Who has “the D”? How clear decision roles enhance organisational performance.

Posted: March 4, 2013 in Business Management
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This is reproduced from the January 1, 2006 Harvard Business Review, by Paul Rogers & Marcia Blenko. It was sent to us by a client experiencing the need to clarify their decision-making on a particularly significant marketing matter, and he kindly thought it should be of interest to a wider audience.

We found it fascinating and relevant – and we hope you find it useful, too.

We have seen more chaos caused in organisations by the true decision-maker being obscured (or inadequately supported in their decision-making) than from any other single factor, except, perhaps, confusion over what the decision that is actually being taken really is. Understanding who has the real authority in any decision is vital, as is a formal process to make key decisions.

That’s why a big part of our business isn’t just generating ads – any ad agency worth it’s salt can come up with decent ads. We now spend at least as much time helping our clients decide what those ads should be about, and who they’re talking to, and why, and how the business needs to respond to decisions taken in the marketing area.

Marketing shouldn’t be a silo, but often is. And marketing should really drive every other department – drive the business strategy of the whole organisation – not merely respond to it, like a glorified production centre.

This very clear article solves the first problem – who is really taking the decision – and we recommend it to you.

And crucially, whoever is really taking the decision needs to be on top of it, at every stage.

To help you solve all the other problems about devising a successful business strategy – the end outcome of which is communications – call Magnum Opus on +613 9426 4500.

The Idea in Brief

Decisions are the coin of the realm in business. Every success, every mishap, every opportunity seized or missed stems from a decision someone made-or failed to make. Yet in many firms, decisions routinely stall inside the organization-hurting the entire company’s performance.

The culprit? Ambiguity over who’s accountable for which decisions.

In one auto manufacturer that was missing milestones for rolling out new models, marketers and product developers each thought they were responsible for deciding new models’ standard features and colors. Result? Conflict over who had final say, endless revisiting of decisions-and missed deadlines that led to lost sales.

So how to clarify decision accountability? Assign clear roles for the decisions that most affect your firm’s performance-such as which markets to enter, where to allocate capital, and how to drive product innovation.

Think “RAPID®”.

Who should Recommend a course of action on a key decision? Who must agree to a recommendation before it can move forward? Who will perform the actions needed to implement the decision? Whose Input is needed to determine the proposal’s feasibility? Who decides-brings the decision to closure and commits the organization to implement it?

When you clarify decision roles, you make the right choices – swiftly and effectively.

The RAPID Decision Model

For every strategic decision, assign the following roles and responsibilities:

PEOPLE WHO ARE RESPONSIBLE FOR

Recommending

  • Making a proposal on a key decision, gathering input, and providing data and analysis to make a sensible choice in a timely fashion
  •  Consulting with input providers-hearing and incorporating their views, and winning their buy-in

Agreeing

  • Negotiating a modified proposal with the recommender if they have concerns about the original proposal
  • Escalating unresolved issues to the decider if the “A” and “R” can’t resolve differences
  • If necessary, exercising veto power over the recommendation

Performing

  • Executing a decision once it’s made
  • Seeing that the decision is implemented promptly and effectively

Inputing

  • Providing relevant facts to the recommender that shed light on the proposal’s feasibility and practical implications

Deciding

  • Serving as the single point of accountability
  • Bringing the decision to closure by resolving any impasse in the decision-making process
  • Committing the organization to implementing the decision

Decision-Role Pitfalls

In assigning decision roles:

  • Ensure that only one person “has the D.” If two or more people think they’re in charge of a particular decision, a tug-of-war results.
  • Watch for a proliferation of “A’s.” Too many people with veto power can paralyze recommenders. If many people must agree, you probably haven’t pushed decisions down far enough in your organization.
  • Avoid assigning too many “I’s.” When many people give input, at least some of them aren’t making meaningful contributions.

An example of the RAPID model in action

At British department-store chain John Lewis, company buyers wanted to increase sales and reduce complexity by offering fewer salt and pepper mill models. The company launched the streamlined product set without involving the sales staff. And sales fell.

Upon visiting the stores, buyers saw that salespeople (not understanding the strategy behind the recommendation) had halved shelf space to match the reduction in product range, rather than maintaining the same space but stocking more of the products.

To fix the problem, the company “gave buyers the D” on how much space product categories would have. Sales staff “had the A”: If space allocations didn’t make sense to them, they could force additional negotiations. They also “had the P,” implementing product layouts in stores.

Once decision roles were clarified, sales of salt and pepper mills exceeded original levels.

Making Critical Decisions the RAPID way

It is increasingly important, no matter what the size and complexity of your organisation is, to have a defined decision-making process.

Having been a leader of extensive global and regional underwriting and marketing business units that require many fast and accurate decisions, our teams had no choice but to establish formal decision-making roles and responsibilities.  In retrospect, while these written authorities provided some clarity, they were fairly one dimensional written “lines of authority”.  To support these basic decision-making rules required constant interaction and an enormous amount of communication.

Executing a strategic plan successfully depends upon the success or failure of the actual people executing the plan to make good decisions.  It stands to reason that if you can improve your team’s decision-making abilities then plan execution and results should also improve along the way.  The RAPID decision-making model goes a few steps further than what we call “written lines of authority” and is an easy but effective way to instil professional decision making within an organisation.

According to a Bain and Company Study, the average organization has the potential to more than double its ability to make and execute key decisions.

On a decision-effectiveness scale of 0 to 100, the best companies score an average of 71, while most companies score only a 28, according to Marcia W. Blenko, Michael C. Mankins, and Paul Rogers, authors of Decide & Deliver: 5 Steps to Breakthrough Performance in Your Organization.

Quick summary of RAPID

  • RAPID was developed by Paul Rogers and Marcia Blenko – two Bain & Company Consultants.  Their article: “Who has the D? How clear decision roles enhance organizational performance” which appeared in the January 2006 Harvard Business Review has since become one of HBRs “10 must reads”.
  • The Acronym RAPID describes the various roles and responsibilities for clear decision making within an organization.  With respect to critical decisions, it ultimately shows how power flows through an organization and/or business unit.
  • The objective with this approach is to create a more formalized, participatory approach towards decision-making process within an organization.
    It is also useful as a “post mortem” tool to diagnose failed decisions – to see what element or elements in the RAPID process was/were lacking or missing so the next time a critical decision has to be made so you are not repeating the same mistakes over and over again.
  • Implementing RAPID can be messy; it can reveal a convoluted and faulty decision-making process so there must be a full commitment to “check egos at the door” and accept the need for adopting RAPID as part of an organizational improvement initiative.  If your organization is in flux, it may not be the appropriate time to implement RAPID.
  • The web site http://www.decide-deliver.com designed by Rogers and Blenko can help you assess your decision making prowess and also, do the same type of assessment of your organization.
  • One of the pitfalls of this approach can be that it actually slows decision-making down. Therefore, at the outset of a project it is recommended that you decide which projects will follow RAPID and which ones will not.

Characteristics of High Performance Companies That Use RAPID

High-Performing organizations make good decisions quickly. Some of the characteristics they exhibit are:

  • For complex issues that require rapid decision making, achieving the right mix of control and creative freedom is critical for sustainable success.
  • A list of critical decisions in priority order must be part of the Strategic planning process. Determining which ones will follow the RAPID process is also required.
  • Decisions that build value are most important and thus, have the highest priority on such a list.
  • Action is the Goal.
  • Ambiguity is the enemy.
  • Speed and adaptability are key.
  • Decision roles trump the organizational chart.
  • A well-aligned organization reinforces roles and responsibilities.
  • Practicing beats preaching.  That being said, a communication plan needs to dovetail with the RAPID process.
  • Remember the “Rule of 7”: once you’ve got 7 people in a decision-making group, each additional member reduces decision effectiveness by 10%. Thus, a group of 17 or more rarely makes any decisions.
  • Managers spend 50% or more of their time in meetings, but Bain & Company research shows that two-thirds of meetings end before participants can make important decisions. Not surprisingly, 85% of executives are dissatisfied with the efficiency and effectiveness of their companies’ meetings.

If you think your meetings, strategy planning and decision-making as less than optimal, perhaps RAPID® is the answer?

RAPID® is a registered trademark of Bain & Company, Inc.

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