In the last column, we discussed how an organization’s decision-making processes predict its capacity for innovation. We learned that organizational creativity and innovation tend to thrive in environments with devolved and consensual decision-making, while concentrating decision authority at the top of the organizational hierarchy tends to kill initiative and innovation.

But how exactly can you move your organization toward delegated and consensual decision-making? Clearly, there is no one-size-fits-all approach when it comes to restructuring the decision-making of an organization. When my company works with organizations, we help them identify what approaches best fit their industry, scope of business, and cultural environment. Here are some of the things that we ask companies to consider when they try to strengthen their innovation capacity by redesigning the way decisions are made.

1. Prepare your workforce for devolved decision-making

Before you can delegate decision authority and make decision-making more consensual, you need to enable your workforce to do so by investing in human development to build up the technical, conceptual and human skills of your employees. In particular, good decision-making requires training in basic modes of decision-making, an introduction to the range of different decision types, familiarization with a solid decision-making process and its associated tools that are to be used for important decisions, training in choosing which decision-making types to use in various business situations, and last but not least, instruction in how to avoid the most common thinking and decision-making traps, such as groupthink and confirmation bias.

2. Create a decision log

Identify and map out typical decisions and decision situations that occur in your organization at different levels (e.g., within a team, a department, or a division). These might be how to respond to particular customer requests, how to invest scarce resources such as time and money, or how to minimize business risks for the organization.

For example, a sales team has to decide what to do in these situations: a customer asks for a discount; a customer requests additional features; a customer asks for a kickback in exchange for the business; etc.

Creating a decision log for a business unit not only brings typical decision situations and dilemmas out into the open, but also provides the business unit manager with an opportunity to coach the team members on dealing with each situation based on the organization’s vision, mission, strategic goals, and values and principles.

3. Classify decisions by type

In order to identify different types of organizational decisions, we suggest considering these questions: How important is this decision for our organization? How many people need to be involved in this decision? How much agreement do we want to have for this decision?

For the first question, create 4 or 5 categories (e.g., very low, low, medium, high, and very high importance; or operational, tactical, strategic, and bet-the-firm).

For the other two questions, you might distinguish decisions based on the number of people that are involved and the level of agreement they need to reach into four sub-types: individual decisions; buddy decisions (“the four-eyes principle”); group decisions with simple consensus (e.g., simple majority or qualified majority); group decisions with true consensus (i.e., every member involved in a decision has a veto right and can block a decision).

4. Create a decision-making & delegation map

Put it all together in an organizational decision-making & delegation map.

• Start creating the matrix by putting the different decision-types (e.g., solo, four eyes, simple consensual, true consensual) on the horizontal axis, and the levels of importance of decisions (e.g., VL-L-M-H-VH) on the vertical axis.
• Then, link each box in the matrix to a place in your company or business unit’s structure.
• Optionally, consider placing financial caps on each of the various organizational levels and/or to each box in your decision-making & delegation matrix. For example, you might say that up to a certain amount of money, a tactical decision can be authorized by two middle managers following the “four eyes” principle, and that once this cap is surpassed, it needs to be decided by consensus in a middle manager committee following a simple or qualified majority. Of course, the details of such intricate financial authorization policies depend heavily on the industry, size, and maturity of your business.
• Next, work your way through the matrix and decide on what hierarchical level (frontline, lower management, middle management, upper management, top management) you want decisions of varying importance to be dealt with in what way.
• Last but not least, go back to your organizational decision log and position each typical decision situation of each business unit within your decision-making & delegation map. This defines who can make each decision, and what style of decision-making should be used. While doing this, keep in mind your overall goal, which is to push decision-making as low as possible in your organization to empower your people, free up managers to take care of more important things, and lay an important structural foundation to build a creative organization.

© Dr. Detlef Reis 2013. This article was published in parallel in the Bangkok Post under the same title on 25 April 2013.