Executives sixty years ago could expect their companies to last a lifetime. Executives today will see half of the S&P 500 disappear in the next decade. The business world is in a digital churn of creative destruction. As McKinsey calls it, we are in the Age of Urgency.
The decision cycle sets the speed limit for your business. Companies with decisive cultures will thrive. What steps are you taking to rev up your decision practices?
Revving Up Your Decision Cycle
Decisions run in a continuous cycle of gathering information, making decisions and driving execution.
It’s common for managers and executives to spend days or weeks deciding what to do. That was fast enough in the pre-digital world of top-down decision making. But in the Age of Urgency companies are flooded with real-time information. We execute as global teams with the potential for instant communication. That’s why in our digital world, decision-making is the new bottleneck.
Digital speed requires a new view of what it takes to create a decisive culture:
1) Track The Truth
Without record keeping of who decided what and why, executives and managers lack a source of searchable truth. Without a single source of truth, good decisions get re-hashed in spirals of delay, bad decisions fester, and decision-makers keep re-inventing the wheel without the benefit of past experiences. Companies must digitize their decisions to operate at digital speeds.
Looking to start now? Use a Decision Log. Teams that track decisions become more decisive as the people get and stay involved. Plus, when leaders communicate decisions consistently, execution and follow-through improves, and teams react faster when decisions go wrong.
2) Push Power To The Edge
In a much faster world, new problems emerge all the time. Situations change too rapidly to “run it up the chain” for guidance. Organizations have to shorten decision cycles by pushing decision-making power to the edge of the company, where what Deloitte calls frontline workgroups have the best information, the greatest motivation and the shortest problem-solving loops.
Frontline workgroups are how companies engage with customers, partners and competitors in the Age of Urgency. If their decision cycles are bogged down waiting for someone else to decide, they will be overrun.
3) Be Transparent
Executives who push decision-making out to the edges must overemphasize openness, visibility and accountability when making and communicating decisions. Ray Dalio claims that transparency is critical for independent thinkers to make the best decisions. Lack of transparency leads to poor communication beyond the people who were in a particular decision-making meeting. Decisions trickle out in a game of telephone. Stakeholders lack crucial context about the choices considered, people involved, and results expected.
Without transparency, people get left in the dark. They disengage. And disengaged people are slow.
4) Nudge To Align
For a long time, executives relied on information technology to perfect decision-making. But the reality of human behavior doesn’t fit in a box. This year the Nobel Prize winner in Economics proved that people are predictably irrational, and so small nudges can make a big positive difference in our decision making. Our Cloverpop research shows that decision checklists can improve decision alignment and outcomes by 20%. And nudging towards more inclusive decision-making teams results in better choices 87% of the time by avoiding groupthink and eliminating execution friction.
Business people make more decisions than ever before. The Age of Urgency demands that companies use behavioral science insights to make those decisions better and faster.
5) Embrace The Pace
The Age of Urgency will push us past our limits. If we stay slow, our work lives will be filled with more confusion and churn. If we get fast, we will feel clear and in control. As Jeff Bezos recently said in a letter to his shareholders, “Speed matters in business – plus a high-velocity decision-making environment is more fun too.” Companies that find ways to make better, faster decisions will have all the fun. The rest will likely vanish.