When did you last evaluate your business decision making processes? Companies that make better and faster decisions and execute them before their competitors are the ones that win the business race. It’s that simple. Despite this many companies don’t review their decision-making capabilities. They don’t know how they compare with the competition, and they can’t tell whether they are improving or not.
High-performing companies make high-quality decisions. But they also make those decisions faster than their competitors, turn them into action more effectively and devote an appropriate amount of effort to the process. People need to know how well (or poorly) they perform in all of these categories—decision quality, speed, rate of return and effort.
Many organisations fail to make and execute their critical decisions well. Some vacillate. Others make poor choices or never execute their decisions. For decisions with a great deal of value at stake, the cost of these failings can be high.
Sometimes companies struggle over small but critical decisions that can create problems later. One pharmaceutical company found that sluggish decision procedures slowed its product development, creating unnecessary review processes. Once it had identified the unnecessary elements in the decision-making process the company could find and remove decision bottlenecks and get its products to market faster.
Meetings should be effective forums for discussing or making decisions, but often they are not. Top-performing companies set decision-focused agendas, beginning meetings by specifying the decisions to be made and who is accountable for them. Then they measure performance on these dimensions. A semiconductor company, for instance, tracked its R&D forums—groups charged with developing new products—to determine the number of decisions each forum made, the number of decisions it delayed, and the number it revisited over a given time period. The company also tracked the frequency of escalation to a decision maker higher up in the organisation. The data helped people learn to increase decision speed, cut back on reconsiderations and reduce escalations.
Companies can assess individuals’ decision-making skills in their regular performance evaluations. They can also track the behaviours that are central to effective decision making and execution, such as people’s willingness to engage in open and constructive debate or their willingness to commit to a decision even when they disagree with it. Some companies link directors’ bonuses to a range of decision metrics, including overall quality, speed, yield and effort. The measurements and incentives encourage individuals to develop their own decision skills and to build organisations that make and execute decisions well.
Good decision processes are as essential to businesses as good production processes. But if you don’t measure the effectiveness of your company’s decisions, how can you improve the process?
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