As originally published in BusinessWeek, this is the first installment in a series about decision-making and design.
Big corporations today can be viewed as decision factories – but where’s the elegant design approach that’s applied to products?
A fascinating transformation has taken place in large corporations’ workforces over the past 50 years. Direct labor engaged in the making of products or delivering of service used to dominate both in numbers of workers and payroll dollars. In most big companies today, however, white-collar, indirect, managerial labor dominates in fully loaded payroll cost, if not in absolute number of employees.
This shift raises the question: If these employees, who now consume the biggest share of corporate resources, aren’t directly making a product or directly delivering a service, what are they doing?
The answer: They’re manufacturing decisions. More than anything else, the modern corporation has become a decision factory – strategy decisions, pricing decisions, distribution decisions, human resource decisions, engineering decisions, capital-spending decisions, advertising decisions, government-relations decisions, what-toilet-paper-to-put-in-the-restroom decisions. Corporations are spending an increasing proportion of fully loaded payroll dollars to pump out decisions.
HOW’S THE DEFECT RATE? Which makes you wonder: If the primary “product” of the most expensive chunk of the modern corporation is decisions, then how effective is the corporation at decision production? Is the defect rate on decisions low? Do the subsequent users of the decisions find the decisions to be of high quality, easy to use, and compelling? Is the cost of generating the decision lower or higher than the value of the decision?
If decision production is such a big deal, corporations should be paying very close attention to design of decisions – as much or more attention than they pay to product or service design. In my experience, they aren’t. Corporate decision factories feature extremely low-quality decision design.
Corporations still see themselves as product and service factories, and if they think at all about elegant design, it’s in that context. Anyone who has worked in an organization of any substantial size can enumerate the common defects in decision-making:
- Decisions don’t get made: There’s the continual study of unresolved “issues,” which come to closure, if ever, only after numerous iterations.
- Decisions appear to have been made but then fall apart: There’s either false consensus whereby those involved don’t really reveal their true feelings during deliberation and undermine the “decision” thereafter, or there’s weak consensus whereby the commitment to the decision is so marginal that it falls apart before catalyzing any action.
- Decisions get made, but follow-up action isn’t timely: The decision-making process is followed by a time-consuming “buy-in” process for those who have to accept and act on the decision.
- Decisions get made, but they’re bad: The decision doesn’t result in the attractive consequences contemplated during the decision-making process.
So how does decision-making get done at your company? Is it effective? Is there follow-through? Or do things fall through the cracks more often than not?
September 12th, 2008 at 10:03 am
More often than not, the larger companies I’ve worked for have been very good about asking for input and suggestions from all employees. They were big proponents of brainstorming. But I sometimes felt as though that was for show – ultimately, it seemed, all the ideas were for naught because there were one or two higher-ups who had it all figured out already. It seemed as though the decisions had already been made and there was just this sense of being polite by asking… and the unstated understanding was basically, “Thanks, but no thanks.”
This being said, I once worked for a company that gave me a lot of free reign to implement my own projects and carry them out. Unfortunately though, they had massive ups and downs as far as revenue – maybe there’s something to be said for a tighter reign. I do know though that it was much more enjoyable to work for a “looser” ship that respected my decisions and encouraged that I make them and take responsibility for them.
September 13th, 2008 at 9:57 pm
Decision Making
When I did my MBA in 1990 I read research on decision making (Bernard Bass). Numerous studies all found the same basic result – executives in large organizations made mediocre decision and seem to expect innovative results.
Bass commented on several specific findings but the one I remember is the issue of teams of people concluding with the ‘first minimally acceptable option’. We have not learned much in 50 years or so of management study to figure out how to harness the full cognitive diversity that exists in our organizations to solve problems effectively.
Design Thinking
I did my MBA in New Zealand and learned how different the world looks when you are an island. One of the fundamental strategies adapted by New Zealand is ‘design’. Its companies can not compete on volume or price – hence they need some different to create value. See http://www.BetterbyDesign.org.nz
To put this in context, I wrote an article recently about the number of NZ consumer products and services that I can buy in Canada and how I rarely – if ever – saw anything made in Canada in 15 years of living and working overseas!
September 14th, 2008 at 9:04 am
Elegant design-decisions have at their foundation elegant briefs.
In order for large corporation to develop elegant decision-making processes they need to develop new methods and protocols of how to craft, communicate and circulate comprehensive briefs. Designers solve problems thinking in 3Dimensional blocks (holistically). Regular companies in 2D plates (departmentally)
A brief containing the critical DNA from every relevant domain force decision-making departments to deal in real time and space with unforeseen problems or opportunities that affect the final outcome.
In the end however, true elegant decision-making is about navigating effortlessly between right–brain thinking, tracking thoughts, ideas, concepts and left-brain thinking, governed by theories, facts, data and logic
September 18th, 2008 at 11:00 am
[...] published in BusinessWeek, this is second installment in a series about decision-making and design. Part One. [The root cause of badly designed decision is the] fundamentally flawed design of the decision [...]