In recent years decision makers in both the public and private sectors have made an astounding number of poor calls. The list of examples will be never ending if anyone starts to pen down those examples. So let’s not waste time in citing examples. Let’s get into the core issue as being carried in a recent article published in 'Harvard Business Review'.
Why this decision-making disorder? First, because decisions have generally been viewed as the prerogative of individuals—usually senior executives. The process employed, the information used, the logic relied on, have been left up to them, in something of a black box. Information goes in, decisions come out—and who knows what happens in between? (The black box deserves some unpacking). Second, unlike other business processes, decision making has rarely been the focus of systematic analysis inside the firm. Very few organizations have “reengineered” their decisions. Yet there are just as many opportunities to improve decision making as to improve any other process. Recent popular business books address a host of decision-making alternatives.
However, although businesspeople are clearly buying and reading these books, few companies have actually adopted their recommendations. The consequences of this inattention are becoming ever more severe. Organizations must help their managers employ better decision-making processes. Better processes won’t guarantee better decisions, of course, but they can make them more likely. One can improve decision making in following steps:
Identification - Managers should begin by listing the decisions that must be made and deciding which are most important. For example, “the top 10 decisions required to execute our strategy” or “the top 10 decisions that have to go well if we are to meet our financial goals.” Some decisions will be rare and highly strategic. Without some prioritization, all decisions will be treated as equal—which probably means that the important ones won’t be analyzed with sufficient care.
Inventory - In addition to identifying key decisions, you should assess the factors that go into each of them. Who plays what role in the decision? How often does it occur? What information is available to support it? How well is the decision typically made? Such an examination helps an organization understand which decisions need improvement and what processes might make them more effective, while establishing a common language for discussing decision making.
Intervention - Having narrowed down your list of decisions and examined what’s involved in making each, you can design the roles, processes, systems, and behaviors your organization should be using to make them. The key to effective decision interventions is a broad, inclusive approach that considers all methods of improvement and addresses all aspects of the decision process—including execution of the decision, which is often overlooked.
Matrix management is a structure for running those companies that have both a diversity of products and a diversity of markets. In a matrix structure, responsibility for the products goes up and down one dimension and responsibility for the markets goes up and down another. This leaves most managers with a dual reporting line: to the head of their product division on the one hand, and to the head of their geographical market on the other.
