How are decisions made in your organization?
Does the boss ask everyone what they think but then go with a gut feeling?
Perhaps leadership simply votes and the privileged vocal majority hold sway?
Maybe your company attempts to keep up with the times by insisting that every choice is a “data-driven decision” but no one really knows what that means. Data is great if you can make sense of it: trends in numerical data can reveal loads of relationships between inputs and outcomes. However, what if the data is complex and unclear?
What if your organization operates in a rapidly changing environment, each day presenting never-before-heard-of challenges and opportunities? What if the memory of a recent failure has everyone walking on eggshells? What if the person you used to rely on to make the hard decisions has left the company? Have no fear. Your company can make better, faster, and more creative decisions to remain relevant and impactful. Better, faster, and more creative decisions are the essence of organizational agility.
Agility is, in theory, simply the ability to successfully respond to change. However, agility in practice requires tight coordination of nearly every aspect of an organization’s functioning.
A unified company is better able to swiftly respond to change and maintain consistently high performance. When everyone shares the same vision, has a similar understanding of the company’s strategy and position, and feels involved in the decision-making process, great things can happen. If everyone is not on the same page, business initiatives will suffer from low commitment. Employees won’t see how their daily efforts connect to the company’s strategy.
Without alignment, cumbersome organizational structures and redundant processes can slow down decision-making. Taking too long to decide can result in missed opportunities to reach a developing market or effectively respond to customer feedback. Alternatively, rushing into action wastes resources, increases mistakes, and limits creativity. How can we confidently calibrate this delicate balance?
The answer, my friends, is scenario planning. Great decisions result from a choice between several plausible future scenarios. Scenarios are hypothetical executions of the company’s strategy which are developed during rounds of collaborative sense-making. During this collaborative process, a diverse team shares relevant information and experiences. Ideally, this team is an intentional blending of perspectives and represents all relevant stakeholders. The team begins to imagine the possible outcomes of each scenario, while maintaining the context of the organization’s values, vision, and mission. Scenario planning is grounded in the assumption that any question has many various acceptable answers. The goal is not to think of every possible outcome; the goal is to systematically consider the logical ramifications of a few realistic choices currently available to your company.
The best decision ultimately depends on each company’s unique positioning and strategy but there are four universal criteria that support better, faster, and more creative decision-making. First, high-quality information is essential; teams must rely on recent, accurate, and objective information. Second, efficient knowledge management guides scenario planning by providing a reflexive form of organizational memory that transcends the limits of human memory and lives on when key senior employees have moved on. Third, a culture of empowerment and inclusion is fundamentally connected to the scenario planning process. Team members must feel safe and valued for a company to truly capitalize on its inherent strengths and diversity. However, a perfect culture is not a pre-requisite. Much like the philosophical chicken-or-the-egg question, both the culture and the process evolve together. Fourth, decentralized authority can speed up response times to capture increasingly fleeting opportunities. Decentralization means trusting more teams to independently make decisions that allocate significant resources in areas they know best.
Not every decision must be made by a collaborative, diverse, and cross-functional team: this method is best suited to complex and ambiguous situations. When markets are stable, competitive advantage is unrivaled, or answers are obvious, an autocratic, top-down decision-making process can be fast and effective. More likely, your company faces constantly changing information in an unpredictable world. Scenario planning is a great way to balance speed and accuracy, combine efficiency and effectiveness, or introduce innovation with a high probability of success. Scenario planning is how your company will make better, faster, and more creative decisions.