Agile decision making
In their book Managing the Unexpected, Karl Weick and Kathleen Sutcliffe examine organizations that constantly deal with high risk and uncertainty - so-called high reliability organizations (HROs) such as nuclear power plants, emergency departments, and fire departments.
From numerous case studies, they distill some guiding principles and practices that promote agility and self-organization in equal measure. They show how such companies on the one hand anticipate the need for decisions and on the other hand ensure that decisions can be made as flexibly as possible when the occasion arises. Helpful practices for anticipating decision-critical points include:
a transparent information policy on irregularities and errors,
the periodic review of expectations or
delegation of decision-making power to those who are close to the problem in question and who also know about it.
When the forest is on fire, waiting for the fire chief's decision is not only pointless, but downright life-threatening. Instead, everyone in firefighting must decide for themselves which extinguishing measures are most appropriate. There are some action-guiding principles for this as well:
contain the problem as quickly as possible in order to prevent it from spreading like wildfire
to accept small losses in order to prevent larger consequential damages
to set short-term solution steps instead of developing long plans.
We can learn a few things from the extreme situations that HROs are repeatedly exposed to:
They show us why decisions should be based on respect for knowledge and ability.
They document why subject matter expertise and situational awareness are more important than role or rank in many cases.
And they show us why we should shift decision-making authority to the person who has the greatest design authority in the case.
Given our day-to-day problems, it's probably no surprise to anyone that centralizing decision-making authority agility and self-organization in equal measure. hinders Decentralized decisions not only strengthen operational readiness; they are also beneficial from a business perspective. For one thing, decentralized decisions increase the company's speed of response: potentially critical issues are addressed more quickly, threats are anticipated earlier, and actions are taken more appropriately for the situation. On the other hand, many more business opportunities are seized.
Indeed, the concentration of decision-making power at the top of the company means that the economic potential of small decisions remains untapped. Yet, as Don Reinertsen persuasively argues, these small, customer-facing decisions have enormous impact on the overall performance of the entire organization. Assuming that the fate of our organization depends on the big strategic decisions, we fall victim to what Reinertsen calls the Pareto Paradox: we over-manage the 20% of big decisions and under-manage the 80% of small changes that should be made for true agility.