Decision Sclerosis

Recently I've been hearing companies lament that they're no longer as nimble as they once were. Decisions require more meetings and take longer. People at all levels are frustrated because they can't implement new ideas quickly. Even the simplest issues seem to require endless rounds of discussion and debate. Eventually, the organization is either outflanked in the market, or talented people leave to find opportunities with faster-moving companies. I see at least two causes creating this problem. First, as companies get bigger and there are more zeroes attached to their budgets, the risks inherent in any decision seem to grow. It's one thing to screw up the colors on a running shoe when it only sells 8,000 pairs; it's quite another to screw it up when it accounts for 800,000 pairs. You really want to be sure that the fluorescent colors of the 80s are back before plastering them all over your new high-end shoe, and as a result, you end up consulting with sales, marketing, manufacturing, account management, IT -- pretty much anyone who has even the most tangential relationship to the product.

The fallacy here is that compared to the scale of the business, that product or initiative isn't really any more significant or risky. It's not the absolute number that's important; it's the relative number. A $5000 investment decision for a start-up is just as meaningful and fraught with danger as a $5 million decision for GE -- maybe even more so, since GE can absorb that loss without going out of business.

Second, as organizations get bigger, consensus rather than action becomes the driving force. When companies are small, everyone either sees eye-to-eye (that's why they're there, after all), or they're at least comfortable with the inevitable interpersonal conflict. But as organizations grow, employee diversity grows, and management is increasingly sensitive to the need for harmony and agreement. People may have the titular authority to make decisions, but in reality they don't: they have to gain consensus before acting. If one group doesn't agree, nothing proceeds.

The problem here is that when no one has the power to make a decision, either nothing gets done, or everything gets pushed up the the CEO for a judgment. Neither option is acceptable. Decision-making authority must reside with individuals within an organization, not be diffuse within a group.

So what is to be done? Establishing clear decision-making criteria is an important start. Set thresholds based on money, say, or risk for involving other groups. Also, allow some decisions to be made by majority, rather than consensus. Neither of these are easy changes to make, but if you don't want to become a sclerotic, lumbering dinosaur, you'll have to pursue these changes at some point.