Leading by Decision making

2019 . 12 . 09
Times of changes

One thing that differentiates our current age from any other historical period is its sheer speed. Never before were forces of globalization, new technology and deregulations forming environment with this amount of changes going this fast.

In this state, both risks and opportunities are jumping in front of companies faster than ever, and companies must react to them before everyone else does. Whether it’s the newest technology, arising customer need, or the latest marketing trend potential. 

This provides plenty of opportunities for disruptions, that companies – especially startups and new tech firms – are happy to grab. When they can position themselves well fast enough. Research even found a direct link between the speed of a company’s decision making and actual profits.

Plenty of organizations, however, didn’t change that much. Especially older, massive corporations that cling to 5-10-year plans and strategies. These barely make sense in this day and age, when we can’t predict how will the market look like next year. Much less, how will it look in five years?

Now, there is nothing inherently wrong with planning itself. As the famous quote attributed to D. Eisenhower goes ‘plans are useless, but planning is indispensable’. It is useful to look into the future and imagine where you’d like to be, and where would you like to set up goals and boundaries. 

But plans that are fixed, rigid and require long and expensive analysis, can end up being worthless.

Decision-making practices, in particular, are proving to be outdated in these times. Which is a big shame, because it is precisely today’s dynamic-rampant environment that heightens the importance of effective management, while most of the tools and approaches to decision making are just not up to snuff.

Leading on the fly

A new paradigm of leading appears across the literature. The way the company is heading is determined not by predetermined strategy alone, but by allowing stakeholders to lead it themselves. By empowering them and positioning processes in such a way, that would allow quick and quality decision making on the fly. Organization lead will have more freedom to chase appearing Opportunities and avoiding threats, as opposed to following long-term rigid plans and leaving companies strategy in danger of becoming obsolete. 

This is very much in line with the whole Agile paradigm based on iterative development and often recalculating plans, depending on the circumstance but on a whole different scale.

Change is coming with paradigms as well as with the tools. For example:

  • Enterprise systems with their dynamic dashboards and BI systems, tracking trends and markers
  • Peter Dousek’s project ‘Stories’ going even further to use AI analysis to identify specific pain points to solve each day
  • Even behavioural frameworks such as Cynefin or tried and true like the Vroom-Yetton model structuring day-to-day decisions

This, however, doesn’t work with simple planning meeting or strategy consultation but require altering organization functioning as a whole. The bigger the company, the more difficult that would be.

Conclusion

Since this is a holistic approach, to reap all benefits requires more than just a quick switch in leadership:

  • It requires building processes with the right mindset together with empowering users to actually make the decisions. That must go along with actively promoting a culture that would allow these decisions to be quickly put into action, so they are not stuck behind byrocracy and political roadblocks.
  • Being able to identify opportunities and risks in companies’ environment, both by available tools and enough resources to pay attention to them. Most of the problems today is not having too little data, but having too much, and not being able to find what’s actually relevant. Along with that, the amount of operative work may hinder users to find the really useful info.
  • Having the right users who have enough foresight and self-awareness to make these decisions. Strategic decisions are one of the most difficult, due to complexity, time constraints and basically no way to learn due to huge time-lag between decision and its impact. Not every manager may be suited to fill this role.

This alone brings another whole suite of risks, and most definitely won’t be for all organizations. However, in this day and age, it’s either about accepting risks from reorganization and transformation within the company or accepting the risk that the company will become obsolete in the face of coming change.

 

Ref:
GORZEŃ-MITKA, Iwona a Małgorzata OKRĘGLICKA. Improving Decision Making in Complexity
Environment. Procedia Economics and Finance [online]. 2014, 16, 402-409 [cit. 2019-10-25]. DOI:
10.1016/S2212-5671(14)00819-3. ISSN 22125671. Dostupné z:
https://linkinghub.elsevier.com/retrieve/pii/S2212567114008193

MONTIEL CAMPOS, Héctor, Francesc SOLÉ PARELLADA, Francisco Alfonso AGUILAR VALENZUELA a
Alejandro MAGOS RUBIO. STRATEGIC DECISION-MAKING SPEED IN NEW TECHNOLOGY BASED FIRMS.
Review of Administration and Innovation – RAI [online]. 2015, 12(2), 130-152 [cit. 2019-10-25]. DOI:
10.11606/rai.v12i2.100336. ISSN 1809-2039. Dostupné z:
http://www.revistas.usp.br/rai/article/view/100336

Huber, G. P. & McDaniel, R. R., 1986. The Decision-Making Paradigm of Organizational Design.
Management Science, 32(5), pp. 572-589.

Fotr, J., 2012. Tvorba strategie a strategické plánování: teorie a praxe. 1 editor Praha: Grada
Publishing.

Pavel Pohorelec, ServiceNow Consultant with a focus on the technical solution of ITSM and ITBM. Pavel is an absolvent of Information Management degree from the University of Economics in Prague and he is curious about processes and psychology. Reading and climbing mountains are Pavel’s passion.

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