Decision-making processes are broken: It takes too long to arrive at a solution, and even after spending so much time deliberating, the outcome may still be less than successful. According to a recent McKinsey survey, this frustrating process wastes 530,000 days' worth of managers' time — the equivalent of $250 million — at a typical Fortune 500 company.
Fortunately, the survey results also unearthed three practices that companies with effective decision-making processes have in common and which, if wholeheartedly embraced by an entire organization, can improve decision quality and speed.
1. Facilitate productive debate: When it comes to what McKinsey calls "big-bet decisions," the key is to encourage the team to question new proposals. These high-risk, future-shaping decisions, usually the business of high-level management and board members, require scrutiny and discussion to ensure they are the right choice for the company.
At meetings concerning these proposals, leaders can appoint a "devil's advocate" to prod and push back upon an idea, or initiate a premortem exercise in which the proposal is imagined to have failed and the team must work backwards to figure out why, identifying weak spots along the way.
Whatever the debate strategy, everyone in the room should be encouraged to examine the proposal both through the lens of their own experience and from outside of their point of view in order to reduce the harmful effects of siloed thinking and an overly consensus-driven culture.
2. Understand the power of process: In "cross-cutting decisions" — the frequent yet high-risk decisions made by unit heads and senior managers regarding things like sales, operations planning and pricing — a well-coordinated decision-making process is crucial.
The goal should be to clarify objectives, measures, targets and roles. To do so, executives must look closely at meetings within the process and make a clear separation between discussion time and decision-making time; if the purpose of a meeting is not immediately evident, it should be restructured or even eliminated.
The meetings themselves should follow a streamlined routine, too. Punctuality must be enforced, only those absolutely necessary to the decision-making process should be in the room and each person's role must be clearly defined.
3. Ensure commitment: "Delegated decisions," those low-risk, day-to-day decisions that come from individuals and teams at every level of an organization, require more than just consensus. Perhaps even more important than total agreement for successful implementation is commitment to a proposal.
It is far more necessary for a team or employee to agree to facilitate the full and effective implementation of an idea than to agree with the actual idea. Leaders should therefore focus less on building consensus around a proposal and more on follow-up, execution risks and bandwidth restraints regarding a final decision.
As a result, organizations will foster an "all-in" culture of committed employees and see a marked improvement in the speed and follow-through of an idea's execution.
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