TRENDS
Faced with a number of seismic digital shifts, organisations need to rethink how they approach
#Digital strategic decision making if they want to break with the past
Digital leaders built for fast decisions
Digital leaders built for fast decisions
Five digital shifts are changing the landscape of business, impacting both strategic and operational decisions. To
Five digital shifts are changing the landscape of business, impacting both strategic and operational decisions. To respond quickly and
respond
dynamically, quicklyneed
organisations and dynamically,
to tap into theorganisations need
collective voices to tap
of their into the collective
stakeholders, harnessingvoices of their
the power stakeholders,
of digital to ensure harnessing
the right
information reaches thethe right people at the right time.
power of digital to ensure the right information reaches the right people at the right time.
IN 30 SECONDS Intelligence everywhere
Smart analytics creates an unprecedented data trove, enabling and
•F
ive concurrent, digital shifts are empowering everyone in the value chain.
Empowering
stakeholders Decision process
for the digital age
W hat happened at Volkswagen?
What chain of events led to ‘A fast decision is often better than no decision. Since no decision leads to delays
2
the collapse in share price by 40%, or unwanted results. No decision therefore is also a decision but it’s passive
the resignation of its CEO and the and with high risk!’ – THOMAS LÜNENDONK, JULY 20151
TRENDS
Methodology
have found that many firms struggle the digital wave has first impacted
over complex structures, systems and more susceptible sectors (taking down outcomes if a number of
TRENDS
processes. Respondents were 2.0x as Kodak, Borders, Blockbuster and others) inter-related elements are in
likely to think that new market entrants and is continuing its relentless progress place
#Digital and more agile competitors using digital
technologies are a significant threat, even
into previously immune verticals such
as financial services, automotive
as they recognise time is not on their side and healthcare. A key element of an Using the BearingPoint Hypercube
Introduction (figure 1). And inevitably, bigger (and organisation’s strategic response, clearly, smart analytics solution we found that
therefore more complex) companies have is to make better, faster decisions that strategic decisions are over 1.3x as likely
Staff and customers less efficient decision processes – ‘too big will stand the test of time. But how can to lead to good outcomes if a number of
should be directly involved to fail’ can become ‘too slow to succeed’. this outcome be achieved, given just inter-related elements are in place. Top
in decisions how complex and downright opaque of the list, according to our research, is
organisations are today? empowerment.
Information needs to be
accessible to all stakeholders
Figure 1: Size and complexity are hindering good decisions
Leaders need to drive digitally Left: Respondents’ company size and the likelihood of making poor decisions
Left: Respondents’ company size and the likelihood of making poor decisions
Right: Respondents’ report impediments asssociated with strategic decision-making
enabled decisions Right: Respondents’ report impediments asssociated with strategic decision-making
Under 999
66% heavily dependent on other
decisions
Key takeaways employees
1.0x
Poor decisions 1.2x more likely in large companies decision-making process
About the author as compared with smaller companies
47% subject to significant
compliance constraints
1.1x
1,000-9,999 and / or industry
The psychology of decision making employees regulation
Methodology 1.2x
46% decision made under
10,000-99,999 significant time pressure
employees
Notes and bibliography Over 100,000
employees
Source: BearingPoint Institute survey, 2015
Staff and customers Significantly, different types of decision One in three marketing
can be seen to benefit from involving decisions met their
should be directly
4
Leaders need to drive digitally Figure 2: Better decisions involve customers, staff on other stakeholders
Figure 2: Better decisions involve customers, staff and other stakeholders
enabled decisions Left: Correlation between degree of staff involvement and quality of decision process
Right: Correlation between customerLeft: Correlation and
involvement between degree
quality of of staff involvement
decision outcomeand quality of decision process
Right: Correlation between customer involvement and quality of decision outcome
Stop deciding unilaterally, start
enabling decisions to happen More likely 2.5x
to make a
Key takeaways
good
decision
2.2x
About the author
1.0x 1.0x 1.1x
The psychology of decision making
0.5x
Methodology
not be more clear. As information sources process is over 2.0x as likely to have used
diversify and extend beyond company
stakeholders digitally accessible information.
TRENDS
F
involved in deriving insights, not as passive or improved decision-making, the Given how many business decisions rely
Information needs to be
accessible to all stakeholders
Stop deciding unilaterally, start Bad decision process Good decision process
enabling decisions to happen Slow; lack of top-level commitment, informal; Information was Fast; had top-level commitment;
lacked workflow application/tool; immediately formal processes in place;
1.5
few alternative options considered; x used workflow application/tool;
Key takeaways complicated decision 1.3
x accessible
considered alternative options;
straightforward decision
About the author
Information
accessed
The psychology of decision making digitally
Decision speed
Methodology measured in days,
rather than weeks or
months
Notes and bibliography
the need for a well-architected digital information needed to make a decsion include immediately
platform. From the research we can see was totally automated. And, as shown accessible information
#Digital that a good decision-making process is
1.5x more likely to include immediately
in figure 4, decisions using algorithms to
analyse data and deliver insights were
accessible information; indeed, it is 2.8x as likely to yield better outcomes.
Introduction
Crowdsourcing data
Key takeaways
Information needs to be
accessible to all stakeholders
Figure 5: Digitally-enabled decision processes need to be driven proactively
Leaders need to drive digitally Figure 4: Digitally-enabled decision processes need to be driven proactively
Correlation between quality of decision process and planned/deployed digital business initiatives
enabled decisions Correlation between quality of decision process and planned/deployed digital business initiatives
for good decision making, not least company can commit is to act as if
utilities – which has a higher level of nothing is happening, or to merely
TRENDS
Methodology
which it participates – engaging as a • Multiple digital shifts are acting in tandem to have an
peer, not making pronouncements like unprecedented impact
#Digital some disengaged dictator. • Empowerment of staff, customers and other stakeholders should be
the focus of any business looking to improve its decision-making
To this end organisations can take • Digital technologies are enablers of significantly better business
Introduction actions such as: decision making
• Implementing a data lab, so • Becoming smarter requires a significant change in mindsets,
Staff and customers that the firm has state of the art structures and skills.
should be directly involved analytical capabilities that deliver Conclusion: Embracing digital technology, in an actionable way, leads
in decisions the right information to the right to improved decision making. To achieve this, there needs to be a
people. breakthrough in thinking from the top of the organisation.
Information needs to be • Adopting experimentation-based
accessible to all stakeholders approaches, as every business
has different needs – building Achieving these changes in thinking
Leaders need to drive digitally experience of what works should be are not for the many, but for the
enabled decisions a higher priority than assuring the few who want not only to ride, but
ROI of each initiative. become part of the digital wave. The
Stop deciding unilaterally, start • Institutionalising co-creative alternative is a continued disconnect
enabling decisions to happen activities, expanding their scope from an increasingly integrated, dynamic
beyond product development to world, leaving the organisation on an
Key takeaways decision making across the board. accelerating slide towards oblivion.
Methodology
Methodology
Are decisions always rational? The group nature of most organisational A typology of organisational
TRENDS
psychology literature says not: emotion decision making. In this context, an decisions
and social influence often get in the way. understanding of social influence
i2 media research, led by Professor
(conformity, compliance, obedience),
#Digital Academic and applied psychologists
have long studied the processes and
group dynamics, and the composition
Jonathan Freeman, has developed a
model of behaviour that has been applied
of a decision-making team is essential.
mechanisms of decision-making on in relation to search behaviours, and is
Effective organisational decision-making
Introduction an individual and group basis, defining processes work best when risks arising
applicable to understanding decision
decision making as the process by which making. The model makes explicit two
from potential sources of social bias are
Staff and customers individuals identify an option from an dimensions – the time pressure under
actively managed. How? Through open,
should be directly involved array of alternatives after the evaluation which a decision is needed, and the
transparent processes so all ideas are
in decisions of possible outcomes (Wang and Ruhe, granularity (and scope) of the decision.
considered. And safe, privacy-maintaining
2007). Mapping these out produces four
mechanisms so that uncomfortable facts
quadrants, which describe types of
Information needs to be are considered and not avoided.
organisational decision.
accessible to all stakeholders Decisions are not ‘rational’
Originally, decision making was identified Good decisions flow from well- As reported in the main text, decisions
Leaders need to drive digitally as a rational process whereby the defined, specific questions made under high time pressure tend to
enabled decisions decision maker(s) carefully evaluates be evaluated as better than decisions
One of the key determinants of the
information – until the concept of made under less time pressure. We have
quality of a decision, and indeed the
‘bounded rationality’ was established, all seen occasions where more drawn out
Stop deciding unilaterally, start mechanism by which the decision is
which highlights that humans have decisions can enable the amplification of
enabling decisions to happen reached, is the character, certainty or
limited resources (time and information) social biases. In these situations, low time
specificity of the question or problem
on which to base decisions. Subsequently, pressure can allow biases to accumulate,
Key takeaways being addressed.
a large body of research focused on
differentiating slower (more methodical) Decision-making diagram
About the author from faster (more instinctive) decision How limited resources such as time and information effect the basis of a decision:
of information sources – risking giving it’s the turn of executing, evaluating and
greater weight to those sources consistent closing the process.
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As part of our review of the current state 29%. As well as painting a picture of Good process: Agree OR Strongly
TRENDS
Key takeaways
1. Trends und themen, Lünendonk, Mindleheim, Germany, web, PDF, Thomas Lünendonk, 07/15, http://bit.ly/LDonkTrends
2. ‘The four horsemen of bad decision making’, Fortune, New York, NY, USA, web, Ryan Derousseau, 28/10/15, http://bit.ly/Fortune4Horse
TRENDS
3. ‘Toshiba just lost its CEO to a huge accounting scandal’, Fortune, New York, NY, USA, web, Geoffrey Smith, 21/07/15, http://bit.ly/FortuneTosh
4. ‘Transient advantage’ Harvard Business Review, Boston, MA, USA, web, Rita Gunther McGrath, 06/13, http://bit.ly/HBRTransAdv
#Digital 5.
6.
‘How to live with risks’, Harvard Business Review, Boston, MA, USA, web, editorial, 07-08/15, http://bit.ly/HBRRisks
‘Brief: Staffing For Data-Driven Design’, Forrester Research, US, web, Allegra Burnette http://bit.ly/1QDrMOL
7. ‘Sir Clive Woodward: “Understanding digital data is key”’, The Telegraph, London, UK, web, Oliver Pickup, 09/07/15, http://bit.ly/TelSirCW
Introduction 8. ‘L’Oreal: How technology is transforming beauty’ The Telegraph, London, UK, web, Sophie Curtis, 18/07/15, http://bit.ly/1I5YXI1
• ‘The onrushing wave’, The Economist, London, UK, web, editorial, 18/01/14, http://bit.ly/OnrushWave
Staff and customers
• ‘Home’, Freedom, Inc., USA, web, Brian M Carney and Isaac Getz, http://freedomincbook.com
should be directly involved
• ‘Message not received: why business communication is broken and how to fix it’, Amazon, Seattle, WA, USA, web, Phil Simon, 02/03/15,
in decisions http://bit.ly/AznSimon
• ‘Huit questions sur l’entreprise libérée’, Les Echos, Paris, France, web, Yves Cavaret, 09/04/15, http://bit.ly/Echos8Q
Information needs to be
• ‘The best data storytellers aren’t always the numbers people’, Harvard Business Review, Boston, MA, USA, web, Alexandra Samuel, 28/10/15,
accessible to all stakeholders http://bit.ly/HBRDataStory
• ‘Everyone says they listen to their customers – here’s how to really do it’, Harvard Business Review, Boston, MA, USA, web, Ana Brant,
Leaders need to drive digitally 28/10/15, http://bit.ly/HBRListen
enabled decisions • ‘Observing culture: differences in US-American and German team meeting behaviors’, University of Nebraska Omaha, Omaha, NE, USA, web,
PDF, Nale Lehmann-Willenbrock et al., 08/13, http://bit.ly/UNOObsCulture
Stop deciding unilaterally, start • ‘3 timeless rules for making tough decisions’ Harvard Business Review, Boston, MA, USA, web, Peter Bregman, 02/11/15,
enabling decisions to happen http://bit.ly/HBR3Rules
• ‘The visionary rebuilding GE from scratch to become a digital powerhouse’, The Telegraph, London, UK, web, James Quinn, 03/10/15,
Key takeaways http://bit.ly/TelGE
• ‘Can we design trust between humans and artificial intelligence?’, Fast Company, Harlan, IA, USA, web, Patrick Mankins, 19/06/15,
About the author http://bit.ly/FastcoTrust
Methodology
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Methodology
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