Who has the "D"? - Audio slideshow with text transcript

"Who has the 'D'?" is a critical question at the heart of building a high-performance organization.

"Who has the 'D'?" is based on several years of Bain research into the topic of high-performing organizations. You can see that from our database of 365 companies, we find only a tiny minority—15 percent—have a truly high-performing organization. Twenty-three percent have a dysfunctional organization, which holds the business back, but the vast majority—62 percent—have an organization that is not broken, but neither is it truly high performance.

You can see that the defining characteristic of a high-performance organization is superior decision effectiveness. Decision effectiveness is defined as making better quality decisions, but also translating them to action and doing it with a cycle time that is, on average, faster than the competition.

In a multi-business company, decision bottlenecks can occur between the center and the business units. In an international or global business, there can be issues of decision making between the global and the regional and the local entities. A very common bottleneck is within a business across functions. And increasingly in today's world of the extended enterprise, there are issues of decision making with respect to activities that are still controlled within the company versus provided by outsource providers or franchisees.

When you look behind the decision bottlenecks, you very often find that there is a common set of root-cause issues. Most often, the problem is one of ambiguity of decision roles. Too many people think they have the authority to decide, or it's not clear that anyone does. Too many people have right of input, or sometimes too few. Decisions very often get referred up the line when they shouldn't be. Or, conversely, bad news gets suppressed when it should be made more visible.

Even if decision roles are clear, bottlenecks can occur with respect to inadequate decision processes—in particular, ineffective meetings. But also, in a complex environment, a disproportionate amount of energy gets spent trying to build consensus.

Even if roles and processes are in place, it's necessary for the people exercising those roles to behave in an appropriate fashion.

And in order to reinforce appropriate behaviors, very often a broad set of organizational enablers are necessary: for example, appropriate structure, appropriate measures and incentives, performance management systems and so on.

In addressing decision effectiveness, we have found that a very simple decision tool can be surprisingly effective. This is an acronym that we call RAPID. The letters of the acronym simply assign appropriate decision roles to the right individuals. So to work quickly through that: The "R" stands for recommend, which is the responsibility to gather and assess the relevant facts. "I" stands for input, which is the obligation of the recommender to seek input from an individual. Agree is a stronger form of "I," and the point here is that agree implies a veto power and, accordingly, should be used sparingly. A critical role is, of course, "Who has the 'D'?": the ability to decide formally and therefore commit the organization to action. And, last but not least, is the "P," which stands for perform, and that carries the accountability for executing a decision once it's been made.

To bring this tool to life, let me talk you through the example of Autoco, which is a large car manufacturer we worked with some time ago, where one of its problems was a bottleneck in the whole product development innovation process. The first step was to help Autoco identify the decision architecture down to the level of the specific decisions involved in the key processes. So in this case, we looked at what features should be standard and what colors should be offered on a new model.

The second step was to use the RAPID tool to understand the current situation—in effect, to complete a decision X-ray. As part of that, we asked a number of people within the business (in the example here, the marketing community and the product development community) who decides these decisions. So guess what: Marketing on average felt that it desides and product development on average felt that it does. It's not surprising that there was a major bottleneck: In practice, neither marketing nor product development had the decision authority. The solution for Autoco was to work through a whole series of similar decisions where there was ambiguity about "Who has the 'D'?" and help it clarify who had the ultimate decision authority and also who had the other RAPID roles to ensure effective cross-functional collaboration.

Of course, it's not as simple as that. One of the critical elements to ensure that clear roles are appropriately followed is to align the behaviors and ultimately the culture of the organization.

Finally, one of the problems our clients most often identify in addressing organizational issues of this kind is simply knowing where to start. Out of our research, we've developed the Bain organizational scorecard, which is a simple tool for benchmarking performance across the entire organizational system against our database of what is now approaching 400 companies.