How should a self-organizing company make a 100k € investment?

February 18, 2015

Read time 3 min

As an abstract concept, decisions are easy. We make a good decision when we choose an solution that optimizes the whole and emphasizes the long-term.

Yet, if such an solution is available, what is there to decide? If it’s good for all parties concerned, now and in the future, why haven’t we done it already? It’s not a decision, it’s a “to-do” item that’s long overdue.

Decisions are a balancing act where all options have their pros and cons. The way to make a sound decision depends on the complexity of the domain. In “A leader’s framework for decision making” the authors Snowden and Boone separate 4 distinct domains: simple, complicated, complex and chaotic. In this blog post I’ll cover the first three.

Decide which way to go? Business concept

In the simple domain a single right answer exists. We can make decisions quickly and by ourselves. If everyone in the organization would make the same decision, just make it.

If you need post-it’s for a meeting and we’re out, buy some. If a low cost piece of equipment breaks, go get a new one. Meeting a client for lunch? Pay for it.

If we’re working in the complicated domain several right answers exist. In this domain, we should consult experts. Even if you could make and implement the decision by yourself, you probably shouldn’t.

If you need to install a new piece of server hardware, talk to the IT department. If you’re planning on setting up a website, talk to the marketing team. If you’re going to a sales meeting, talk to the sales department. You can still make the decision, but you shouldn’t make it in a vacuum.

Many of the decisions we struggle with in organizations are in the complex domain. There are several right answers, but no amount of planning or studying will bring them out. The effects of a decision are impossible to predict beforehand, and thus each option should be carefully considered.

In the complex domain, we have to experiment. We should try to avoid big decisions and divide them into smaller, more manageable ones. Instead of making a 100k € decision, can we first do something with 1000 € to learn and get new information that will help us make a more educated choice down the road?

In the complex domain, consider the following when making a decision.

Before the decision we should ask:

  • Am I the best person to make this decision? (For example, if you’re a major benefactor, you might not be the right person to decide.)
  • Who should be involved in the decision? Who’s the expert? Who are the stakeholders? Who is most affected by the decision?
  • Can we generate more options?
  • When do we need to decide?
  • What happens if we don’t make a decision?
  • What are we commiting to with our decision? Can we fall back?

When making the decision we should:

  • Make the smallest possible decision
  • Decide at the last responsible moment
  • View the decision as an experiment

Afterwards we should:

  • Review and evaluate the experiment
  • Learn from it
  • Make the next decision (=experiment)

Let’s assume the 100k € investment is in the complex domain. We’d get the relevant people together, generate more options, try to find smaller experiments, see if we can delay the decision to get more information. Eventually, as a group, we’d make a make a decision, even if we couldn’t make it smaller.

Does it have to be a consensus? Optimally yes. Yet consensus can be too tiresome and slow to reach. If we can’t reach a consensus we should aim for a decision that everyone can commit to even though they don’t necessarily agree with it.

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