Forget processes, think decisions

Posted on: October 17, 2017 by Peter Kalmijn

Imagine a customer standing at the front desk. Most likely this customer wants something from you. More precisely: he wants you to make a decision. Maybe an insurance claim, if you are in the insurance business. Or advice on a new car if you are in the motoring business. There are many millions of customer contacts, each triggering operational business decisions each day.

In a military situation, the strategic decisions and their implementation matter even more than brute force. Likewise, any organization will only improve performance based on its ability to make and execute key business decisions better and faster than competitors. This insight challenges organizations to re-think the way they manage their business. Understanding the critical decisions aligned to the organization's strategy will create the highest value. Failing to pay proper attention to operational decision-making seriously undermines performance.

Decision effectiveness drives financial results

Worldwide research by Harvard Business Review and Bain & Company showed that 'decision effectiveness' and financial results correlated at a 95% confidence level or higher for every country, industry, and company size. They measured decision quality, decision speed, how well decisions were translated into action and the effort to execute the operational decision. Effectively the value of an organization is no more (and no less) than the total value created by the decisions it makes and executes.

Automated decision-making dramatically shortens response times and increases reliability, quality, and consistency throughout the whole enterprise. Yet, most operational decision-making tasks today are still performed manually and require constant retraining of staff. No matter how excellent the training, manual decision-making is biased, error-prone, limited in efficiency (slow), and always requires new hiring and training when scalability is needed.

Decision-centric process design

Most organizations still run multiple rigid variations of their core processes. Even 'dynamic processes' are predominantly overly complex with multiple paths and complicated routing. This makes them cumbersome to change, rendering the organization about as agile as an oil tanker.

The best way to understand any company’s procedures is to view the business as a series of operational decisions. Focusing on decisions and putting them first effectively creates a decision-centric process.

Decision-centric organizations tend to be event-focused. Focusing on decisions enables organizations to respond to external, or internal, events in real-time. This means acting when business events are detected, immediately responding with excellent service, as customers and business partners expect from premium organizations.

The future: data-driven, decision-centric processes

Future decision-centric enterprises will use real-time data and information to drive the organization's behavior. Mostly using Enterprise Data, and data collected and aggregated from emerging industrial data platforms. This data will be used to make even more effective decisions, based on derived insights. Already, we can see that organizations using data-analytics to improve automated decision-making really do have a competitive advantage.

90% of businesses expect data-driven insight to become a key differentiator by 2020.

Organizations will need to transform to become Digital Decision-Centric organizations before being able to fully harness the distinguishing value of data-driven insight derived by means of advanced data analytics and specialized Artificial Intelligence. On a larger scale and in the future, we will see the rise of Intelligent Networked Enterprises, sharing their Automated Enterprise Decisions and capitalizing on combined Industrial Data Platforms. Doing so by innovating and delivering faster and better than self-centered organizations.

Key impacts

Digital Transformation fundamentally changes the way organizations must address tactical and operational decision-making to stay successful.
Thinking about business decisions first revolutionizes process-thinking;
Putting decisions first liberates organizations from the choking hold of rigid, hard to change process implementations. And in a natural way delivering sustainable business agility for free;
Automated Decision-making proves essential for organizations in successful Digital Transformation;
Enterprise Decision Management provides for a solid foundation to fully profit from advanced data analytics and specialized Artificial Intelligence on an enterprise scale.

Six steps creating Decision-Centric organizations

Identify the organization’s key decisions. This is where the money is made;
Determine who is responsible and where in the organization those key decisions are executed;
Figure out the decision-making criteria and the decision makers need;
Align the organization, information flow and incentives (KPI's), with operational decision execution;
Model decision requirements and automate operational decisions where possible;
Help all organizational levels develop the skills and behaviors necessary to understand, make and execute (manual) decisions quickly and well.