Decision Frameworks Help (Fast-growing) Companies

As a business grows and becomes more complex, a decision-making framework can ensure effectiveness, transparency, and inclusivity.

In a way, decision frameworks focus on what needs to be done before a decision is made. It is an opportunity to generate the best ideas, receive appropriate feedback and define the importance of a decision.

The challenge

Successful companies are often action-oriented. Entrepreneurs, managers and contributors step in when they see a need.

This agility can be beneficial, but soon unilateral decisions – especially when they are strategic or irreversible – could cause problems. Work is doubled, communication becomes muddled, and customers are confused.

Photo of five employees around a computer

Decision frameworks can generate helpful ideas and boost morale by gathering input from across the organization.

dictatorship

In response, a business leader might choose to become a kind of dictator.

The top manager gets involved in every important decision, often behind closed doors or in small groups.

There are advantages to being a dictator. Decisions are made quickly. The entrepreneur is happy. And it is clear who runs the company.

Voltaire, the 16th-century French philosopher, apparently had this approach in mind when he said: “The best government is a benevolent dictatorship tempered by the occasional assassination.”

It’s the occasional assassinations that business owners should worry about.

Economic dictatorships have their price. The entrepreneur may not always – or even often – make the best choice. Some decisions will surprise employees who may feel unheard or even annoyed. Excluded people could leave.

Leader

A better option is a decision framework, in which an entrepreneur or manager develops and shares a plan that describes how key decisions are made and who makes them.

This approach has some assumptions.

It assumes that good ideas, thoughtful insights, and detailed analysis can come from anywhere within the organization—a “decision meritocracy.”

The approach also assumes that employee involvement creates effectiveness and stability.

After all, it assumes that employees can express unpopular opinions without fear.

Here is an example.

An example

Suppose the chief revenue officer of a fast-growing company with about $30 million in annual sales hears complaints from several middle managers that a popular customer segment isn’t profitable enough.

This category of buyers represents celebrity users who “highlight” the brand, but as a cohort:

  • have high customer acquisition costs,
  • have a low lifetime value
  • Are expensive to service and
  • Take the lion’s share of the company’s content marketing and social media efforts.

Many employees would be affected if the CRO suddenly decided to stop working for the group. But if he kept the segment without discussion, the mentioned middle managers would rant.

Fortunately, the company had a decision-making framework. It sets the framework when a leader believes a decision is important.

Here are the steps.

working in public. The CRO publishes a description of the problem and communicates it to all personnel.

This document:

  • Explains why the decision framework is useful
  • Lists stakeholders who will participate in small group discussions,
  • Name the final decision maker and
  • Provides the ability to post comments or request inclusion in the small groups.

research and planning. One or more small groups work together. Participants do research, use tools like a decision matrix, and list the pros and cons of each choice.

Together, the group defines several nuanced options, such as: such as reducing investment, increasing investment, or completely changing direction.

decision place. The CRO will publish the small group options. It will include the underlying research. And she will set the date for a vote.

comment period. Everyone in the business has time to post comments. Even the newest employee in the warehouse has a vote.

A non-binding vote. The entire company will vote publicly, perhaps for multiple options or a ranking of choices.

The vote is counted.

The decision. At the end, the designated person posts their decision. It does not have to agree with the vote, but should include its rationale.

Not everyone is happy with the choice, but no one is surprised. Everyone had the opportunity to participate.

The decision framework was:

  • Effectivewho benefit from company-wide input.
  • Transparentto make it clear who made the decision and why.
  • Includedall team members participated.

frame

This example is based on my experience with a company. It is by no means the only way a decision framework can work.

There are many such frameworks. A thoughtful entrepreneur might do a little research.

A starting point is the Open decision framework. Red Hat, the open-source software company, developed it for internal use a few years ago and then released it publicly for everyone to use.

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