The Decision Bottleneck. Renowned management consultant and author, Peter Drucker, once noted, “The bottle neck is always at the top of the bottle.” This is true for most businesses. What we find is too many decisions remain in the hands of the person on top, which inadvertently hobbles the efforts of employees, and the management team, to excel in their roles. Relieving these bottlenecks is a major focus of our coaching.
Typically, businesses move at the pace of the leader. In their infancy, the leader can easily manage all areas of the business. They have an overarching view of the company, due to their hands-on role in all the departments. This means they can see what needs to be done to bring the business to a position of profit. However, over time, they become used to being the sole decision maker. This is fine, but only while the business is small.
As the business grows, the owner then starts to employ highly skilled people. These experts must then be empowered to take responsibility for their individual units. However, if the leader does not hand over the decision-making responsibilities to their management teams, these teams are then forced to wait for the business owner’s final say. This is where the leader starts stalling progress on developing the sales, marketing, finance, accounting and human resources departments.
When this happens, it is a signal that the business owner needs to adjust their way of thinking. They must be willing to let go of control and implement systems that decentralise the decision-making process, away from themselves and onto the management team. This, however, can often be a difficult shift to make. As part of our coaching program, we actively work with our clients to help them step-back.
Here are seven principles to consider.
The first, and perhaps most important step, is for the leader to realise that their role within the business will change as the business grows and evolves. They need to start focusing on their strategic priorities and less on the day-to-day running of the business. As renowned American businessman and author, Steven Covey, put it, the owner needs to start doing more of the “important” work rather than the “urgent” work.
As the leader shifts from working in the business to working on it, they start strategizing, building systems and processes, training, delegating and ultimately empowering their team to take over at an operational level.
This is not an organic shift. It is very intentional and requires discipline on the side of the leader. They have to realise that it is a new competency, a muscle that must be built up. And if they stop working on it, they will keep defaulting to their established competency of operation. One way to enforce this practice, is for the business owner to diarise blocks of time, on a weekly basis, purely for the purpose of strategy work.
To be able to step away from the operational side of the business, leaders need to be able to delegate their old responsibilities. Successful delegation, however, requires leaders to be clear about what their expectations are, and the deliverables required. If the leader is concerned that the people to whom they have delegated have what is called a “low task relevance maturity” – meaning they may not have the understanding of the ability to execute a task adequately – then the leader needs to put shorter milestones in place, and schedule report back sessions more frequently, to ensure their people are coping with the job at hand.
Leaders, however, must be patient when building up their people, in order to allow them to build the confidence to not only execute their tasks well, but to begin making decisions on their own, which is ultimately what the leader wants.
Delegation and spreading the load are often used interchangeably, but there is a difference. Although a leader needs to delegate decision making responsibility, the load has to be spread amongst the various players, perhaps one person in every department. It is no good delegating the leaders entire set of responsibilities to one or two people, as this will not prevent the problem of bottlenecks; if anything it may exacerbate them.
The leader, then, together with his management team, needs to clearly define who has authority over which decisions. This authority will mean that a particular person or team will have the final decision on a particular component of the business. This assures a chain of command and assists with accountability.
The person with authority over a decision must then be held accountable for that decision. Leaders must insist that the person takes ownership of the responsibility, keeps track of the progress being made, and reports back at predefined intervals. However, key to this is that only one person per department is made accountable. This person then works with the leader to provide relevant information and help the owner to break down, analyse and understand the decisions that have being made by their team.
While authority and accountability fall on the shoulders of a single person, responsibility falls on everyone in the team. This allows the entire team to participate in generating ideas and taking part in the decision-making process. They can then ultimately all share in the success of the process as everyone becomes responsible for seeing the decision through.
Finally, leaders must value their teams. Teams are more likely to rally behind ideas and strategic directions that they understand and have helped formulate. When a leader executes ideas they personally do not fully understand, without consultation, they inadvertently undervalue the team and discourage them from future participation.
With these seven principles in mind, we encourage our clients to step back and realise the inherent value to decentralising a business’s decision-making processes. When leaders involve their teams in the process, the teams can offer up valuable insights that a leader may not be privy to or had thought about. This makes the process a lot richer and more successful.
I leave you with a closing thought. Correct decisions lead to growth and expansion, poor decisions lead to stalling and wastage – we need to adjust our decision-making accordingly. This is the the Decision Bottleneck.