Decision-making in organizations has enormous room for improvement in terms of effectiveness, efficiency and quality; it must, if organizations want to survive and succeed in an increasingly competitive global environment.
Decision makers should therefore focus on certain broad areas in order to achieve this.
The first is on achieving clarity in
- what their MISSION really means,
- which are the core PROCESSES that execute their mission and
- which are the Key Performance Indicators that reveal the degree at which they create and DELIVER value to the organization’s stakeholders!
The second is on formulating a VISION for their medium to long-term future on the basis of hard, high quality information: on organizational intelligence and on competitive intelligence!
The third is on obtaining, filtering and verifying the data needed for decision-making by decision-makers. This is where technology comes into play, and where a big difference can be made by the optimal use of
> process automation following process reengineering,
> core and support process KPIs,
> analytics,
> dashboards and
> organizational and competitive intelligence applications.
The fourth is on understanding how human beings fit into and perform processes and, in particular, the decision-making process.
The last, but by no means least, is on effective leadership: the capability to achieve alignment, engagement, execution willingness and capability and implementation!
Remember:
> The best technology in the world will not help an organization, if executives do not trust it, find it difficult to use or are disposed, for some other reason, not to use it.
> There is always an inevitable tension between formalizing processes and trying to benefit from intuition. However, an organization which understands the uses and limits of both will gain an important competitive edge.
> Decision-making is at the core of all organizational activity, as executives at all levels manage mission-dictated operations and formulate and execute vision-dictated strategic projects, by weighing a vast array of factors so as to arrive at the desired balance of risk and reward.
It is cause for alarm that executives themselves perceive the quality of decision-making at their organizations as mixed at best.
In an international study,
> well over half of executives surveyed—61%—characterize management decision-making at their organizations as moderately efficient or worse, a figure which climbs to 72% for large organisations;
> nearly one in five thinks that management frequently gets its decisions wrong.
This may result in part from the greater challenges of running an organization in a period of rapid growth, but it reveals deeper problems as well.
Major conclusions of the research include the following:
1. Poor data leads to poor decisions, as we have seen in our Newsletter 39.
> Fewer than one in ten executives receive information when they need it and 46% assert that “sieving” huge volumes of data impedes decision-making.
> Worse still, 56% are often concerned about making poor choices because of faulty, inaccurate or incomplete data.
2. Culture plays a very important role in decision making.
Approaches to decision-making vary over the planet. There are distinct geographic differences when it comes to how executives make decisions, and to their reliance on technology in doing so.
> For example, Asian executives appear more likely than those in other regions to trust their own intuition and judgement, while Europeans look more strongly to the opinions of their peers.
> Asian executives also make greater use of technology to support decision- making.
> Organizations need to take these cultural differences into account as they seek to improve decision-making tools and processes.
> Detailed, uniform decision-making processes may be hard to apply across different cultures; broad frameworks describing mission and values may work better.
3. Approaches to decision-making vary depending on the nature of the organization and the status of the executives.
>There are distinct differences when it comes to how decisions are made, between private and state-owned organizations.
> It also varies between profit-making and non-profit organizations.
> Risk-making aversion grows moving from the first to the last ones. It also grows moving from internally promoted to appointed to elected executives!
4. The size of the Organization also plays its part, the challenge increasing as organizations grow.
> Executives at smaller organizations are more confident in the efficiency of their decision-making than peers at larger organizations, more reliant on people over process, more consultative and less worried about data overload.
> This is an advantage of being small.
> The ability to retain these qualities is an important management challenge for organizations especially in rapid growth periods.
5. Too much art, not enough science?
> Senior management decision-making at the majority of organizations (55%) proves to be largely informal and unstructured, with executives consulting others largely on an ad hoc basis.
> Most executives seem comfortable with these arrangements: only 29% think poor decision-making structures are a common cause of bad choices.
> This reflects a view expressed by several executives that strategic decisions always require a strong element of intuition or judgement.
6. Selected decision support tools need to be easier to use.
> Executives believe that technology can play a key role in improving decision-making, by making it quicker and easier to access and organize large amounts of information.
> This is hugely important as organizations become larger and more complex and as the volume of data available rises.
> At the moment, however, too many executives do not feel comfortable using dashboards and other IT tools that could sharpen their decision-making.
> Organizations therefore need to develop decision-making tools that are sufficiently reliable and user-friendly to appeal to even the less technology-savvy members of the management team and wider workforce.
> Intelligence applications can make a big difference.
Do remember
Successful leaders place equal importance on all five broad areas mentioned at the beginning of this article! Once, leadership “processes” are successfully implemented, IT tools and applications can help improve enormously the effectiveness, the efficiency and the quality of decision-making and, therefore, the chances of success of the Organization!
8.7.2016