Data Explosion and Decision Making

In the HBR, useful thoughts on decisions,  data and organization.

How the Big Data Explosion Has Changed Decision Making
by Michael Schrage

Organizations I work with increasingly struggle to straddle two painfully  
polarizing operating principles. On the one hand, they desperately seek greater agility; on the other, they genuinely want to include all the right stakeholders in their processes. This conflict uncomfortably transcends traditional “centralization/decentralization” debates. Customers and clients demand greater agility, and employees and partners expect greater empowerment. So the companies push hard to provide both.

Including more people, alas, typically increases coordination costs and response times. But, almost paradoxically, greater organizational agility requires greater responsiveness and improved coordination. The more stakeholders involved, the more likely that decisions are delayed. But effective agility frequently demands inclusive stakeholder involvement.

In other words, more people want to make more-agile decisions more often. This tension drives my clients mad. At one Fortune 1000 company, for example, “flame wars” broke out between customer support units, desperate to respond faster to customer complaints, and the technical design group, equally desperate to avoid ad hoc fixes. Neither group could effectively solve the problems without the other, but their overlaps quickly became sources of conflict rather than collaboration. That pathology isn’t uncommon.

The digitally networked enterprise — whether Slacked, Chattered, Skyped, Google Doc-ed — sharply exacerbates tensions and pain points: More stakeholders can instantly access, and share, actionable information. Technology facilitates greater transparency and visibility throughout enterprise ecosystems. Real-time situational awareness dramatically increases. But the managerial and operational ability to act on that data-driven information may not.

By far the best and most useful approach for managing those tensions is Michael Jensen’s path-breaking work in decision rights a quarter-century ago. Simply put, decision rights clarify authority and accountability for decisions and decision making. Decision rights are about how organizations “decide how to decide” who is empowered to make decisions. Think of it as a governance model for enterprise decision.  .... "