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Untangling your organization's decision making

The ABCDs of categorizing decisions

The ABCDs of categorizing decisions
  • Big-bet decisions: infrequent and high-risk - from major acquisitions to game-changing capital investments;
  • Cross-cutting decisions: frequent and high-risk - think pricing, sales, and operations planning processes or new-product launches;
  • Delegated decisions: frequent and low-risk - routine elements of day-to-day management, typically in areas such as hiring, marketing, and purchasing;
  • Ad hoc decisions: infrequent, low-stakes.

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Untangling your organization's decision making

Untangling your organization's decision making

https://www.mckinsey.com/business-functions/organization/our-insights/untangling-your-organizations-decision-making

mckinsey.com

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Key Ideas

The ABCDs of categorizing decisions

  • Big-bet decisions: infrequent and high-risk - from major acquisitions to game-changing capital investments;
  • Cross-cutting decisions: frequent and high-risk - think pricing, sales, and operations planning processes or new-product launches;
  • Delegated decisions: frequent and low-risk - routine elements of day-to-day management, typically in areas such as hiring, marketing, and purchasing;
  • Ad hoc decisions: infrequent, low-stakes.

Approaching big bet decisions

  • Appoint an executive sponsor to work with a project lead to frame important decisions for senior leaders to weigh in on;
  • Break things down (with decision meetings at each stage), and connect them up.
  • Focuses on debating the solution (instead of endlessly elaborating the problem) and gather the right people.
  • Move faster without losing commitment: get comfortable living with imperfect data and being clear about what “good enough” looks like.

Approaching cross-cutting decisions

  • Identify decisions that involve a cross-cutting group of leaders, and work with the stakeholders of each to agree on what the main steps in the process entail.
  • Work through a set of real-life scenarios to pressure-test the system in collaboration with the people who will be running the process.
  • Limit the number of decision-making bodies, and clarify for each its mandate, standing membership, roles etc.
  • Create shared objectives, metrics, and collaboration targets.

Approaching Delegated decisions

  • Delegate more decision.
  • Avoid overlap of decision rights.
  • Establish a clear escalation path.
  • Get people to  take ownership of the decisions.

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