Decision Making Alternatives
Decision making is, arguably, the single most important cultural attribute that distinguishes a fast moving company from a stagnating one. Understanding the science, art and culture of decision making can help move your organization from mediocrity to excellence.
The premise that there is a unique right solution to a problem, or a right choice for a decision, and that given adequate time and constructive collaboration the participants will arrive at that, is suspect in today’s environment. In today’s world, where speed and agility are essential elements for competitive success, if the best option for a difficult decision has uniquely distinguished itself to be self evident, then management might well be guilty of procrastination. Business decisions often have to be made with incomplete data and some gut level convictions. What then should be the process for making decisions in the corporate world?
There are four styles of decision making: consensus, democracy, authority and command. Each has its role and place in the larger society.
For a business enterprise in a corporate environment, decisions are most effective using the authority style of decision making. Before we make that case let’s first dispense with the two other remaining styles - democracy and command.
Democracy
Democracy is well known to be an effective and efficient form of decision making for legislative processes. It allows for consultation with those whom you choose to consult, proactive advocacy by those that have an agenda and the means, and a time-efficient closure and conclusion that all can respect. Aside from its advantages of fairness and efficiency, its simplicity renders it suitable for use in a variety of situations. Unlike consensus and authority, which require a significant amount of organizational culture and interpersonal relationships to succeed, democracy can be deployed with little working relationship amongst the participants. The inherent attribute of fairness makes democracy appealing for legislative bodies while its simplicity makes it appealing for governing bodies that do not routinely work together on a day-to-day basis.
Democracy, by its very nature, tends to maintain status quo. People tend to endure the pain of the present more readily than risk enacting change.
This actually serves well in social and legislative settings where one needs to be more deliberate in changing seasoned practices that have survived Darwinian principles. But in a business setting, where risk reward ratios are significantly different, democracy leads to stagnation.
There are many other drawbacks of democracy as a style of decision making in the business environment. Defining the electorate for any issue is both tedious and fraught with political underpinnings. The few organizations that actively use this style employ either an egalitarian approach to the choice of the electorate or a circumstantial approach allowing all present to vote. Neither lends itself to good business decisions. Not everybody is equally well-informed on any specific issue. The uninformed either conscientiously abstain or maliciously drive one’s own political agenda.
Table: Styles of Decision Making 
Democracy also leads to inconsistent conclusions arising from independent decisions on related matters. For example the national electorate might vote to reduce taxes on one occasion and increase social welfare on another occasion. Overall, democracy might be a good way to decide where to go to lunch, but it is a poor way to decide whether to make a significant capital expenditure.
Command
Command is the form of decision making most often deployed in real time-, mission- and life-critical situations. A military sergeant in the battlefield, a surgeon at the operating table, a pilot in the cockpit or a fire marshal at the scene of the fire, all operate in a command mode of making decisions. There is no intent for the process to be consultative. Nobody expects to be consulted. The decision maker is trained to make those decisions. The parties involved do not second guess the decisions.
Enrolment is mandatory and taken for granted. But, those very same decision makers, operating outside the real-time situations, operate in a different mode than the command style of decision making to which they are accustomed. For instance, the same surgeon operates in a more consultative mode before and after the surgery seeking opinions from his respected colleagues. As effective as the command style of decision making is in the situations for which it is intended, it is an ineffective style for less urgent situations, in particular, for business decisions in corporate settings.
Authority
That brings us to the authority style of decision making. The defining principle here is that decisions are made by a single individual. Not by a group of people, not by a department, not by an organization and not by a committee. A single individual, by the authority delegated to them, makes a decision.
Not even the boss gets to make the decision. As will be discussed later, the boss can veto a decision – an act requiring far greater conviction – but cannot make the decision. The principle of a single-point decision maker provides for considerable flexibility in balancing consultative discussions with timely decision. As a result, the authority style can emulate a broad range of styles of decision making ranging from the command style where no consultation is warranted to the consensus style where buy-in from the stakeholders is highly valued.
The foundational premise of the consensus style, that there is a unique right answer and that collaborative consultation will render that answer self evident, is questioned in the authority style of decision making. The belief here is that most (nontrivial) decisions have multiple viable options.
Data and analysis can certainly eliminate many seemingly attractive options. There will still remain multiple viable options indiscernible with data and analysis alone. Gut-level convictions must drive the choice of the preferred option. Accordingly, instead of further protracted consultations that are only likely to lead to stalemate or compromise, one individual needs to be given the authority to make the gutlevel call. This philosophy combines some of the efficiency of the command style with the consultative virtues of the consensus style.
The premise of the authority style is that a responsible individual, close to the issue at hand, can construct superior solutions through the collaboration of others (a benefit also found in the consensus model) and not fall victim to arbitrary compromises for the appeasement of a few (a drawback of the consensus model). Like consensus, the authority style is a consultative form of making decisions. It requires the participants to not only understand its science but craftily practice the art. Furthermore, the organization must develop a culture supportive of this style. This style of decision making requires clear organizational hierarchy for it to succeed, such as that found in most corporate environments.
The science requires that the authority to make each decision be delegated to one individual. It does not prescribe the individual. The skillful practice of the art promotes dispersing decision making authority in various areas across the organization. An autocratic leader could practice the science without the art, centralizing all decision making at the top or requiring that all decisions be consistent with the wishes of the leader. The science of the authority style, practiced without the art form, could easily degenerate into an autocratic style of decision making.
Practiced well, the organization is empowered by distributed decision making. A supportive culture promotes expression of diverse opinions, without tainting individuals for having advocated less popular positions. The culture requires the universal adoption of the final decision by the entire organization. There are two clear indicators of an organization that practices the authority style effectively.
First, is decision making pushed deep into the organization to individuals that are close to the issue at hand, showing preference for proximity to the issue over breadth of perspective?
Pushing decision making down empowers people. Any concern that people lower in the organization, devoid of a broader organizational perspective, will be parochial in their analysis of the options is typically ill-founded. Entrusting individuals to understand the broader organizational impact of decisions instills a sense of responsibility and grows internal leadership. Any fear of adverse consequences of poor decisions can be mitigated by judicious use of veto powers held by the superiors.
Second, does the organization witness and accept instances wherein a decision maker, based on their conviction, chooses an option that is known to run counter to their superior’s instincts? This indicator speaks to the heart of the authority style of decision making – that gutlevel instincts must drive the preferred choice from multiple viable options. The organization should neither expect nor desire that those gutlevel instincts will always be aligned between a decision maker and their superiors. The culture of the organization must allow expression of those opinions and empowerment of the decision maker to act as he or she deems fit.
On occasion, superiors will take legitimate issue with the inclination of the decision maker, based on the superior’s broader perspective of its organizational impact. The boss always has the power of veto. The exercise of veto powers should be infrequent and reserved for avoiding a harmful decision, not for choosing a preferred decision. The strength of one’s conviction needed to exercise their veto powers must be far greater than that needed to make a decision. A decision maker chooses an option based on a majority of evidence, both factual and instinctive. In contrast, a superior, intending to veto the decision, must be convinced that there is a preponderance of evidence to the contrary.
A personal example from the author’s career as a CEO serves to illustrate this example well.
Erick, a division vice president, in search of a senior manager for his business had identified Jennifer and was impressed with her dynamism and her can-do attitude. Erick, knowing that Jennifer had previously been with the company and had left shortly after the author joined as the CEO, made sure there was no residual ill-will. Erick seeking the CEO’s counsel was advised that such situations of returning employees seldom work out – an opinion that Erick did not share. When reference checks reaffirmed Erick’s instincts, he, as the decision maker, was ready to go with his gut-instincts provided his boss would not veto the decision. Confronted, the CEO had to evaluate the strength of his general conviction about returning employees. While the CEO would not have made the same decision as Erick, his broad belief could not overrule the specific instance of which Erick was convinced.
Though the CEO, based on his broad experience, believed there was a majority of evidence supporting his position, there was not a preponderance of evidence in this specific instance. He declined to veto the decision.
As an epilogue to the story, it should be pointed out that Jennifer emerged as a shining star, winning company-wide recognitions on multiple occasions. The CEO had an enhanced responsibility to assure Erick, Jennifer and the entire organization that such instances enhance the culture in support of this style of decision making.
However, exercise of the veto is sometimes necessary. On those rare occasions skillful practice of the art of veto is essential. Exercised in private, it offers a coaching opportunity for the superior to broaden the horizons of the decision-maker’s business understanding.
Additionally, a supportive culture enables the decision maker to understand the need for those checks and balances. All that said, the power of veto should be used sparingly.
Perhaps the most powerful characteristic of the authority style is the empowerment of the individual and the associated accountability it engenders. The result is a self-assumption of responsibility to be a guardian of the interests of the company over parochial or individual agendas. Such empowerment leads to better decisions by people better informed of the nuances of an issue.
While the science of the authority style is quite simple, its effective practice requires considerable art form and a supportive culture.
Good and effective execution of the authority style of decision making is as difficult as the consensus style. However, it can lead to faster and superior results. An organization that fully absorbs the science, art and culture of the authority style of decision making can move from mediocrity to excellence.
