How does your company approach strategic decisions? Does it have a plan for identifying the issue, uncovering several solutions, determining the factors that should be used to assess the strategic alternatives and evaluating them? Don’t be embarrassed if the answer is “no”.
Many companies face strategic decisions without a clear understanding of how they should proceed. In the absence of a defined decision process, the majority of executives take one of two suboptimal approaches. Either they revert to past experience and make a “gut call,” or they spend an inordinate amount of time overanalyzing the situation. These approaches may have worked in the past. But today, with our fast pace of change and increasingly complex business environment these approaches can’t provide a competitive advantage.
But even companies that avoid these suboptimal business practices can have problems. They form ad hoc committees or assign a nebulous task to the leadership team. Well, we all know what happens when a committee gets hold of an ill-defined issue. No? Well it results in monotonous meetings, rehashing the same issues and getting nowhere. Just what we all like to do with our time, isn’t it?
Strategic decisions require a carefully planned set of activities that will guide the decision team toward an optimal outcome. Research shows that groups obtain better decision outcomes when they follow a defined strategic decision process.1 What do we mean by process? A process is a systematic set of activities that guide the achievement of an objective.
There are several reasons why a structured process can be helpful:
• It provides a fixed approach, transparent to all. I don’t know whether you’ve observed this, but I’ve noticed that when a team has a process to follow, it builds confidence. Confidence that they won’t be wasting their time. Assurance that this complex business issue can be resolved. This spurs greater participation in the decision, higher level analysis and innovative thinking.
• A structured process supplies a vision for how the team will accomplish the task. People can see how to attack the issue and how to measure progress toward accomplishing the task. When everyone on the team understands the methodology, trust is fostered among team members. Communication barriers dissipate. There is willingness to present innovative concepts or out-of-the box solutions without fear of ridicule or political backlash. There is confidence that parochial attitudes are parked outside the meeting room and hidden agendas can be uncovered. The ensuing trust unifies team members and elevates team performance
• It prevents redundant activity. One of the reasons why complex situations, like strategic issues, take so long is that teams often have to perform the same decision activity multiple times. For instance, perhaps a team is ready to analyze the solutions being proposed but then someone uncovers an important factor that needs to be incorporated into the evaluation. If this happens, the team must postpone the analysis, collect data about this new factor, before the team can move forward; progress on the strategic issue becomes delayed.
• A process prevents decision gaming. I’m sure you all have encountered the team member who is adept at manipulating situations to benefit themselves or their departments. They seem to have answers that support their position, or derail the position of others. Some people are adept enough to sway the team, even if the approach is suboptimal for the company. Or perhaps a team member works outside the team meeting, developing back-door deals to swing the decision in his favor. But these tactics won’t work when the decision team has a decision process in place. Members of the team know how the decision is to be developed. Team members have a guide to police one another, so that when a member promotes a myopic view or steps outside the process, the remaining members rein him in.
So now that you understand some of the benefits of a defined strategic decision process, how do you know if your company has implemented one? You can judge whether a process is in place by the results of strategic decision meetings. Here are some signs that an optimal strategic decision process has not been implemented:
• The team has a track record of poor strategic decision-making.
• Only conservative solutions to strategic problems surface. Identification of innovative strategic alternatives is limited or nonexistent.
• Workable solutions to strategic issues are not developed. They are impractical.
• Strategy meetings do not seem to be getting anything accomplished. The team seems to spin its wheels.
• The team fails to identify the key factors that affect a strategic issue.
• Analysis of factors important to the company’s strategic decision is capricious.
• Unanticipated factors prevent strategic decisions from being successful.
• Analysis of important factors is overly detailed or takes too much time.
• Previously attempted strategic solutions are commonly recirculated.
• It takes longer than three months to make a strategic decision.
• Strategic decisions seem to be made for the wrong reasons.
• Strategy discussions devolve into bickering.
• Team members let opinions, rather than facts, dominate the discussion.
• One member of the team is able to dominate strategic discussions.
• Political agendas and intrigue hamper strategic decision-making.
• The team members let personality differences get in the way of good decisions.
• Because the team has been together for so long, it is mired in stale approaches to strategic decisions.
• Because the team is new, the members have not yet learned how to work together effectively.
• Post-meeting discussions subvert decisions made in strategic meetings.
Rarely will you find a leadership team that lacks the cognitive capability to resolve strategic issues. So, if any of these symptoms exist in your organization, it is time to develop and implement a new strategic decision process.
1. I. D. Steiner, Group Processes and Productivity (New York: Academic Press, 1972)