The Perils of Procrastination: Decision-Making in Mature Organisations

"The opportunity is often lost by deliberating." - Publilius Syrus, 43BC

"The most difficult thing is the decision to act, the rest is merely tenacity. " - Amelia Earhart?

In the early stages of any organisation, the absence of strict decision-making processes fosters agility and rapid progress. Founders revel in the freedom to act swiftly, unencumbered by bureaucratic chains of command. As organisations mature, this unchecked approach to decision-making encounters challenges that demand adaptation.

At the outset, the founder's decisive command style may be well-suited to the chaos of rapid growth, where daily shifts mean perfection takes a backseat to pragmatism. However, as the company evolves, so too does its decision-making framework.

The transition from survival to improvement marks a pivotal shift in focus. With growth comes complexity, necessitating the integration of diverse expertise and perspectives. Organisational complexity significantly affects decision-making processes, making them slower and more cumbersome. As organisations grow in size, expand their lines of business, and extend their operations across various geographies, they encounter increasing difficulties in making swift decisions. This complexity arises from the need to navigate through data silos and secure buy-in across numerous nodes within the organisation's network.

In larger and more complex organisations, the decision-making process gets bogged down by the need to consider diverse regulatory environments, varied customer needs across different business lines, and the challenge of integrating information across disparate data systems. Securing consensus or approval across different departments and regions becomes a significant hurdle, further delaying decision-making.

Innovative initiatives require direct approval from executive sponsors, including exemptions from standard company policies. Organisational silos decelerate innovation, while resources are locked within yearly budgeting processes, limiting the ability to fund innovative projects. The scarcity of approved projects leads to fear that those who are approved will fail. Furthermore, executives are often fearful of sharing the unvarnished truth about how well these projects are progressing. This often means papering over cracks and putting lipstick on pigs. Ventures with uncertain outcomes are quickly labelled as hazardous to career progression and failure is linked to those crazy enough to associate their names with such projects.

In simpler organisations, with fewer employees, a singular focus, and limited geographic reach, decision-making is faster (I hope). Such organisations benefit from streamlined processes, simpler communication channels, and less bureaucratic resistance. Executives can quickly align their strategies with market and technology trends, driven by assertive decisions.

Yet, even if an organisation embraces a more inclusive approach to decision-making, new challenges emerge. Investors clamour for short-term results, tempting managers to prioritise predictability over innovation. Layers of management dilute frontline autonomy, stifling initiative and hindering responsiveness.

Change agents may seek to disrupt the status quo, but their efforts are often thwarted by entrenched bureaucratic norms. To break free from this lifecycle, decision-making authority must cascade downwards, empowering those closest to the action.

The tension between urgency and planning is a perpetual struggle, especially for legacy organisations. Leaders must strive to balance the need for swift action with the imperative of thoughtful deliberation. Listening to frontline voices and recalibrating decision-making processes in times of crisis are essential steps towards regaining agility.

In this evolving landscape, success hinges not only on swift action but also on the ability to learn from past endeavours and adapt to changing circumstances. As organisations navigate the interplay between speed and structure, they must remain vigilant, embracing change as a catalyst for growth and innovation.

In this week's Thursday Thought, we share a tale of two companies, one that continued to reinvent itself and one that did not.

Nokia: Decision-Making Paralysis

"What struck me when we started working with Nokia back in 2008 was how Nokia spent much more time than other device makers just strategizing. We would present Nokia with a new technology that to us would seem as a big opportunity. Instead of just diving into this opportunity, Nokia would spend a long time, maybe six to nine months, just assessing the opportunity. And by that time the opportunity often just went away." - Paul Jacobs, former Executive Chairman and CEO of 高通

The tale of Nokia is one of remarkable foresight and innovation, yet it also serves as a cautionary story of how success can breed complacency. Nokia's initial brilliance in decision-making was ultimately dulled by a mix of hubris and success, illustrating the delicate balance required to sustain innovation and adaptability in a rapidly evolving market.

Nokia's storied transition from a 19th-century lumber mill to a 21st-century telecommunications powerhouse underscores its innovative spirit and strategic acumen. Founded in 1865, Nokia seamlessly shifted from producing electricity and rubber goods to dominating the global cellphone market, capturing over 40 per cent of global market share at its zenith. This remarkable rise was fuelled by a combination of visionary leadership, strategic innovation, fast decision-making and an ability to rapidly scale in response to an insatiable market demand.

However, Nokia's story took a dramatic turn as internal and external pressures began to mount. Despite its early success and pioneering innovations such as the world's first smartphone and camera phone, Nokia found itself struggling to maintain its market leadership amidst rapidly evolving technological landscapes and emerging competitors like Apple, Google, and Samsung. While many commentators attribute Nokia's decline to these external threats, a deeper analysis reveals a more complex interplay of largely self-inflicted factors. (See "Ringtone" by future guests on The Innovation Show , Yves Doz and Keeley Wilson )

The crux of Nokia's downfall was its inability to sustain the same agility and innovative spirit that had propelled it to success. As we see with many organisations, as Nokia grew, its organisational structure became increasingly cumbersome, stifling the rapid decision-making and flexibility essential in the tech industry. The pursuit of what Nokia leaders termed a "third leg" to complement its mobile phone and network businesses led to the establishment of the Nokia Ventures Organisation (NVO). Despite identifying future growth areas such as the Internet of Things and multimedia health management, the NVO struggled under the weight of Nokia's growing bureaucracy and short-term performance pressures. (Sound familiar to anyone working in corporate Innovation?)

Compounding these challenges was a poorly executed reorganisation into a matrix structure, which diluted strategic focus and hindered effective collaboration across different parts of the organisation. The resulting internal conflicts and decision-making paralysis eroded Nokia's innovative edge and responsiveness to market changes.

The final blow came as Nokia failed to recognise and adapt to the shift towards software and application ecosystems, a transformation pioneered by its competitors. Clinging to its outdated Symbian operating system, Nokia was unable to keep pace with the industry's evolution towards more integrated and user-friendly platforms.

Nokia's decline serves as a potent reminder of the dangers of complacency and the imperative for continuous adaptation. It illustrates how even the most successful companies can falter if they fail to remain agile and responsive to the ever-changing business landscape. As organisations navigate the complexities of growth and innovation, the lessons from Nokia's story are clear: embracing change, fostering a culture of agility, and prioritising swift, strategic decision-making are essential for long-term success and avoiding the pitfalls of past successes.

Cisco: Navigating Change with Agile Decision-Making

“Without changing the structure of your organisation, I would argue that [innovation] will not work.” - John Chambers , Chairman Emeritus, 思科

John Chambers' tenure at Cisco serves as a compelling counterpoint to the narrative of Nokia's decline, exemplifying the crucial role of leadership in fostering adaptability, customer-centricity, and the preservation of decision-making speed in the face of organisational growth and complexity. Under Chambers' leadership, the company survived repeated tech shifts and threats. The company reinvented itself several times as new technology disrupted existing products.

Beyond products, Chambers led a transformative shift in the company's operational and decision-making framework. Recognising the pitfalls of a centralised organisational structure, Chambers introduced a system of executive-level councils designed to enhance cross-functional collaboration and ensure a laser focus on the needs and challenges of customers.

The cornerstone of this system was the "Three-in-a-Box" leadership model, which brought together an executive from the engineering or technology unit, a member of the go-to-market team, and an operations resource director. This model ensured that decisions were informed by a comprehensive understanding of diverse functional perspectives, thereby fostering well-rounded and effective decision-making. The councils reported to the Operating Committee, chaired by Chambers himself, which was charged with setting the long-term strategic direction and resource allocation for Cisco.

Chambers' leadership at Cisco highlights the effectiveness of adaptive, customer-focused management and the strategic alignment of organisational structures and cultures in driving transformative outcomes. His emphasis on collaboration, cross-functional teaming, and outcome-based strategies underscored the importance of maintaining agility and decisiveness in decision-making, providing a valuable lesson for leaders navigating the complexities of growth and change in today's dynamic business landscape.

Since Chambers stepped down as CEO of Cisco in 2015, the company has continued to navigate through the rapidly evolving tech landscape under the leadership of Chuck Robbins, who builds on the initiatives kick-started by Chambers. Chambers currently holds the position of Chairman Emeritus at Cisco.

Calcify and Die

“Companies rarely die from moving too fast, and they frequently die from moving too slowly,” - Reed Hastings , Chairman of Netflix

In the quest for sustained innovation and adaptability, the agility of decision-making is a critical determinant for organisations navigating the complexities of growth. The challenge, particularly for mature entities, is to prevent the decision-making process from calcifying, a common side effect of organisational expansion and complexity.

To survive, organisations must empower teams, foster a culture of quick and effective decision-making, and ensure resources are allocated with the flexibility to support exploratory ventures. This involves embracing governance models that facilitate rapid action and adapting strategies that push decision-making to the most practical level within the organisation.

Digital-native businesses like Amazon, Netflix, and Alphabet exemplify the success of such approaches, showcasing how decentralising decision-making can lead to swift action. Cisco, shows organisations can adapt to a changing environment. Leaders must work hard to combat inertia, ensuring their organisations remain as nimble and responsive as they were in their earliest days. In sum, the path to long-term success and agility lies not just in growth but in maintaining the dynamism and decisiveness that characterise the most innovative and adaptable companies.

THANKS FOR READING

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