In command-and-control-style organizations, decision making is reserved for managers at the top of the hierarchy. To support this structure, business analysts or IT create executive information systems to support the decision-making processes of these authorized managers.
But this model is flawed in several fundamental ways:
- Since the gatherers of the information are not involved in decision making, they often fail to provide information that is relevant to the decision at hand.
- If a decision must be made on the spot to address a real-time issue, the information that had been assembled might not reflect the changed situation and there may be no time to contact the executive decision maker.
- Decisions and their outcomes are not documented, so there is no learning from experience. Ineffective decisions can be repeated when the same situation comes up again and again.
IDC research finds that companies that are leaders in their industries have a culture that promotes fact-based decision making across the organization. This analytical orientation is needed in today’s flatter organizations where decision-making is more evenly distributed.
How can you raise the analytical orientation of the people in your organization? It turns out that commitment by line-of-business project sponsors, coupled with training, are the most impactful actions you can take.
Reinforcing a fact-based decision-making culture across groups, with training on analytical skills, is key. That’s because few decisions stand alone. It turns out that decisions tend to be connected, where the result of one can impact another.
Consider sales and operations planning in a consumer packaged goods company. In reality, this is not just one decision, but a series of connected decisions made by a range of business and IT professionals:
- Senior managers formulate corporate goals and policies that must be considered and applied by a range of business personnel who have roles in the businesses key processes.
- Marketing seeks to stimulate demand via targeted campaigns, and sales seeks to capture business in line with the promotions.
- Operational planners build forecasts that govern mid-term and current operations, seeking to balance demand, capacity, and inventory following corporate policies and goals
- Front-line personnel monitor events, then respond to unplanned exceptions (such as a new large order or stock out of needed inventory), and trigger activity by planners to revise the plan of record.
- Business analysts explore the trail of information behind the operations, looking for significant patterns that could provide early warnings (i.e. weak signals) of issues that demand a response.
Connected decisions imply that the people involved in making these decisions are connected as well. Thus decision making is a collaborative process. So all the decision makers in a domain need visibility into related decisions that have already been made, along with visibility to late-breaking information that is relevant to making the next decision.
Thus far, we’ve looked at connected decisions across various functions within an organization. But in today’s networked world, the connections go across people within and outside an organization. This brings up the next topic: information produced and used in a business network.
For more strategies that boost agility, read New Ways Of Working Toward A Better Bottom Line.