Organizational Judgment Is The New Decision Making

In Judgement Calls, authors Thomas H. Davenport and Brook Manville consider twelve cases of teams making critical--and correct--decisions. In the conclusion excerpted below, the authors examine the structural attributes that made these organizations successful.

Good organizational judgment is often created by leaders--not as great "deciders" themselves, but as more egoless developers of the right context and structures to allow their organizations to find solutions more collectively.

Organizational judgment usually involves reframing decisions as a participative process of problem solving. It takes advantage--and often considerable advantage--of the widening array of data now available in the world, and the advancing technological and analytical tools to interpret it. It is shaped by, and often itself shapes, powerful organizational culture based on values such as participation, deliberation, diversity of thought, constructive challenge and debate, and the like. But armed with more and better information, decision makers in turn face even more choices and nuances about what they must decide and why.

Another aspect of the new complexity is the ongoing knowledge revolution. More than just information, knowledge--in the heads and hands of professionals--is increasingly appreciated as the source of value creation for businesses and enterprises. How can organizations mobilize that in order to make better decisions? Part of this same revolution is that organizations are (to use the now popular vernacular) "getting flatter"--meaning, in varying ways, leaders have broader spans of managerial control, and structures and values are less hierarchical, with more authority for decisions more widely distributed in enterprises. This shift, chronicled for the last several decades, has allowed businesses to "get closer to customers," improve productivity, solve problems more quickly, and innovate more rapidly. But here again, another dimension of complexity enters the fray: when the knowledge needed for a good decision is more decentralized, together with the authority to apply it, how can organizations mobilize this knowledge in a rationale and practical way?

Begin by Recognizing the Need and Opportunity

Every case, in one way or another, exhibited an organization whose leaders understood that they needed to go beyond their own limitations and take advantage of a broader set of ideas, concepts, and wisdom. They took on the challenge of letting go of at least some of their own power and prerogative, at some level, in exchange for the deeper set of resources that comes from engaging and authentically collaborating with, and learning from, others to get to better decisions. They did so also believing that such an approach promised better outcomes and more chances for future success in all that their organization strives for.

Be Intentional and Invest in Capability

In no case did we see an enterprise that had or was developing this kind of judging capability by accident. The capability for an organization to perform in this way is invested in, built, and earned, rather than resulting from luck or a little bit of tinkering here or there. Even the ancient Athenians and McKinsey & Company, which had well-established processes and values within which decisions developed, reflect organizations in which the capability was deliberately built over time.

Consider the "Architectural Elements" Within the Cultural and Market Context

Whether using analytical software, blogging across the enterprise, embracing more democratic approaches to employee or managerial participation, employing a new problem-solving process, changing how to engage a leadership team, or using a different organizational design, our cases show enterprises that built judgment by assembling and combining different pieces of infrastructure and process into a new kind of "system" to better find solutions to problems. Though not always done consciously, in the end they all created a mechanism that embraced more collective intelligence and understanding. If perhaps too fancy a word, an architecture can still be seen among the different dimensions of people working together that, as constructed and operated, provided a better way of coming to a decision.

That architecture, however, varies from organization to organization based on a variety of variables. These might include the cultural traditions of the enterprise, the particular market conditions in which it operates, and the stage of development and sophistication about decision making it aspires to. Context must guide which pieces are assembled and how. There is no one-size-fits-all blueprint, but some kind of blueprint (implicit or explicit) is nonetheless visible in every case.

Be Ready for Change

As the previous themes would naturally suggest, taking steps in the indicated directions will change the status quo. Power is redistributed, values are reinterpreted, people not used to giving their opinions or being listened to are suddenly invited to center stage. New technology comes in with more and new information, old prejudices are made visible, former reporting relationships are muddied by a mandate to share more knowledge across boundaries. Building organizational judgment is transformational, not just a new set of practices "bolted on" to the old way of working.

And, as mentioned already, it will be transformational not just for your organization, but also very likely for you as a leader.

Understand That, Like Health, Organizational Judgment Needs Exercise and Continuous Maintenance

We would argue that organizational judgment is, in fact, one other dimension of organizational health--as a capability, it offers the potential for better future decisions. And what capability could be more important than that? Like any capability, and like health itself (organizational and human), it must be exercised and maintained. Organizations that build judgment do so with a journey of continuous improvement, and are constantly learning through practice, both how to improve it and how to maintain it for the future. In every case of our study, we see judgment that has been built to be sustainable, and used repeatedly to improve decisions on the horizon beyond the challenge of the immediate moment.

Reprinted by permission of Harvard Business Review Press. Excerpted from Judgment Calls: 12 Stories of Big Decisions and the Teams that Got Them Right. Copyright 2012 Thomas H. Davenport and Brook Manville.

[Image: Flickr user Victory is Mine]

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