Data protection and compliance are often cited as the major hurdles to achieve digitization. But a survey indicates that long decision processes are way too often involved when it comes to digital challenges.
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The consulting firm Lünendonk & Hossenfelder GmbH conducted an extensive study on digital customer experience services in Germany. This includes the question which reasons hinder the expansion and marketing of new business models.
There are hardly any surprising answers among the top three reasons: data protection requirements, IT security and compliance are clear hurdles on the way to becoming a modern company. Particularly with regard to local regulations such as the General Data Protection Regulation (GDPR), many companies are unsure how to act.
However, hiding in further challenges is a reason that rarely is named as the main challenge but seems to be partially responsible in the majority of cases.
In its study, Lünendonk enabled the answers "Yes", "No" and "Partly".
For example, while data protection requirements represent clear hurdles for 58%, 25% of respondents believe they represent "partial" hurdles. Overall the issue matters to 83% of survey participants.
"Complex decision-making and responsibility structures" are clearly a challenge for only 22%, but for another 66% they are partly responsible for delayed processes. In total, that's 86% who believe that lengthy decision-making processes hold up progress. This puts the decision making at the secret top of challenges that impact the digitalization and progress at different capacities.
McKinsey suggests in the article "Untangling your organization's decision making" that digitization is one of the reasons why decision chains within companies are longer.
The interconnection of corporate divisions, globalization and the complexity of modern corporate structures mean that there are often no clear responsibilities for a large number of decisions. So the fact that digital communication channels support everyone's participation not only ensures more diversity, but also longer processes and more complex discussions.
This nearly seems like a chicken-egg-problem. Which came first? Complex decision chains that hindered digitalization or digitalization that created complex decision chains?
But no matter the answer, the real question is:
What can companies do to adequately define their decision chains?
How "big" are the decisions, who are the stakeholders, how often do they need to be made, and how urgent are they? In addition to long-term decisions that affect the entire company, there are numerous cases in everyday life where action needs to be taken quickly and decisively but who don't require the entire board of directors to chime in.
To avoid delays or hasty decisions, the company needs clear categories to identify priorities, responsibilities and impact of decisions.
Who is needed to make a decision and what can different stakeholders and experts contribute to the decision-making process? It is not always necessary for management or supervisors to step in to make decisions, especially those that occur frequently and are highly specific. When it comes to responsibilities, it is important that the decision-maker really knows their way around the subject. That doesn't always apply to every single stakeholder.
McKinsey recommends assigning clear responsibilities to individuals so that there is no overlap or delay.
Who has decision rights for which areas? More often than not, not everyone who is involved in the discussion will also have a vote in the final decision. Each stakeholder/participant needs clarity on whether and to what extent they have influence on a decision. In other words: transparency and clarity are absolutely essential to avoid misunderstandings.
This applies, for example, when a manager needs the input of an employee, but wants to make the decision themselves (and vice versa).
If you know the influence each stakeholder has on each decision, you can develop workflows that apply to different types of decisions. These can include required information/input, timelines, responsibilities and the right steps to take.
McKinsey mentions use cases where one pagers give clearly defined information as prerequisites for certain decisions (less for short-notice decisions but ones for the upper management).
All in all, transparent and defined processes help everyone take the right steps, involve the right people and make the right decision with much delay.
Decision-making processes should be regularly reviewed and tested. McKinsey suggests that test runs should be designed, especially for weighty decision-making processes, to prevent major mishaps in practice.
Reports also help to ensure that decisions are in line with the corporate objective. In doing so, they can prevent different decisions impacting each other negatively.
The bottom line of these five points should always be:
Uncertainty creates delays or hastily decisions based on lack of information.
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