Power in Numbers: The importance of collective thinking in Corporate Decision Making
Oct 28, 2016
Decision making is the most basic and vital aspect of running a company and the ability to do it well is a major determinant in the level of success that a company may experience. At its best corporate decision making is a collaborative effort between those in the company that have been specifically placed in positions of power due to either their specialties or their overall business acumen. In these situations, multiple individuals seek to make decisions by analyzing specific situations, providing their input, and allowing the group to determine the best course of action. While ultimately there is a key decision maker who signs off on the final decision, that person depends on the groups’ ability to collaborate to make informed decisions.
The problem that arises in modern corporate settings is that this type of collaborative decision making rarely occurs because of the structure of the organization. Whether the CEO is the chief decision maker and rarely requests the council of others to make decisions, or the CEO is surrounded by enabling “Yes Men” who always agree with the CEO’s course of action, many organizations simply don’t foster the necessary collaborative environment to effectively make decisions.
While it is understood that all company’s require a structured corporate hierarchy; and that generally includes one person who has the final say on major decisions, it is necessary to implement collaborative thinking into the decision making process for all organizations. Outside of collaboration being a logical way to hear other opinions and perspectives; collaborative thinking in a corporate environment also provides the following:
- Risk Management – The utilization of multiple perspectives during the decision making process forces the executives to look at a situation from multiple points of view. This may provide the key decision maker(s) with an ability to assess a scenario that was previously unknown and possibly avoid a dangerous situation; or at the very least create a contingency plan to deal with that situation if it were to arise.
- Executive/Management Training – If you plan to have your corporation exist in the long-term, then you will eventually be forced to deal with executive succession, as nobody works forever, you will be forced to find other individuals to eventually replace your executives and managers. If they are included in the decision making process now (in a real sense where they feel as though their ideas carry weight) then they will be in a better position to make decisions in the future. Executive and Management development can not be done in a vacuum and shouldn’t be done on the fly, with this understanding it should be obvious that allowing these individuals to be involved in real world decision-making as junior executives or assistant managers will better prepare them to do it in the future.
- Improved ability to evaluate personnel – While implementing collaborative efforts into decision making is a good way to train those employees who are already positioned to become the managers, directors, and executives of the future; it also allows management the opportunity to identify and evaluate personnel whose talents may not be as easy to recognize. Fostering an environment of collaboration tends to provide an opportunity for companies to locate “Diamonds in the Rough” through their ability to solve problems and assist in the making of key decisions.
- Innovation – The fact is that innovation can not be fostered properly in a prohibitive environment. The ability to have an environment that welcomes healthy conflict, disagreements, and challenges (responsibly and respectably) the authority of the existing management/executive team is also the environment that allows individuals to be creative in their thinking. This is how innovation can occur, and in the best of cases it is that innovations that will allow the company to grow and prosper in the future. While some sort of boundaries do need to be established, the ability to allow everyone the opportunity to make a positive change in the company is how the market leaders of today stay market leaders tomorrow.
- Decision Making Effectiveness – While decision making is generally done at the executive or managerial level; implementation and execution is generally done at lower levels of the corporate hierarchy; obtaining the perspective of those that will be responsible for executing decisions is a good way to increase the effectiveness of the company’s decision making processes.
- Transparency – When decisions are made behind locked doors there tends to be the belief that the ramifications of those decisions may not be as clear as observers may think. When the decision making process is opened up and more people are included, there is a sense that the executive team is being transparent in their actions. While this doesn’t directly improve effectiveness of the decision making process within the company, it does provide more confidence to the board of directors, shareholders, and the employees, which is always a benefit to the company.
- REAL Checks and Balances – In a situation where one individual is responsible for all key decision making or where the chief decision maker never faces any resistance on his/her decision making; there can be no true system of checks and balances. THIS IS ALWAYS DANGEROUS. Without a functional system of checks and balances, the company is in a far more risky situation. These systems exist so that there is always another body in place to decrease the likelihood of mistakes happening, monitor for operational or financial malfeasance, or simply providing a different perspective; and it has to exist for companies to succeed in the long term. Without this operational ally companies drastically increase the level of risk associated with operations.
The fact is that the ability to effectively implement collaboration into the corporate decision making process is one of the best ways to improve the quality of operational decisions. Without this type of effort being made to maximize the efficiency and effectiveness of decision making, companies will generally find themselves overly dependent on a singular voice, and eventually that voice will be wrong. The use of effective collaboration is paramount to a company’s ability to not only exist in the present but also to exist in the future. Similar to a sports team, companies need individuals who can come in and replace other employees when they are terminated, promoted, or are indisposed for any number of reasons; without the development of a collaborative environment these companies are open to unnecessary exposure and are overly dependent on a finite resource —– the decision maker.
With the tumultuous business climate that the corporate world is experiencing we have found that nobody is infallible and nobody is perfect; with that understanding it is always in the best interest to use teamwork to not only make decisions, but also be in position to handle the repercussions of those decisions; whatever the outcome may be.
Get access to the 5 executive powerful coaching questions leading to business mastery webinar!