Building Effective Decision-Making Teams

The Conflict

My wife and I had a fight yesterday.

Two weeks back, we went shopping for a new mattress. We liked one, but wanted to check the reviews and compare prices online before we bought it. But then the sales guy at the store tells us that we can order the mattress right there, and we can cancel the order anytime before delivery without any charge whatsoever. So we order the mattress. We also agree that I would do some research online and circle back with her to decide whether we need to cancel the order. So I go do the research – turns out that there are some (minor) concerns around the synthetic materials used in these mattresses. Unfortunately, with our busy lives, I forget to sync back with my wife.

Two weeks go by. The delivery guy shows up at our door at the scheduled time. As the delivery guy unwraps the mattress, a foul chemical odor fills the room. Right then, my wife asks whatever happened to the research I was supposed to do. I tell her what I found, and she’s not happy. We fight.

Initially, I blamed poor communication for our failure at a simple decision like buying a mattress. But now, after reading a recent article in Harvard Business Review, I have a different take on our conflict (read through to the end to find out how we resolved the root of this issue).

The Reorganization at Yahoo

In an article titled the “The Decision-Driven Organization” in the June 2010 issue of the Harvard Business Review, the authors describe a failed reorganization at Yahoo Inc.

In December 2006, then CEO Terry Semmel announced a sweeping reorganization of the company replacing Yahoo’s product-aligned structure with one focused on users and advertiser-customers. Seven product groups were merged into a group called Audience, and another seven moved into a group called Advertisers & Publishers. A unit dubbed Technology would provide infrastructure for the two new operating groups.

Long story short, the reorganization was a complete failure. The Technology division ended up being involved in every product effort in the company that required infrastructure support. Both the Audience and Advertisers/Publishers divisions competed for scarce resources in the Technology division. Where previously, teams could make decisions independently, now they had to involve the Technology division, and wait for the Technology division to approve resources for any infrastructure support needed.

The Problem is Too Many “Cooks”

The core problem in Yahoo’s case was the same as in my mattress-buying decision: too many teams were stakeholders in every product decision. Effective decision-making requires that organizations be structured in a way that important decisions can be made without spanning too many divisions, and without requiring the approval of too many people.

In the first example (of my marriage), we would have been better off if the decision as to what mattress to buy should have been driven by just one of us – that person should have done the research, looked at the mattresses, scheduled the delivery, etc.Having two people involved increased the coordination costs, and with our busy lives, almost ensured that some slip would happen.

It is crucial to reduce the number of stakeholders in every decision in an organization. Some organizations (especially startups) pride on hiring people who can wear multiple hats, people who will want to give input to multiple facets of the company’s day-to-day decision-making. And yet, the more the smart people you hold accountable for a decision, the slower decision-making becomes as all those people strive to build consensus.

You’d think it was obvious that “decision by committee” is a bad thing. But organizations don’t apply this principle deeply enough. Flat organizations are another outcome of this principle. In any organization, the management chain will want to be involved in any major decision. In other words, every manager ends up being a stakeholder in important decisions. Ergo, reducing the number of managers reduces the number of stakeholders, thereby making decision-making more effective.

Effective Decision-making requires Clear Boundaries

Why do organizations end up with too many stakeholders in a decision?

Sometimes (as in the Yahoo example above), teams are structured sub-optimally for decision-making. But more often, conflict in teams happens because multiple people think they own a decision. This happens when roles and responsibilities aren’t clearly demarcated. I’ve seen product managers and engineers argue about what features should get built into a product, because the organization has not clearly defined who owns decisions about feature selection. This is why it is crucial that teams clearly outline who owns what decision.

Emergency Room teams and army teams are two examples of teams that operate in environments where a wrong decision can make the difference between life and death. In both these cases, roles and responsibilities are clearly defined, and it is clear who owns what decision. This doesn’t make teams less agile; on the contrary, it speeds up decision-making and makes teams more effective.

Clear boundaries are not an excuse for creating fiefdoms. Input from other people should be encouraged. But it should be equally clear that their input is non-binding and that the final decision is owned by a small set of people. Ideally, each team-member gets a portion of the overall decision-space, and owns making the best choices for those decisions. As in marriage, other team-members trust this person to make the right calls for those decisions.

recent study validates the value of clear boundaries in marriage:

Parents generally were so flexible in dividing up chores and child-care responsibilities — “catch as catch can,” one dad described it — that many boundaries were left unclear, adding to the stress.

The couples who reported the least stress tended to have rigid divisions of labor, whether equal or not. “She does the inside work, and I do all the outside, and we don’t interfere” with each other, said one husband.

Back to my marriage

When I and my wife looked back at all the stress in our lives, it turned out that most of it was around the care of our child. So we agreed to split child-care duties in a way where my wife takes a specific time-slot where she takes care of the kid, and I take a different slot. We mostly stay out of each other’s way and by reducing the number of stakeholders in any particular time-slot (through clear boundaries), it seems to have reduced the stress in our lives.

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One response to “Building Effective Decision-Making Teams

  1. Super read. Agree whole heartedly – clear boundaries with inputs encouraged. Then as long as you have the right leaders (or spouse) the company (or you) will do well.

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