Better Decisions for Your Company – 1

Several years ago Marcia Blenko, Michael Mankins, and Paul Rogers (all Bain consultants) wrote a book called Decide & Deliver – 5 Steps to Breakthrough Performance in Your Organization. Recently, they converted it into a white paper. Since their research provides important clues for improving decision making, I’d like to summarize it today and tomorrow. I hope it will encourage you to read more – it’s useful stuff.

Step 1 – Score Your Organization. Most of us don’t give our organizations a grade for the quality of our decisions. But we rate ourselves on most everything else, so why not decision making? The authors suggest a broad survey of managers and employees, followed by face-to-face interviews. Ask four basic questions:

• Quality — How often do you choose the right course of action?
• Speed — How quickly do you make decisions versus competitors?
• Yield – How often do you execute decisions as intended?
• Effort – Do you put the right amount of effort into making and executing decisions?

These are simple, straightforward questions but I suspect that most of our organizations don’t give much thought to them. Once you’ve gathered the information, Bain has a database of companies to benchmark against.

Step 2 – Focus on Key Decisions. You can’t evaluate every decision, so identify the critical ones in two different categories: 1) Big, high-value strategic choices – most of these are obvious. 2) Operating decisions that “are made and remade frequently and generate a lot of value over time.” These are less obvious but might include things like merchandising decisions. Companies often make millions of merchandising decisions; shifting even a small percentage from “bad” to “good” can make a huge difference.

To identify the most important decisions, consider two key attributes:

• Value at stake – don’t forget to multiply value by frequency. Doing so will help you identify high-value operating decisions.
• Degree of management attention required – can the decision be pushed down the hierarchy and out toward the customer or does it percolate upward? Decisions that require a lot of attention often provide “greater scope for improvement.”

The authors also suggest using the Decision X-Ray. When a decision goes bad, don’t just fix it. Study how the decision was made and identify the factors that caused it to fail. Then apply the lessons to future decisions.

Step 3 – Make Decisions Work. Four elements here: What, Who, How, and When.

• Clarify the What – don’t just focus on “whether-or-not” decisions – as in, “We need to decide whether or not to buy Company X”.  Expand the decision, as in “What’s the best way to invest our capital?”

• Determine the Who – consider the acronym RAPID and identify people who need to Recommend, others who provide Input, others who need to buy into or Agree to the decision, someone(s) to make the final Decision, and others who Perform or execute the decision.

• Understand the How – how will you make the decision … by popular vote? By consensus? By a key executive?

• Make the When explicit – “A schedule ensures that decisions are quickly followed by action so that things can happen rapidly and the hurdle to reopen the decisions is high.”

Tomorrow: Steps 4 and 5: Build an Organization and Embed Decision Capabilities.