Play the Game of Life
Ryan Petersen's Blog

The biggest challenge leading a large organization appears to be getting others to take the right action without consulting you first. How do I get those below me to do the right thing? Or more specifically, how can I define the “right thing” in a way that is clear as day and yet adaptable to the unforeseen?

Technology is allowing for ever-tighter connections between members of ever-larger organizational networks. While this may lead to increased cross-functional collaboration, it also increases the number of relevant stakeholders for every decision. Decision-makers now feel compelled to get buy-in from even more people before they feel free to take action. Thus, vested interests, tradition, or the mere complexity of the network may prevent us from making necessary changes to secure a brighter future.

Although my previous employers have been small companies, with just 8-10 employees, I have seen firsthand how difficult it can be to get all these different individuals behind my projects. Meanwhile, each new employee can increase the total number of relationships in an organization by a factor of ten or more. If every decision requires buy-in from all these diverse parties, even in a relatively small company paralysis seems inevitable.

As I see it, there are three ways that we can better manage these relationships to ensure that decisions can be made quickly and correctly. The first is to reduce the time delays between parties to any decision. What this will mean is more, faster technology deployed at all levels of the organization to minimize delays and transaction costs in communications.

The second way to manage increasing organizational complexity is to add more hierarchy. Layers of organizational structure can limit the number of relationships each employee must manage, and provides the opportunity for specialization of decision-making. Unfortunately, it also can lead to the creation of operational silos incapable of sharing valuable information across the firm. Clearly any reduction in cross-functional collaborations must be a drain on creativity and innovation. Moreover, hierarchy can lead to a dull and frustrating work environment and, one would think, higher turnover rates.

The third, and most desirable, means of managing organizational complexity is to develop consistency in decision-making. When you know what the answer is going to be, you don’t have to waste time asking for permission. You just take action now.

But do we want to be consistent in our decision-making in an ambiguous, fast-changing world? I am not suggesting that we remain consistent in our decisions, but rather in the processes that lead to those decisions. To succeed, our organizations must develop a principled approach to analyzing each problem we face. Solutions must be measured against a common backdrop, framed by the company’s resources, values, and goals. I expect that working out such an approach will occupy all of this semester and most of my career.

If we succeed in creating and training our teams in a principled approach to consistent decision-making, we can push decisions down the hierarchy. This will give us faster solutions that are more appropriate for the problems facing us. Our teams won’t need to wait for permission before they take action—and just as important, they won’t excuse inaction by pointing up the corporate ladder. A culture with that type of responsiveness and personal responsibility would be a dangerous competitor in any industry.

Labels: business, Columbia Business School, complexity, networks