A635.2.3.RB_BorutyAlan_How Companies Can Make Better Decisions

How Companies Can Make Better Decisions

 In her eleven-minute interview with Sara Greene from Harvard Business Review, Marcia Blenko (2010) explained that better decision making has a significant correlation with financial performance.  My initial thought was of course it does.  It seems obvious that a business that consistently makes good business decisions would make more money than if it routinely made bad business decisions.  After all, that is how businesses fail.  However, the correlation is so high and so consistent that Blenko (2010) suggests that decisions should be the basic unit of organization.  In other words, build organizational structure to support making specific decisions.  That is significant.

The study also correlated employee engagement with better decision making.  This also makes sense to me.  If a company is consistently making good business decisions, it is listening to and including employees at every level in those decisions.  Approximately 60 percent of the solutions to an organization’s problems come from the lower levels of the organization (Obolensky, 2014).  When those solutions become decisions that make the organization better, the employees feel more a part of the company and that they have a say in how the company does business.  They get more satisfaction from their work and will continue to offer suggestions to make it even better (Obolensky, 2014).  "Making information available at every level increases employee motivation and permits faster decision making" (Brown, 2011, p. 67).  That is how employee engagement relates to decision effectiveness.

Consistently making effective decisions is no small feat.  There are many things that can get in the way of good decision making.  Blenko (2010) talked about how people in an organization often do not know who should make the decision which slows the process down.  Sometimes a person must make a decision and the circumstances pressure a quick decision, but they do not have enough or the right information to make a quality decision.  This happens a lot in maintenance.  No two jobs are the same and something unexpected always comes up.  Usually experience can get you through, but sometimes you need more information.  The trick is to know and respond correctly to the difference.  Blenko (2010) continued by explaining how leadership behavior could be a barrier to making good decisions specifically if they do not have open discussions.  

I had a supervisor that genuinely believed information was power.  He liked to know things before anyone else and he would use that to make himself look more important.  More than once, he received information that involved committing our team to do volunteer work on one of the commander’s projects.  He would make the decision without telling (or asking) anyone else.  It allowed him to say yes to the boss and let everyone on the team know he was our boss.  He got it wrong twice in a row; we could not do what he committed us to do.  If he had discussed his decision with us, we would have reminded him of the prior commitments he forgot about.  We could not change plans.  On both occasions he had to go to the boss and retract his decision.  I assume there was some discussion between him and the boss because it did not happen again.  Not discussing his decision or getting all the information he needed before making the decision, resulted in him making a poor decision that he ultimately regretted.

Bias is another impediment to making good decisions.  I find bias especially dangerous because often the decision maker does not know that bias has affected their decision.  Psychologists have identified scores of these bias traps that anyone can fall into and not realize it.  The result of bias can be disastrous (Neal & Spetzler, 2015).  While all bias has the potential to undermine the decision-making process, nearly three quarters of companies still have no organization-wide process for effective decision making (Neal & Spetzler, 2015). 

Blenko (2010) defined an effective decision using four measures: quality, speed, yield, and effort.  Each of the measures do seem to have merit although I am not fond of the use of of the term speed.  Blenko uses the word to describe the ability to make and execute an effective decision before the competition.  As a standalone word one might get the impression that the idea is to rush decisions just to get to the next.  Unfortunately, I do not know what else she might call it. 

I would, however, add one additional measure to define effective decisions.  I would add timing.  Timing would measure where on the scale of proactive to reactive the decision occurred.  You can consistently be quicker to the decision than the competition but still be reactive.  Yes, the decision created value but I would argue that if the timing of the decision was more proactive, it would have generated even more value.  “Proactive strategies are superior because they allow the company using the strategy the freedom to make its own decisions rather than responding out of necessity to a situation that already may be out of control” (Thompson, 2018).  Each decision should be looked at to determine what could possibly be done to improve the timing of decisions.  Being more proactive is a lesson I need to use in my daily activities.  Otherwise, someone else is making my decisions for me; I am only choosing how to do what has already been determined.

I tried to write this exercise off as stating the obvious which, for the most part, is exactly what Blenko’s (2010) study did.  However, the implications to developing an organization are huge.  Determining the decisions an organization will have to make and assigning those decisions at the appropriate level then building an organizational structure that effectively support those decisions is not obvious.  I have questions on how to predict those decisions as well as how to determine which organizational level will make the decision.  It seems like an inside-out way to create structure and I have not quite wrapped my head around the concept.  I do, however, believe the concept has merit (Blenko, et al., 2010).  For now, it is an area I need to research further.

Effective decision making requires a process developed by the top executives and taught to the entire organization (Quain, 2018; Neal & Spetzler, 2015).  Top executives make the critical decisions, but many decisions happen at lower levels in the organization.  This implies that the organization will have to become transparent internally and openly share information, knowledge, and processes (Quain, 2018; Neal & Spetzler, 2015).  I would also add that doing so sooner rather than later will likely add value to your decision.

~Pete

References

Blenko, M. (2010, October 13). How companies can make better decisions, faster [Video file]. Harvard Business Review. Retrieved from https://www.youtube.com/watch?time_ continue=23&v=pbxpg6D4Hk8

Blenko, M. W., Mankins, M. C., & Rogers, P. (2010). The decision-driven organization. (cover story). Harvard Business Review, 88(6), 54-62.

Brown, D. R. (2011). An experiential approach to organization development. Upper Saddle River, NJ: Prentice Hall.

Neal, L. and Spetzler, C. (2015, May 27). An organization-wide approach to good decision making. Harvard Business Review.  Retrieved from http://web.a.ebscohost.com.ezproxy. libproxy.db.erau.edu/ehost/pdfviewer/pdfviewer?vid=2&sid=a52f2b69-7be5-4938-a1b6-0c7e3baf5545%40sessionmgr4010

Obolensky, N. (2014). Complex adaptive leadership: Embracing paradox and uncertainty. Burlington, VT: Gower Publishing.

Quain, Sampson. (2018, June 29). The decision-making process in an organization. Small Business - Chron.com. Retrieved from http://smallbusiness.chron.com/decisionmaking-process-organization-21532.html

Thompson, S. (2018, June 26). Difference between a proactive and a reactive business strategy. Small Business - Chron.com. Retrieved from http://smallbusiness.chron.com/difference-between-proactive-reactive-business-strategy-62157.html