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Why companies must focus more on the decision making process

Why companies must focus more on the decision making process

Companies can take discrete steps to avoid dithering and get better at making decisions and following through on them.

  • 26 mars 2012
  • min

Article

Why companies must focus more on the decision making process

It seems obvious: decisions matter. Companies that make good decisions and act on them perform well. Yet poor decision making remains a chronic problem at many companies.

And corporate dithering doesn't just hurt financial results - it also hurts people. Organizations that can't decide and deliver are dispiriting places to work.

Most of us know the signs: decisions take longer than they should. Or decisions are made by the wrong people, based on the wrong information. Worse, a company makes a good decision, but then executes it poorly—or never acts on it at all.

For the next few months, we plan to use this space to share our insights on decision effectiveness, as well as some practical examples from companies such as ABB, Ford Motor Company, MetLife and Hospira.

Over the past 25 years, we noticed that companies get better at decision making when they focus on it—and their results improve too. Bain's book, Decide & Deliver, includes a lot of research, several articles, and interesting feedback from executives about what it takes for companies to make better, more effective decisions.

Surprisingly few companies look systematically at what gets in the way of good decision making and execution. We say that's surprising because our research shows a strong correlation between an organization's decision abilities and its financial results. And we've identified an equally strong correlation between decision effectiveness and employee attitudes.

Better yet, companies can take discrete steps to get better at making decisions and following through on them. We'll discuss those steps in detail in our upcoming posts, but they include: 

Assess your decision effectiveness

As we described above, decisions can go awry in many ways. What's your company's problem? And how do you stack up against competitors?

Identify critical decisions

Since you can't focus on every decision, which are the most important? Don't just focus on the obvious strategic decisions (though of course they're important). Look for daily operations decisions that cumulatively create (or destroy) a lot of value.

Redesign individual critical decisions for success

Once you know which are your critical decisions, you can apply some time-tested tools and techniques to improve how those decisions are made.

Ensure that your organization enables and reinforces great decision making and execution

In other words, once you improve individual decisions, make sure that your organizational structure isn't undermining them.

Embed the changes in the way your organization works every day

It's just not worth doing any of the work above if you don't make the changes stick. Companies find many different ways to do that.

Improving decision making and execution is a continuous process. We plan to use this series to explore other important dimensions of decision effectiveness, such as agreeing on a decision style for your organization, creating a decisive culture, gathering the right information to make good decisions, and decision-driven strategy development. This space offers readers a deeper look at how the best organizations decide and deliver.

This article was written by Karim Shariff, Partner based in Dubai and Head of Middle East Organization Practice, Bain & Company and Jenny Davis-Peccoud, Senior Director, Global Organization Practice, Bain & Company.

Bain Book

Decide & Deliver

Learn more about the five steps that leading organizations use to make great decisions quickly and execute them effectively.

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