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Posts Tagged ‘decision making’

Harnessing the Strengths of All Employees

November 17th, 2010 1 comment

Something that has caught my eye lately in the business press is a focus on employee empowerment and the idea that big ideas can come from anywhere within an organization — if each employee feels like he/she is supported in breaking down traditional barriers.

Gone are the days when a management structure centralized decision making at the top of the organization and messages traveled linearly to the “worker bees” at the bottom.  No longer is it possible to be a high-functioning company if information is held tightly within silos by a select few.  Today’s leading companies need to foster an environment where information is freely shared and everyone feels like he/she can do what is necessary to advance the mission of the company, make customers happy, and ultimately become more profitable.

Smart companies are implementing tools for employees to use in this pursuit.  These tools sound a lot like tools that people use in their personal lives such as Facebook, Twitter, blogs, Wikipedia, etc.  An HBR piece today highlights this rather well.  Read more at this link: Moving from Top-Down to All-In – Suzanne Vickberg – The Conversation – Harvard Business Review.

Take for example, British telecommunications giant BT. They started to encourage participation with an experimental wiki called BTpedia, designed to facilitate information sharing across the company. On its heels they launched a second experiment that introduced blogging, and a third that created a small-scale social network.These ad hoc efforts then evolved into a robust internal social network, called My BT, that lets individuals customize their own pages.

My BT provides one-stop shopping to access all the content employees have posted on BTpedia, in blogs, and elsewhere, and also shows what other colleagues in someone’s network are up to. Involving people through new mediums has been a big hit with BT’s people for sure, but the company is seeing an even bigger payoff from their investment. Richard Dennison, principal business partner at BT, described it to us like this, “I don’t think that you can have an innovative company unless every single employee thinks they can make a difference to the organization. These tools are a key enabler for people to think they can make a difference.”

Also linked in the aforementioned HBR post is a related piece about the move from a “ladder” structure to a “lattice” structure in successful organizations.  Both of these are great reads about where strategic management is heading and the power that can come from inclusion rather than tight control.

For a more in-depth examination of this topic, I highly recommend reading Empowered: Unleash Your Employees, Energize Your Customers, and Transform Your Business by Josh Bernoff and Ted Schadler, a book that was released in September.  It highlights this same phenomenon of information sharing and decentralized structures that the authors predict will be the wave of the future.  They argue that since customers are more empowered (consider the information consumers have now about nearly any product as compared to 20 years ago) that companies need to be as well.  For example, Best Buy is featured extensively in the book for their Twelpforce concept that has turned customer service into a proactive task and customer difficulty into an opportunity instead of a curse.

I loved reading this book but I’m guessing the challenge will be to get buy-in from the people that need to make the biggest changes: those entrenched in the IT department.  In my experience, IT policies can be terribly restrictive and I’m not sure how to get the ideas presented in Empowered into the hands of the people that need to change direction since, in a way, doing so is a threat to their existence.

How many companies block access to sites like Youtube, Flickr, Twitter, etc. in the name of security?  Is it really computer security or job security that is the focus here I wonder?  Lots of things that IT does today could be done by the former “worker bees” in the future and those IT folks that are not flexible will hold on until the bitter end because their lack of flexibility is exactly what spells doom for their employment future.

The opportunity, however, exists for those that are flexible (or are willing to become flexible) to set a new path for IT by becoming a partner to business units rather than performing the traditional gatekeeper role they maintain today.  Companies with management within IT and elsewhere that manage to realize this before the competition does will have a distinct competitive advantage.  In fact, those inflexible IT employees may soon find that they company the work for no longer exists.  Who is empowered then?

How Companies Can Make Better Decisions

October 31st, 2010 Comments off

Here is an interesting video from HBR that explores decision-effectiveness within companies.  Marcia Blenko is a co-author of Decide and Deliver: Five Steps to Breakthrough Performance in Your Organization and she shares the framework of some concepts in the book in this video.  In particular, there is a 4-point framework to measuring companies on decision-making skills:

  1. Quality decision making
  2. Quick/timely decision making
  3. Executing decisions
  4. Effort spent on decision-making and execution

Most of our course is about decision-making and it really is what separates the winners from the losers in the “real world.”  Too many companies focus on decision-making as an afterthought or a necessary evil rather than an opportunity to excel.  Setting up the corporate culture to foster strong decision-making and execution is important to long-term success.  Many companies focus on “big decisions” but the cumulative effect of all of the daily decisions is probably a bigger place to focus and effectiveness in this area needs to “just happen” as the result of systems encouraging it.

http://blogs.hbr.org/video/2010/10/how-companies-can-make-better.html

Why So Many People Can’t Make Decisions

October 13th, 2010 Comments off

Decision making is a key component of strategic management accounting.  Nearly everything we discuss in class has to do with getting information so that people can make better decisions.  As I’ve posted before, however, there is a risk of information overload where filtering out irrelevant information becomes more important than having enough information to make a decision.  Also, a recent piece highlighted that consumers have an easier time making purchases if they have fewer choices.  In fact, having too many choices makes it less likely that they will purchase anything.

In that context, I found a recent Wall Street Journal article very interesting because it highlights the fact that people with certain personality types have a harder time making decisions.  Those that have high levels of ambivalence find it more uncomfortable and more difficult to make decisions. 

If there isn’t an easy answer, ambivalent people, more than black-and-white thinkers, are likely to procrastinate and avoid making a choice, for instance about whether to take a new job, says Dr. Harreveld. But if after careful consideration an individual still can’t decide, one’s gut reaction may be the way to go.

In contrast, people that see the world as black and white and that can easily fall on one side of an issue have an easier time making decisions, but whether or not those decisions are “better” decisions is less clear.   A certain amount of ambivalence is necessary and desired in leaders so that all points of view and options are considered but too much seems to indicate that negative aspects fog the view of the decision maker:

Every job has good and bad elements. But people who aren’t ambivalent about their job perform well if they like their work and poorly if they don’t. Dr. Ziegler suggests that black-and-white thinkers tend to focus on key aspects of their job, such as how much they are getting paid or how much they like their boss, and not the total picture in determining whether they are happy at work.

Black-and-white thinkers similarly may recognize that there are positive and negative aspects to a significant relationship. But they generally choose to focus only on some qualities that are particularly important to them.

By contrast, people who are truly ambivalent in a relationship can’t put the negative out of their mind. They may worry about being hurt or abandoned even in moments when their partner is doing something nice, says Mario Mikulincer, dean of the New School of Psychology at the Interdisciplinary Center Herzliya in Israel.

The conclusions in this article would seem to indicate that the “typical accountant” would be better at decisions than most since most accountants I know fall squarely in the “black and white” camp.  Still, I know from personal experience that I have a really hard time making decisions (even trivial ones) even though I see myself as a black and white, non-ambivalent thinker.  Perhaps my own view of myself is out of touch with reality or maybe I just don’t fit the mold…in either case there is a lesson here as well that things that apply broadly to populations may not apply to individuals within that population. 

The bottom line is that knowing how you approach decisions is as important as having facts to make a decision.  Being able to see the whole picture while still making a timely, effective choice is the key to those in leadership positions.  Before one can get to that point, he/she has to know that different decision personalities exist so that they can take measures to move to a better place where decision making is concerned.  Even after reading this article several times I’m still not sure what conclusion one is supposed to take from it…maybe it is just that I can’t “decide” what the article is about?!  Still I find it interesting to ponder the points in the article and I think that is enough reason to share it here. 

Why So Many People Can’t Make Decisions. Shirley S. Wang. Wall Street Journal. (Eastern edition). New York, N.Y.: Sep 28, 2010. pg. D.1 

A Better Choosing Experience

September 27th, 2010 Comments off

Photo credit: verbeeldingskr8 on flickr

When we discuss decisions in detail we will discuss the importance of filtering out the relevant information from the irrelevant. As I’ve written about before, people today are overwhelmed with information but the cognitive ability to process information is pretty much where it was 100 years ago.

This leads us to a strategy+business piece posted today that takes the position that limiting choices to customers can be a successful strategy for businesses:

Consumers have grown accustomed to having a lot of choice, and many people still express a strong desire for having more options. But that doesn’t make it a good idea. There are neurological limits on humans’ ability to process information, and the task of having to choose is often experienced as suffering, not pleasure.

That is why, rather than helping consumers better satisfy their preferences, the explosion of choice has made it more difficult overall for people to identify what they want and how to get it. Thus, if the market for your product is saturated with choice, you can’t gain a competitive edge by dumping more choices into the mix. Instead, you can outthink and outperform your competitors by turning the process of choosing into an experience that is more positive and less mind-numbing for your customers. You can design a more helpful form of choice.

Even limiting choices internally to employees can have benefits, even in the case of investment options in retirement plans that, at least to me, seems counter-intuitive (I would think that more choices would equal more participation)

We see this frustrated response to “choice overload” even when the decision has serious consequences. For example, in 2001, at the request of Steve Utkus, the director of the Center for Retirement Research at the Vanguard Group, Iyengar and her collaborators, Wei Jiang and Gur Huberman, tried to determine why so few of the 900,000 employees covered by Vanguard were participating in their defined-contribution retirement savings plans — also known as 401(k) plans. Analysis of the data revealed that participation fell significantly as the average number of funds in a plan rose. By controlling for individual-level variables such as age and income, as well as plan-level variables such as the size of the company and the extent of employer matching contributions, Iyengar and her collaborators showed that the decline in average participation rates was due to an increase in choice. When plans offered only two funds, 75 percent of the relevant employees participated; when plans offered 59 funds, the percentage of participants fell to 61 percent.

Read more of this long piece at:

A Better Choosing Experience. When consumers are overwhelmed with options, marketers should give them what they really want: ways of shopping that lower the cognitive demands of choosing. By Sheena Iyengar and Kanika Agrawal. strategy+business.  September 27, 2010

Five Ways Pixar Makes Better Decisions

July 16th, 2010 Comments off

Here is a short read previewing an upcoming book about companies that make great decisions.  Having an advantage at decision making over competitors can make for a huge advantage in the marketplace as products reach c0nsumers more quickly, quality is higher, and employees are happier in these kinds of organizations.

We think that organizations with good judgment have a number of typical attributes. One is that they involve a number of different people in making important decisions. Their senior executives keep in mind that they don’t have a monopoly on knowledge and judgment and therefore involve multiple people in decision processes.

The short blog post linked below highlights how some things work at Pixar that are part of their “high-quality decision making culture.”  Furthermore, it is easy to pick out some things like Pixar University and manager autonomy that relate to things like the Learning & Growth perspective of the balanced scorecard that we have discussed in class.

Read more at: Five Ways Pixar Makes Better Decisions – Tom Davenport – Harvard Business Review.

Toyota Changes How It Develops Cars

July 11th, 2010 Comments off

Here is a very timely article about how Toyota is challenging its engineers to focus on quality at the design phase to avoid issues later on.  As mentioned in class with regard to quality and costs, often the best (or only) place to make changes that have a true impact is at the design phase.

Toyota Motor Corp. is stretching out how long its new models are tested before they go into production and reducing the number of outside engineers it uses in a bid to overcome a spate of quality problems.

Randy Stephens, a senior Toyota engineer based in Ann Arbor, Mich., said company executives recognize that there were quality issues with the last generation of vehicles, which were developed while the company was in a global-growth mode. Executives began talking about making changes nearly a year ago, he said, but the recent recall problems have spurred the company to act.

Toyota is going to increase the lead time for development but also simply the number of options (on such things as engines) to make the focus of the engineers.  Interestingly enough, the article mentions that costs will increase but obviously Toyota feels that the benefits of increased quality will outweigh this cost increase.

In addition to extending product-development lead times, Mr. Uchiyamada and his engineering team have decided to cut the number of engine and other key-feature variants and options to simplify and narrow the scope of engineering work, allowing engineers to focus more on quality.

Toyota may also further reduce the use of virtual engineering and begin using more vehicle prototypes. Doing so extends development time and increases costs.

And finally, my last observation is with Toyota bringing certain work back in-house that they have been outsourcing.  Recall that when we talked about decision making and make/buy situations that quality concerns were one of the non-financial factors that companies need to consider before decided to outsource.  It seems that Toyota feels that they can do a better job themselves rather than farming out this work.

The company is also working to bring development work that had been sourced to outside engineers back inside. Some outside engineers actually work side by side with Toyota’s engineers inside Toyota research and development centers. But using contractors has led to a breakdown in communication and potential misunderstandings, Mr. Stephens said.

Toyota Alters Car Development — After Quality Problems, It Stretches Out Testing of New Models, Cuts Number of Outside Engineers. Mike Ramsey, Norihiko Shirouzu. Wall Street Journal. (Eastern edition). New York, N.Y.: Jul 6, 2010. pg. B.1

Strategic Plans Lose Favor

January 26th, 2010 Comments off

This article focuses on some changes being made to strategic planning efforts given the recent economic downturn.  I think the headline is a bit misleading because I feel that strategic planning is as important as ever, but the rigid, long-term plans of the past are becoming obsolete.  Instead, companies are striving to set more short-term plans while allowing flexibility in the long-term to nimbly change things as information become available (whether that information is about competitors, the economy, new products, etc.).  The lessons learned from the economic challenges of the past couple years will shape strategy for years to come.

Walt Shill, head of the North American management consulting practice for Accenture Ltd., is even more blunt: “Strategy, as we knew it, is dead,” he contends. “Corporate clients decided that increased flexibility and accelerated decision making are much more important than simply predicting the future.”

Companies have long planned for changing circumstances. What’s new—and a switch from the distant calendars and rigid forecasts of the past—is the heavy dose of opportunism. Office Depot stuck with its three-year planning process after the recession hit, largely to make sure employees had a common plan to rally around, Mr. Odland says. But the CEO decided to review the budget every month rather than quarterly so the office-supply chain could react faster to customers’ needs.

Theory & Practice: Strategic Plans Lose Favor — Slump Showed Bosses Value of Flexibility, Quick Decisions. Joann S. Lublin, Dana Mattioli. Wall Street Journal. (Eastern edition). New York, N.Y.: Jan 25, 2010. pg. B.7

Cost/Benefit Analysis & Going Green

September 6th, 2009 Comments off

It isn’t popular to say so, but embracing “green” as a marketing strategy still has to pass the cost/benefit test just like any other business strategy and decision.  Failing to do so would mean that green companies (and projects) would go under until there were none left.

INSIGHT, the magazine of the Illinois CPA Society explores this and related environmental accounting concerns in their latest issue.

  • Is Green Worth the Money?. Criticizing the green movement isn’t politically correct. But is it wrong to want a sound business case for going green? Kristine Blenkhorn Rodriguez. INSIGHT, The Magazine of the Illinois CPA Society.  September/October 2009.
  • Water Water Everywhere. But maybe not for long…What could easily be dismissed as an environmental issue has a heavy impact on business and industry as well. Here’s the business case for why water shortages matter. Sheryl Nance-Nash. INSIGHT, The Magazine of the Illinois CPA Society.  September/October 2009.
  • Green Power. What will alternative energies mean to the US economy? Carolyn Tang INSIGHT, The Magazine of the Illinois CPA Society.  September/October 2009.

Behavior/Culture & Information Overload

May 19th, 2009 Comments off

An interesting piece about how behavioral and cultural influences of the process of information impact productivity in organizations was posted today at MarketWatch.  Some companies have a culture of “the person that sends the most emails wins” that drives people to try to “keep up” with the prolific emailers, for example, and that causes productivity to fall throughout the company.  Instead, companies should set up reward systems and/or compensation plans that are based on actual outcomes and not on perceptions that actually are detrimental to the company performance.  Of course, this is easier said than done.

One thing companies could do: Tell employees their productivity isn’t measured in number of emails sent. Currently, “people need to maintain a certain communication noise level to keep up with everyone else,” said Tony Wright, founder of Seattle-based RescueTime, maker of a tool that measures how people manage their computer time. That’s a cultural problem “that businesses need to attack,” Wright said. “It’s honestly lazy management, in my opinion, to let that be part of your culture.”

Are we overwhelmed yet? Workers face huge influx of information, but they’re on their own in dealing with it. By Andrea Coombes, MarketWatch. 5/18/2009.