Designing organisations for strategic decision making
When we talk to managers about organisation design, we are, initially at least, talking about the operating structure and the management structure. The operating structure shows the way in which the work of the organisation is actually organised, and the management structure covers the additional elements which sit alongside that, to bind it all into a viable whole. This includes coordination, management and monitoring of the operations, as well as consideration of requirements and options for organisation development, and the governance decisions on where, how and how fast to actually develop it.
But there’s more to organisation design than that, and a part of design is ensuring that the organisation can take well informed decisions. Disraeli said: “As a rule, he or she who has the most information will have the greatest success in life.” Yes, but. It’s not necessarily the most information, it’s about the right information. Warren McCulloch takes this a bit further: “In any complex decision network the ability to act effectively depends on an adequate concatenation of information.” So having the appropriate information, organised in a helpful way, is critical for effective decision making and effective decision execution.
In most organisations, information provision and information systems are focused on supporting the operations, not strategic decisions. Even where there are information sets which are aimed at management (business intelligence or management intelligence, for example), these are often a subset of what’s available from the operations, rather than purposefully designed to support the decisions which the managers need to take. And there’s a key factor lurking in there: managers – and organisations – take the decisions they have the information to take. So what information is provided actually shapes the decisions. Good, pertinent information can deliver better decisions, and the reverse is also true.
The place to start is with the decisions themselves: what decisions do the management team need to make? And having clarified that, there are two things to get right, to enable good strategic decision making. One is about the information structure, and the other is about the organisation structure. For an effective decision process, there needs to be a clear place (person or team) in the organisation which is accountable for taking that decision. This provides ownership and resource organised to take a decision and without this decision taking simply doesn’t happen. (Ever tried complaining to an organisation which doesn’t have anyone accountable for customer complaints? There literally is nowhere for your complaint to go, as no one is accountable for taking decisions about it). So with a clear organisational focal point for the decision, and the right information set, presented in the right way.
Getting balance in the information set is critical. Most organisations have more information about recent and current operational performance (inside the organisation, here and now) than about long term market trends (outside the organisation and into the future), and given that organisations take decisions based on the information they have, this asymmetry in information creates bias before the decision makers even gather together for the decision process. The internal performance data, current and historic, tends to be ‘hard’ and factual. The information about the environment and about the future tends to be ‘soft’, such as forecasts and scenarios. They are very different in nature, but both are essential inputs for balanced decisions.
The final element to design is about speed. To survive, any organisation needs to move and adapt at least as fast as the changes in its environment (and faster than its competition, too, if it’s in a competitive situation). So the cycle time for the decision-action cycle (informing the decision, making the decision, implementing the decision) needs to be congruent with the speed at which the organisation needs to move. So the speed of information provision and refresh is also important.
Successful decision making, then, needs all of
- clarity on the critical decisions
- aligned and linked organisation and information structures to support those decisions
- decision-action cycle times which are fast enough for the rate of change in the environment.