Decision Frameworks Help (Fast-growing) Companies
As a business grows and becomes more complex, a decision-making framework can provide effectiveness, transparency, and inclusiveness.
In a sense, decision frameworks focus on what to do before making a choice. It is an opportunity to generate the best ideas, have appropriate feedback, and define a decision’s importance.
Flourishing businesses are often action-oriented. Entrepreneurs, managers, and contributors dive in when they see a need.
This agility can be beneficial, but before long unilateral decisions — especially when strategic or irrevocable — could cause problems. Work doubles, communications become muddled, and customers are befuddled.
In response, a business leader might choose to become a dictator of sorts.
The top manager inserts herself into every important decision, often behind closed doors or in small groups.
There are advantages to being a dictator. Decisions are quick. The entrepreneur is pleased. And it’s clear who guides the company.
Voltaire, the 16th-century French philosopher, seemingly had this approach in mind when he said, “The best government is a benevolent dictatorship tempered by an occasional assassination.”
It’s the occasional assassination that should trouble entrepreneurs.
Business dictatorships come at a cost. The entrepreneur might not always — or even often — make the best choices. Some decisions will come as a surprise to employees, who could feel unheard or even angry. Marginalized folks might leave.
A better option is a decision-making framework, wherein an entrepreneur or manager develops and shares a plan describing how key decisions are made and who makes them.
This approach has a few assumptions.
It assumes that good ideas, thoughtful insights, and detailed analysis can come from anywhere within the organization — a “decision meritocracy.”
The approach also assumes that including employees creates effectiveness and stability.
It finally assumes that employees can express unpopular opinions without fear.
Here’s an example.
Say the chief revenue officer at a fast-growing company with about $30 million in annual sales hears complaints from several middle managers that a popular customer segment isn’t profitable enough.
This category of buyers represents prominent users that “elevate” the brand, but as a cohort they:
- Have a high customer acquisition cost,
- Have a low lifetime value,
- Are expensive to service, and
- Take up the lion’s share of the company’s content marketing and social media efforts.
Many employees would be impacted if the CRO suddenly chose to stop serving the group. But if he retained the segment without discussion, the aforementioned middle managers would grumble.
Fortunately, the company had a decision-making framework. It deploys the framework when a leader feels a decision is important.
Here are the steps.
Work in public. The CRO posts a description of the problem and shares it with the entire staff.
- Explains why the decision-making framework is useful,
- Lists stakeholders who will take part in small group discussions,
- Names the ultimate decider, and
- Creates an opportunity to post comments or request inclusion in the small groups.
Research and planning. One or more small groups collaborate. Participants research, employ tools such as a decision matrix, and list the pros and cons of each choice.
Collectively, the group defines several nuanced options, such as reducing investment, increasing investment, or changing directions entirely.
Decision pitch. The CRO will post the options of the small group. She will include the underlying research. And she will specify the date for a vote.
Comment period. Anyone in the business will have time to post comments. Even the newest employee in the warehouse has a voice.
A non-binding vote. The entire company will vote publicly, perhaps for multiple options or ranking the choices.
The vote is tallied.
The decision. In the end, the designated person posts her decision. It does not have to match the voting, but it should include her rationale.
Not everyone is happy with the choice, but no one is surprised. All had a chance to participate.
The decision framework was:
- Effective, benefitting from company-wide input.
- Transparent, making clear who made the decision and why.
- Inclusive, all team members participated.
I based this example on my experience with a company. By no means is it the only way a decision framework can function.
There are many such frameworks. A thoughtful entrepreneur might do a bit of research.
One place to start is with the Open Decision Framework. Red Hat, the open-source software company, developed it for internal use several years ago and then released it publicly for everyone.
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