these have few or no negative consequences; at other times they can lead to disaster. How do you know when you can safely hedge on quality in favor of speed?
When decision-leader companies are faced with this question, they fall back on an axiom: Not all decisions are created equal. Some leave no room for failure, others can be less than perfect. To determine which decisions fall into each category, decision-leaders invest a substantial amount of time setting priorities, and they are ruthless about adhering to them.
Said Alan Eusden, vice president and general manager of Corning Optical Fiber, "We are often faced with this 'speed versus quality' decision-making dilemma. The first step in our process for resolving it is to assess the business priority of the decision. That prioritization helps to determine whether we can tolerate any trade-off in the speed/quality equation."
A Decision- Enabling Culture
Culture is the pattern of norms, values, beliefs and attitudes that influences individual and group behavior within an organization. Originating with the founders of the organization, culture is shaped and honed over time by succeeding senior executives and other stakeholders. Culture filters down through the organization and is further refined and modified in the day-to-day priorities and actions of everyone in the business.
One critical question to consider is: What key attributes within an organization's culture best support digital-age decision making? In studying these organizations, we isolated three attributes that distinguish them: speed as a corporate virtue, a passion for information sharing and a willingness to take risks including the delegation of decision making.
Decision-leaders recognize that the complexity of today's business environment and the speed at which results must be achieved demand that a greater number of people assume responsibility for decision making. One of the most common actions decision-leaders have taken has been to remove layers of approval that retard decision making. Anthony Iorio, vice president and regional manager for Citigroup Global Technology Incorporated, describes the changes in his organization. "We have fostered a decision process that empowers people who, traditionally, not only didn't make decisions but weren't even asked for their input. Today, the people who work for me make decisions that five years ago were made by my boss' boss."
Redefinition of Decision Ownership
Where should the responsibility for making a decision lie? Decision-leaders continually grapple with this tough question. Decision-leaders ask two questions to help them determine who in the organization should make a decision. The first is: Who has the most relevant information about the customer or market? The second question that decision-leaders raise to determine the level at which a decision should be made is: Who will be responsible for implementation? After all, it's at that point of interface between making a decision and acting on it that speed and effectiveness count most.
Redefining decision ownership is not merely a matter of passing the baton to a wider number of decision-makers in an organization. It is also important to look at the performance environment in which decision making plays out: the roles and responsibilities, skills, tools and rewards that accompany each job.
AES, a leading global independent power producer and the number-one U.S. power-plant developer, may well be the ultimate decentralized decision-making organization. "Our leaders are not supposed to make decisions. Our so-called managers do not make decisions. They coach or give advice, and the real decision-makers in the company are the people closest to the issue," says Dr. Roger Naill, vice president.
Technology matters. Without question, it can accelerate decision making in many ways, from providing instantaneous access to vital information to facilitating communication among team members in different countries and time zones. Our decision-leaders utilize technology to compress decision-making time in a number of areas, from hiring processes to quality control.
However, regardless of how much technology matters in the digital age, people matter more. Keenly aware of the need to maintain a healthy equilibrium between "high tech and high touch," decision-leaders make wide but judicious use of digital-age avenues of communication, which for them will never replace human interaction. The sheer force of geographical expanse makes it imperative for Novell's Debbie Maucieri, vice president of education, to rely on technology to communicate with colleagues and customers worldwide. On any given day she may take part in a videoconference, several telephone conferences and the exchange of dozens of e-mail and voice-mail messages. She estimates that approximately 80 percent of her decision making is now done remotely. However, technology without the human element can create a dangerous vacuum, so Maucieri is careful to personally visit each of Novell's overseas operations at least once a year. "You actually have to go from customer to customer to listen and understand their challenges in order to be able to make decisions. You can't understand all the variables and empathize by sitting in an office thousands of miles away from the action."
Connectivity Through Process
The word "process" has many meanings and usages. When referring to the material world, people speak of an engineering process or a manufacturing process. In the mental realm, process refers to the series of steps one goes through to organize and analyze information and make judgments about it.
In either case, a process channels decision making. Having an agreed-upon, common process enables all involved in a decision, regardless of background or function, to work collaboratively toward a common goal.
Intel, for instance, knew that to remain competitive in a hotly contested market, it had to significantly shorten its product development cycle. As a result, it moved to install a company-wide product development process, the product life cycle (PLC) process, which serves as a road map on which key synchronization points or milestones are clearly marked. By following this process, everyone involved in the development knows exactly when the data is going to come together, when they are going to look at it and make changes, and how they will move forward from that point.
They Bank on Memory
Those who ignore the past are condemned to repeat its errors. Yet, when asked if their organization maintains a database of information relating to past decision making, over 91 percent of all respondents to the Kepner-Tregoe survey either said "no" or couldn't answer the question. As a result, many organizations spend time, money and effort reinventing the wheel. Such decision-making amnesia carries a high cost.
A characteristic that sets decision- leaders apart is their ability to retain information about past decisions so it can be applied to current ones. Documentation is the key to being able to learn from the past and being able to pass on information in a consistent format will help to speed decision making without sacrificing quality.
Honeywell subscribes to the belief that capturing the past is critical for the future. Data warehouses exist in many areas, including finance and engineering. Someone having a problem in one of these areas can use the company intranet to do a keyword search and access all data regarding the past problems that have been encountered and solved in that area.
Each generation of executives thinks that the challenges it faces are unique and more daunting than those faced by its predecessors. This generation is no different, and with good reason. Information technology has triggered a revolution in the way we think about and operate business organizations. In the face of this revolution, decision-leaders are working to evolve a new, integrated approach, one that combines the best of what technology offers with the power of the human intellect so that decision making in their organization is faster and better than ever.
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