The pandemic has forced organizations across sectors to increase flexibility and speed decision-making. The healthcare sector is no exception. Rising costs are eroding affordability and industry margins, forcing healthcare companies to scale-up speed like never before.
Flexible and faster decision-making is a critical advantage in difficult times. According to research by McKinsey & Company, an organization’s strategizing speed significantly impacts profitability, operational resilience, organizational health, and growth.
Currently, organizational laxity and slow digital decision-making are pushing up frustration levels among senior leaders in the healthcare industry. According to a survey, more than 1,200 managers globally expressed frustration over the poor and uneven quality of decision-making. Almost half the respondents said decisions were timely, while 61 percent said their time was wasted. It is worth noting the survey pointed to more than 530,000 days of managers’ time collectively wasted for a typical Fortune 500 company due to poor decision-making. It amounts to about $250 million in wages annually.
Various reasons lead to this dissatisfaction: lack of honest debate, convoluted processes, overreliance on consensus and death by committee, unclear organizational roles, information overload, inability to distinguish between signal and noise, and a lack of empowerment within companies.
It is not easy to increase an organization’s speed. A behemoth usually simulates a snail’s pace as its silos, fuzzy strategies, and slow processes hinder its transition to the next level.
The survey presented three real-life examples of how tardy decision-making or fuzzy processes can throw a spanner in the works:
Example 1: A healthcare executive sat through the same 90-minute proposal thrice because no one knew who would authorize the decision.
Example 2: A pharma company waited too long to acquire a target and lost the deal to a competitor.
Example 3: The CEO of a chemical manufacturing company was devoting his precious time to hiring decisions four levels down the organization.
Categories of decisions
The four critical decision-making categories for senior leaders:
- Big ticket decisions: Usually made by the board of directors and top-tier management on mega issues such as acquisitions. These could be infrequent but high-risk and significantly impact the company’s future.
- Pricing decisions can pose high risks and frequently occur in an end-to-end collaborative process in cross-functional forums.
- Delegated decisions: Frequent and low risk, these can be handled by an individual or group without external input.
- Ad hoc decisions: These are infrequent and low stakes. Usually, the company makes them at the appropriate level. These are not CEO-related decisions as they involve routine delegation, which is not to say they are not necessary. It is worth noting that many decisions are taken at higher levels than necessary, slowing down the pace of progress.
A guide to making fast decisions
Most businesses complain about slow and bad results even when they make decisions at the right level. According to McKinsey, executives often grapple with this syndrome.
Here is a checklist that can troubleshoot.
To increase speed and resilience, leaders must ask the following questions:
- Have you spotted the bottlenecks? How are they slowing down the organization?
- What are the top bottlenecks?
- How can you remove them, and why has the organization not addressed them?
- Is the operating model enhanced? Do key processes have clearly defined roles and responsibilities?
- What steps have been taken to remove unnecessary ‘stage gates’ that impede decision-making?
- Are potential risks actively monitored? If crucial decision thresholds are crossed, have trigger points been set to enable immediate action?
These efforts often result in faster decisions. According to the survey, quick decisions are strongly correlated with good ones, disproving the commonly held belief among executives that good choices cannot be made fast.
McKinsey proposed solutions centered around categorizing decision types and organizing different processes against them. Each major decision category is a noteworthy practice. Sometimes, it can launch a stimulating debate; in other cases, it might empower employees.
When the areas mentioned above are improved along with an organizational commitment to embracing and not undermining decisions, companies achieve lasting improvements in decision quality and speed of implementation.