STRUCTURING FOR DECISIONS:
A BETTER WAY TO EXECUTE WHAT MATTERS
TERRA FIRMA, DECEMBER 2013
A company’s performance is the sum of the decisions it makes and the actions
it takes. Structuring your organisation to optimise decision-making and
execution will achieve better results – but how do you do it?
Organisational structures are designed to simplify decision-making,
so when the lines of communication fail we focus our attention on the
organisational chart. However, many reorganisations fail to deliver meaningful
improvement in performance, so it is clear that the link between structure
and performance lies beyond rearranging who sits where. Changing a company
depends just as much on improving the quality and execution of decisions as it does on the
redistribution of people. When we view organisations in this way, the focus for change management
must move away from structures and systems, and towards understanding how to make decisions
more quickly and effectively than those around us. Whether your organisation needs to innovate,
consolidate or simply adapt - the change challenge must be aimed at enabling decision makers to
make and execute the decisions that matter.
There are three key elements to successfully structuring for effective decision-making:
1. Identify the ‘critical decisions’ – work out which are the decisions that matter, and focus
change efforts on them
2. Identify and enable your high achievers – find them, and get them into the roles that
make the critical decisions
3. Measure and repeat – ensure you have a repeatable model to help people develop the
new behaviours and reward people who are making a difference
This is not a simple sequential process – often steps 1 and 2 need to be done iteratively until
identifying the critical decisions and the best people to be the decision-makers becomes engrained
in the company culture. Once you have the best structure to optimise decision-making, we need to
revisit these elements as the model is developed and as major changes or strategic choices arise.
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The critical decisions
Organisations cannot immediately focus on every decision that needs to be made – the resources,
time and finances never stretch that far. To drive successful initiatives and a successful business, we
must start with the decisions that matter most – the critical decisions. Many organizations struggle
to create a clear context for the decisions employees must make and fail to define their priorities
specifically enough to allow people to make trade-offs. To know what to execute, we need to
measure what is most important for success. A simple approach to measuring what is most
important is to analyse the two key factors of decisions – value and leadership.
Value
We can measure the value of a decision and how important it is by asking
the question - “What’s at stake?” Every decision involves risks and opportunities.
To understand value we must analyse what will happen if the organisation gets the
decision right - and equally; what will happen if we get it wrong! Importantly, this is not just about
strategic choices, but also involves the key operating decisions that are made frequently and that
generate a huge value over time. For example, key initiatives to improve processes at an operational
level in industries such as manufacturing often add up to enormous savings over time. Getting this
type of critical decisions right can be just a valuable to an organisation as decisions on new marketentry or downsizing.
Leadership
Leadership, in this context, focuses on analysing what capabilities and management influence is
needed to make a decision effective. This helps us understand who needs to be involved in terms of
both seniority and the appropriate spread of expertise and influence across the organisation. Most
organisations understand that decisions take multiple people and a clear set of roles and
responsibilities needs to be developed when understanding the impact of leadership on the decision
making process. It is critical to separately consider what level of leadership is required to get the
decision right, and what leadership is required to successfully deliver on that decision. Remember,
just because a decision has the potential to create enormous value does not mean the CEO is the
right person to make the choice and won’t always be the right person to deliver on the decision.
Case study 1: An Australian based IT company grew rapidly in a short time frame creating a number
of issues related to customer management and the ability to adapt services and products. The focus
was on solving issues at the team and customer level, however management quickly realised they
needed a better solution. After analysing the value being lost due to these recurring issues across
multiple clients and the level of leadership required to make the organisation-wide change, a critical
decision was identified. The organisation needed to either continue leaving customer management
responsibility to company-specific teams, or take on a bold new strategy that would improve
customer management across all clients. The company focused on aligning service management and
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customer management across every client-facing team to accommodate growth and organisational
efficiency. Senior management identified the key decision implementer to drive the change and built
a high performance team to realise the new way of doing things. The alignment focused a new
Customer Management Team to deliver a high-value, highly coherent experience across all clients
achieving industry leading results in Customer Satisfaction.
Once the value of the decisions and leadership required to make and implement the decisions are
analysed and understood, we can communicate the top priorities for the organisation to succeed.
The goal is to be clear and explicit about the top priorities and what that means for everyone in the
organisation.
Identify and enable
Implementing critical decisions requires the right people making a big impact. Key decision-makers
are required throughout the organisation and must be enabled to make the right decisions and
execute them quickly. Most organisations have models for identifying high achievers and it is
important these people are aligned with the decision making process for all critical decisions. How
many high performers are in the key roles for your organisation’s critical decisions? When we look at
our organisation from this perspective it changes the way we think about talent and radically
improves the utilisation of the best people.
However, getting the right people in the right place can only be effective if an organisation enables
its key decision makers to make quick and good decisions in whatever place in the organisation
structure they exist. Two key areas to focus on are ownership of delivery and decision roles.
Ownership of delivery
Ownership of delivery is a straightforward concept but poorly executed in many organisations. If
those who make the decision are not responsible for delivering on that decision, then the chances
for success are dramatically reduced. Ownership of delivery works when we align decision-making
with decision execution to ensure accountability. A classic example of this problem occurs when a
group of experts is introduced to make significant change and improvement, create a set of
recommendations and walk away before anything has been successfully changed or improved.
Decision roles
Traditional job descriptions and reporting lines often say little about who should play particular roles
in major decisions. Developing clear decision roles for each decision is complex, but is a critical step
to changing the culture of decision making in an organisation. Companies need to spell out decision
roles explicitly and design simple accountability guidelines — broad principles that help.
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Companies need to spell out decision roles explicitly and design simple accountability guidelines
— broad principles that help managers know where decisions should sit. This can be a standalone
set of principles, or more effectively, integrated into the choices made in the leadership of critical
decisions.
Case study 2: Under harsh economic conditions, a large financial institution was forced to streamline
four divisions. In this case, a program was initiated with the four divisional managers to lead the
internal merger. Due to a lack of clear ownership of delivery and no direct control of each other; the
divisional mangers created an ineffective committee style process where decisions were revisited
many times and no one was accountable to execute any decisions that were finally made. The
program was a disaster. This classic breakdown in decision making can be avoided by a clear set of
accountability guidelines that identifies one of the divisional managers as the key decision maker
who is accountable for delivery and supported by their three peers who also have clear roles and
authority in the decision process.
Decision roles must reflect a company’s balance between leadership across divisions with autonomy
in execution. When coupled with clear ownership of delivery, this enables any member of the
organisation to quickly understand a decision’s progress and support the decision execution all the
way through to delivery.
Measure and repeat
For our approach to be effective we cannot glaze over the people issues - change
has to stick. The proof of this method is being able to apply the model to the most
contentious decisions at the highest levels. This requires communication of why the
changes are occurring, successfully measuring and aligning incentives, and focusing
people on making and executing the right decisions for the business again and again. The aim is to
develop a repeatable model for decisions over the long term, while also setting targets throughout
the journey that people can only achieve by changing their behaviour.
Case study 3: Coming off the back of an economic downturn, a large electrical appliance
manufacturer initiated a program to dramatically increase both their sales targets and production
capabilities over a three year period. A new CEO of the company brought the senior management of
both the manufacturing and sales teams together to agree on targets and discuss strategies. This
was the first time the manufacturing team and sales team worked together to identify clear
objectives and goals. A number of decisions were made and agreed by both teams. This included
simplifying the product line to enable the manufacturing team to dedicate more time to enhancing
the quality of the production line and focusing the sales team to enhance their knowledge of the
products and streamlining their incentives strategies. A clear communication strategy was put in
place between the two teams. This enabled the manufacturing team to quickly and dynamically
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change its production capabilities pending the orders coming through from the sales team. The sales
team were able to promise customers delivery on short timeframes and the team became passionate
about the products it was selling due to the increased quality and speed of delivery. The organisation
weathered the 2008-2009 downturn better than competitors, compensating for falling sales volumes
with greater revenue and in 2010 sales increased, product quality increased and overall satisfaction
of team members from both division rose. The company now had a dynamic structure that would
allow them to adapt to changing economic conditions and implement better strategic decisions
moving forward.
A repeatable model
Consistently getting the best people having the biggest impact on the key decisions requires a
repeatable model for decision execution. To develop this model we need to learn lessons and share
best practices while developing a clear understanding of decision roles. All this must happen in the
context of adapting to the specifics of our organisation and the ever-present forces of our external
environment. Here are a few classic change management techniques applied to decision execution
to help guide us towards a repeatable model for decisions:
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Pilot programs – Pilot programs help the organisation learn from real decisions and see the
frameworks and tools being applied rather than just hearing about them
Champions - To help the change stick it is important to develop decision “champions"
charged with working with business leaders to identify and improve key decisions along the
way
Leadership support - Ensure regular check-ins for senior leadership meetings to measure
what processes have changed and how, what tasks have been eliminated, and what new
work has been added
Once good decision behaviours are in the forefront of people's minds, decision effectiveness must
be firmly rooted in the overall cost and effectiveness efforts. The success of the change is in guiding
people at all levels to learn new decision capabilities, share best practices and allow the organisation
to adjust and adapt to support a new decision-oriented culture.
Measure success
Measuring decision effectiveness enforces the need for continuous improvement and helps highlight
the challenges being faced with any organisation. It is critical to measure both the overall progress
of decision-making and the individual decisions themselves. Overall progress towards improved
decision effectiveness needs to cover the quality, speed, and effort required to make and execute all
decisions. Individual critical decisions should be tracked using timetables, deadlines and
accountability guidelines.
The key driver for change using this approach is to show improvement in decision quality, the speed
decisions are executed and a reduction in unnecessary effort.
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Final thoughts
Improving the decision-making process at an organisational level is a complex undertaking.
However, a culture of fast, effective decision-making and action throughout the organisation enables
true flexibility and responsiveness. In a rapidly changing business landscape, executing the right
decisions better than those around us is the key to success.
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References and Further Readings
Axelrod, RH. Terms of Engagement: Changing the Way We Change Organizations. Berrett-Koehler Publishers,
2000.
Blenko, M, Mankins MC, Rogers, P. "The Decision Driven Organization." Harvard Business Review, June 2010,
pp. 55-62.
Blenko, M, Mankins MC, Rogers P. Decide & Deliver: Five Steps to Breakthrough Performance in Your
Organization. Harvard Business Press, 2010.
Davenport, TH. "Make Better Decisions." Harvard Business Review, November 2009, pp. 117-122.
Garvin, DA., Roberto, MA. "What You Don't Know About Making Decisions." Harvard Business Review,
September 2001, pp. 108-116.
Kotter, JP, Cohen, DS. The Heart of Change: Real-Life Stories of How People Change Their Organizations.
Harvard Business Press, 2002.
Lawler, EE. III, Worley CP. Built to Change: How to Achieve Sustained Organizational Effectiveness. Jossey-Bass,
2006.
Mintzberg, H. The Rise and Fall of Strategic Planning: Reconceiving Roles for Planning, Plans, Planners. Free
Press, 1994.
Neilson, GL., Martin KL, and Powers E. "The Secrets to Successful Strategy Execution." Harvard Business
Review, June 2008, pp. 61-70.
Rogers, P, and Blenko, M. "Who Has the D? How Clear Decision Roles Enhance Organizational Performance."
Harvard Business Review, January 2006, pp. 53-61.
AUTHOR:
Cyndi Dawes, Terra Firma Pty Ltd
Contact Us
If you require further information on the above article or have any questions, please feel free to contact us at
info@terrafirma.com.au.
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