Leaders have many responsibilities. The COO is responsible for delivering product on time and on target for cost and quality. The CFO is responsible for ensuring proper financial statements and managing the balance sheet. Of course, the CEO is responsible for the overall performance of the company. But what ultimately distinguishes leaders from managers or front line staff is their responsibility to make decisions.
Decisions come in all sizes and shapes. From the mundane: Should we close the office early due to the impending snow storm? To the profound: Should we launch a bid for a competitor as a way to increase our manufacturing capacity? Decisions are the essence of what leaders do. It doesn’t take a leader to manage a business process and monitor its performance or that of the people performing it. But it does take a leader to make a decision when a manufacturing process is derailed because of an equipment malfunction that threatens delivery of this month’s product to expectant customers.
Ultimately, a company is the summation of the decisions it makes and the actions that follow. The decisions determine the markets and customers that will be pursued; what products and services will be produced and sold; and how those products and services will be distributed and supported. The decisions determine the ecosystem in which the company operates, labeling some companies as partners, others as competitors. The decisions made when performance comes up short are instrumental in determining the culture of an organization (see "Are You Led by a Table Pounder" and "Pilot Your Team Through Challenges"). And, of course, decisions to hire or fire determine the human capability and personality of an organization.
As important as decision-making is in forging the essence of a company, few companies treat it as a core capability. Lean manufacturing, financial management, and people development are activities often thought of as core capabilities worthy of investment. But little attention is paid to the skills necessary to make thoughtful business decisions, repeatedly and quickly. If decisions are at the heart of what determines the performance of a company, then those organizations with the capability to make better decisions at a faster pace ought to have a true advantage over their competitors.
Decision making, like other organizational capabilities, can be deconstructed, assessed, and improved. There are six disciplines of decision-making I believe are necessary for this important capability. I do not assert that possessing these disciplines ensures success. After all, effective execution must follow effective decision-making. However, I do assert that without these disciplines, an organization will be hard pressed to win against a competitor equipped for better decision-making. The disciplines are:
With appropriate attention and practice, decision-making can be turned from an uncomfortable afterthought to a strategic weapon. Over the next six posts, I will address each of these disciplines in turn.
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Photo: Boston Customs House - November 28, 2009
For over 20 years, I've worked with CEOs and senior leaders both as a consultant and c-suite executive. These articles are culled from some of those experiences.