Tenet #7: Decentralize the decision-making
In this blog I would like to discuss the importance of decentralization in decision-making. I mean to illustrate the difference in effectiveness between managing decision-making from a central (usually high level) authority compared to empowering those people lower in the organizational structure (and typically closer to the daily status of specific issues) with the knowledge and authority to make these decisions for themselves. These differences will fall into the following categories:
- Project speed
- Decision correctness
- Leadership development
- Job satisfaction
I will mainly discuss how distributed decision-making impacts the first two points.
There are many ways to categorize leadership and management philosophies. But one that I think is illuminating for fast projects is the leadership difference between the coaching styles of “American Football”, and the coaching methods of “Rest of the World Football” (known in the USA and referred to herein as “Soccer”). Consider these differences:
- American Football: The coach trains the team members outside of the game to maximize their athletic ability, to take on a highly specialized and specific roles, and to follow orders without question. In this manner, it is a lot like military training for infantry ranks. At game time, the coach is on the sidelines watching the game, and in today’s world the coach will speak through a wireless headset to the quarterback (or defensive captain) to command the next play. The game is stopped after each short play, giving time for this interaction, and often making the total game time 3 hours but with only about 11 minutes of ball-in-play time . The coach must train the team well and then command them from the sidelines, knowing that they will follow pre-arranged plans, and that breaks in the game will allow for new strategies and communication.
- Soccer: The coaches also train their team members outside of the game to maximize their athletic ability, to work fluidly with the rest of the team, and use good judgement in altering any giving plan to account for the speed of changes in play. At game time, the coach is also on the sidelines watching the game, but has little ability to influence the team members for a given play. The game is too fast and too hard to communicate on the field. Play is stopped infrequently, and the total game time may be 90 minutes with 62 minutes of ball-in-play time . The coach must train the team well and then trust that their training will allow for fast and excellent judgement.
Figure 7-1: American Football coach
Figure 7-2: Soccer coach
Leaders in business usually fall into one of these two types, mirroring either American Football or Soccer coaches. The balance tipped heavily in the latter half of the 20th century toward a Soccer-like leadership and management style. The reason is clear: business has become faster. The pace at which decisions and execution must take place has continued to quicken and shows little signs of slowing. Interestingly, many people think at first that when this kind of stress hits, the smart thing to do is to centralize decision-making. Centralized authority is the fallback plan when fear strikes upper management. However, time and again this centralization has been shown to be counterproductive. In crisis mode this “command and control” leadership may work due to the high level of attention placed by the leaders on the specific problem and the willingness for everyone to do what is necessary to save the firm. But over time, the crush of urgent business issues will split the attention of the single decision maker (or committee) so that rapid response decisions are no longer seen.
A much better answer to this problem is to manage more like a Soccer coach. Business leaders in today’s world need to move faster; they need to have the best decisions with the current, ground-level information; and they need to execute with confidence knowing that decisions are based on clear principles, strategies and guidelines. To achieve the required speed and decision effectiveness, the Soccer coach-manager needs to train the team in background information, methods for well-judged decisions, appropriate communication and speed. And these managers need to create an environment of empowerment, granting authority and responsibility to the appropriate people at the lowest levels possible.
I have written about aspects of leadership style previously in my Ten Tenets of Leadership. In particular, the first three tenets on leadership are related to distributed decision-making, and essential to creating the right environment. Those three tenets are:
- Respect people. Trust them.
- Manage by objective.
- Enable your people.
In order to create the right environment for distributed decision-making to flourish, leaders will need to understand how fear of taking authority and responsibility is established in the workplace, and work to eliminate this fear. People are amazingly adaptable and will respond to the pressures of the environment. If leaders create an environment with little demonstrated respect or trust in their people, instead displaying condescension and destructive contention, the result will be few people willing to take the personal risk that comes with making important yet career-risky decisions for the firm. Additionally, if management styles tend toward the highly directive and less toward managing by objective, your people may not be trained and experienced in more complex and higher stake decision-making. You need to enable your people with the right tools and training, reinforce this training by managing by objective, and be consistent with demonstrating trust and respect. In this way, you will gravitate more toward the Soccer coach style of leadership and management. For more information, please see my short whitepaper on those tenets.
A few years ago, I took over a department that had been beaten-up by the previous leader. He had reportedly practiced management by ridicule and public embarrassment, and felt that he had to openly correct other technologists at every turn. As a result, I had quite an uphill battle trying to introduce “management by objective”, to establishing trust and respect, and to create the expectation of distributed decision-making. Whenever I failed to see distributed decision-making, I had to look closely at whether the obstacle was lack of motivation (alignment with strategy, and faith that their best efforts would be respected) or lack of empowerment (training, tools and authority given). Often the issue was a mix of both. It took time, understanding and continual reinforcement of these principles and values, but eventually the organization adapted and thrived in the new environment. As a result, we became much faster. And due to the decisions being made by people closer to the essential information, I also believe we made better decisions, that is, decisions using more accurate information and producing results superior in alignment with the goals of the company.
Speed is important, but companies also need excellent decisions made quickly. In order to make better decisions, several things must be present:
- The best information to make decisions. This is often more readily available at the lower levels in the organization, and supplemented by critical statements for guidance from top management.
- The most effective processes to turn information into well-judged decisions. This may involve general training or perhaps algorithms (as discussed in “Tenet #5: Sharpen Your Prioritization”)
- Appropriate boundary conditions to escalate to higher management when necessary.
“Boundary conditions” used in this manner deserves a little more description. Boundary conditions are those limits placed on a decision maker intended to set off alarms when breached and trigger a new process, typically escalating the decision to a higher level of management. All projects, and in fact all decision makers should have boundary conditions set, and then revisited often. Examples of boundary conditions that might be set in NPD are:
- Project cost exceeds quarterly target by 15%
- Product performance will fail in a critical “money specification”
- Project schedule will be longer than predicted by 20%
- Queue of projects waiting for PC design is greater than x dollars
Note that the first 3 would be assigned to a given project, while the last to a process center like PC design.
Distributed decision-making can produce faster decisions while not sacrificing the effectiveness of those decisions, and may even enhance the latter. In order to drive excellence in distributed decision-making, focus on Soccer coach management, and make sure you set up boundary conditions with a clear escalation path.
In my next blog, “Tenet #8: Monitor buffers and queues” I will describe the value and the implementation of increasing speed in product development through the careful management of buffers and queues.
 Actually, multiple coaches for different game aspects (offense, defense, etc.) in today’s American football. But these comments still apply.
 “An average professional football game lasts 3 hours and 12 minutes, but if you tally up the time when the ball is actually in play, the action amounts to a mere 11 minutes.” http://qz.com/150577/an-average-nfl-game-more-than-100-commercials-and-just-11-minutes-of-play/
 “…on average, ‘the ball was in play for 62.39 minutes this season…’ What the comparison doesn't mention explicitly is (the perhaps obvious) that 90 minutes of a football match actually don't give you 90 minutes of football. http://www.soccerbythenumbers.com/2011/05/how-much-football-is-there-in-match.html
 See my Ten Tenets of Leadership at http://techzecs.com/images/larry_ten_tenets/Ten%20Tenets%20of%20Leadership%20Final.pdf
 Perhaps as measured by the sum of all COD (cost of delay) times TT (throughput time). See “Tenet #5: Sharpen your prioritization” and “Tenet #8: Watch the buffers and queues”.