Enhancing the Performance of an Organizational Entity by Improving a Targeted Aspect of Leadership: Example of Decision-Making

Now let’s examine how leadership can optimize the performance of an organizational entity, whether it is a project, team, function, business unit, the interface between any of these, or the organization as a whole. In the diagnostic and prescriptive analysis, we will first explore the entity as a whole, and then examine a targeted capability within (in this case, decision-making), which asymmetrically drives performance. Before we jump in, let’s briefly address two contiguous issues that operate in the background: 1) the role of leadership in organizational performance and 2) the relationship between optimizing organizational performance and what is commonly referred to as “managing organizational change.”

First, let’s consider the role of leadership in organizational performance. A high performing organization achieves its desired outcomes in a way that is aligned with its mission and values and is financially sustainable. In leading a project, team, function or organization, leadership’s role is to create the conditions that make it easier (vs. harder) for members to be outrageously successful in their jobs. Very few people wake up every morning and go to work hoping to be mediocre at their job. Yet, most of us have had the experience of being less successful than we would want, despite our best efforts. Leadership plays a critical role in creating the conditions that optimize individual and collective strengths to take advantage of opportunities and reduce barriers to success. In aligning the strategy, architecture and culture of the organization, leadership better supports the success of each of the people working towards the enterprise goals.

Second, let’s consider the relationship between optimizing organizational performance and “change management.” In “managing organizational change,” leadership often loses sight of the fact that the base unit of change is individual change. Fundamentally, “organizational change” requires individual people to do something differently. Thus, organizational change, while initially framed in terms of a desired collective improvement (i.e., optimization of decision-making by the Executive Team), ultimately must be reduced to specific changes individual people need to make, albeit often times in a group context. At a very fundamental level, individuals need to understand what change is required, be committed to making that change, know how to shift their behavior or priorities, and practice doing so until the new approach becomes routine. 217 One reason that organizational change is so complex is that it requires the sequenced behavioral change of many individuals embedded in multiple groups. 218 While this paper does not specifically address “change management,” the Performance Prism, the stages of change and the meta competencies can be deployed to support leadership to effectively implement large-scale organizational change.

Awareness

Change begins with the awareness that performance is not what it could or needs to be and a desire to change; it is a function of what leadership “sees.” Typically, this awareness is rooted in outcome data or feedback, customer or competitive data, or employee feedback that suggest the results of the project, team, function or organization are not optimal. Lower-than-anticipated returns on investments, missed opportunities, internal churn, rampant frustration are potential indicators. Awareness can also be rooted in leadership’s vision for a better future and a sense of a gap between what is currently being achieved and what is possible. Regardless of the source of feedback, leadership must be open to the opportunity and be committed to improving performance.

Map the Territory

As mentioned earlier, the Performance Prism provides leaders with both a diagnostic and prescriptive tool that can be used to understand the root causes of the gap and the intervention that can lead to better results. Greater clarity about challenges (and opportunities) helps illuminate where to continue to drill down, to gain still greater clarity. Similar to the “five whys” process, 219 initial conclusions about what is going awry (or strengths that can be capitalized on) help focus further inquiry, to further hone understanding. Ultimately, the goal is to understand the root causes of the performance gap, so that targeted, effective interventions can be implemented. Specifically, leadership wants to understand what intervention, in what arena, with what group of people will yield the desired improvements. Thus, from an internal state of openness and curiosity, leadership can use the Performance Prism to “see more” so they can “do more.”

Thus, in conducting a diagnosis, at the highest level, leadership anchors on the essential outcomes for which they hold themselves accountable and reflect on two simple questions:

What are we doing that is contributing to success and thus want to keep doing?
What are we doing to detract from success and thus what do we want to change?

The Performance Prism focusses this reflection on the three distinct and overlapping foundations of organizational performance: ideas (envision), action (enact) and relationships (enroll). As discussed earlier, these three pillars manifest as:

Ideas: What you are trying to achieve, why and how (seeing)
Action: The organizational design choices made to support the efficient and effective mobilization of resources to implement the strategy and achieve the vison / mission (doing)
Relationships and Culture: The way members interact with critical internal and external stakeholders, including behavioral norms (connecting)

A simple line of questioning grounded in the achievement of the most important results and drilling down to consider the effectiveness of the component pieces of the Performance Prism can be quite revealing. Leadership can use time as a strategic lever by contrasting what is true today with what might be true three years from now, as the industry, organization, and world overall evolve. The questions will vary, depending on the “unit of analysis” (e.g., an executive team or the HR department). Here is a set of illustrative questions:

Recognizing that performance is assessed by its achievement of desired results,
o What are the most important goals and outcomes? This year? In the next three years?
o To what degree are we on track (or not) to achieve these? Why or why not?
o What is your confidence that we will achieve these goals? What gives you confidence? What causes you concern?
Assess performance today on each of these pillars. In what areas does it excel? In what ways would you like to see it do better, today? What would be the value of these improvements?
Over the next 3 years, what aspects of how it works do you want to be sure it does not lose? What aspects should change, if it wants to optimize performance? Why?
Considering that a high-performing organization makes it easier, not harder, for intelligent, well-intentioned, committed members to do their job well – what specific opportunities would yield the greatest benefit?
In what ways would greater clarity or alignment of purpose, vision, mission, strategy, outcomes help individuals do a better job?
In what ways would greater clarity of roles and responsibilities enable individuals to do a better job?
In what areas would more/better structure, systems and processes enable them to do a better job?
In what ways would enhanced consistency or quality of service delivery contribute to better outcomes? How? Why?
In what areas could aligned incentives or clearly delineated decision rights or greater accountability make it easier, rather than harder, for people to excel?
In what areas could more/better collaboration and information sharing improve performance? Across the units? Within the units? In what ways would this matter?
In what areas would enhanced information flows improve performance?
In what ways could an enhanced ability to resolve tension or conflict without eroding relationships make it easier for the entity to achieve its aspirations?
How is morale within this entity?
o At the top of the organization
o In the middle
o Lower in the organization
o Across the different units?
o How do you know?
What “keeps you up at night” as you think about the evolution of this entity over the next three years?
What else is essential to highlight, to illuminate the full picture of the organizational strengths and challenges, today and over time?

This inquiry can ferret out the arenas of challenge (e.g., Business Development? Operations? The coordination between Sales and Marketing?) as well as the underlying issues (e.g., Confused decision rights? Insufficient collaboration? Need for fast-cycle learning? Communication break-downs? Insufficient expertise, experience or capacity?). This diagnosis paves the way for targeted interventions. Notice how the bullets in the Performance Prisma diagram below can be used as a diagnostic checklist, to help leadership “see more,” by asking to what degree the entity accomplishes each and how much it matters to the achievement of key outcomes.

Note that the “presenting problem” (i.e., the problem that is first identified as needing a fix) is not always the underlying challenge that actually needs to be addressed. 220 Sometimes the presenting problem has a different root or a more elegant “fix” lies in a different part of the Performance Prism. For example, initial belief in a need for restructuring, with further exploration, can lead to understanding that other actions (e.g., clarifying roles and responsibilities or holding members accountable or improving communication across silos) could be more effective and less disruptive.

Once a root cause is identified, it, too, can be dissected and diagnosed according to the Performance Prism. Let’s use the example of decision-making. Here are the kinds of things you may hear in an organization with decision-making challenges:

“On our leadership team, each business unit leader has specialized knowledge and focus. How do we realize synergies or prioritize across the different businesses? Are we making decisions collectively? Is the CEO making the decision?”
“It drives me crazy. My boss tells me it is my job to make decisions, but then he chronically over-rides my decisions.”
“The cross-functional group had a good discussion about the tricky issues. Did we actually make a decision? What are the next steps?”
“We have had rigorous debate on this issue. Each side understands the other. Yet, we disagree. How can we move forward?”
“Yikes. I gave that team responsibility for making the decision, but I know the answer they are proposing is not going to fly. What do I do?”
“I do not know if a decision was ever made. I know some people were working on it, but I do not know what ever came of it.”
“This critical decision was made, but our interests were not taken into account. That solution doesn’t work for us.”

If the initial diagnosis reveals that slow or low-quality decision-making is a driver of undesirable performance, the first step is to pinpoint with precision which decisions -- made by whom, when, how – have the greatest effect on the key outcomes. (In most cases, these decisions will travel along critical business processes.) Not every irritation needs to be soothed; the name of the game is to identify the key decisions and dynamics that are worthy of asymmetric time and attention.

Focusing on these key decisions (or decision-makers or decision-making moments), use the Performance Prism to “see more,” to understand “what good looks like” and assess whether the necessary substantive, structural and behavior resources and practices are in place to support high quality, efficient decision-making. (See diagram below.) Of course, the intervention will vary greatly, depending what issues need to be addressed. For example, if decision-makers do not have the right expertise, are not using robust models to support decision-making or are not using sufficient analytic processes or data, then the intervention focusses on making sure these elements are bolstered. Perhaps those are sufficient, but the political infighting, lack of trust, and/or lack of communication skills throws a monkey wrench in the works. Then the intervention must focus on those issues. Sometimes lack of clarity of decision rights, decision rules, decision processes, roles and responsibilities, and timeline – or misaligned incentives – are at the root of interpersonal frustration and squabbling that slows down decision-making. Explicit articulation and agreement of these may help decrease the interpersonal friction and increase decision-making speed. Bottom line, an accurate diagnosis suggests what intervention, in what arena, with what group of people can help solve the root cause of the challenge and yield the desired improvements.

To illustrate, let’s imagine that an organization is striving to improve the performance of the Executive Team. Initial diagnostic efforts suggest that one key issue this team could work on, in order to increase its collective effectiveness, is decision-making. Furthermore, the dynamic has been identified as the following:

The extremely smart, visionary, capable CEO tends to make most of the cross-organizational decisions. Each Executive Team member is a functional domain leader, and capably makes decisions for their own domain. All team members are high-performing. The team is collegial and team members respect each other. All team members provide high-quality input into the CEO decisions, during team discussions.
No team members can recall a time when the CEO’s decisions were of questionable quality. The fact that she makes most of the decisions makes for fast and efficient decision-making.
What is the problem? The CEO believes she is not fully utilizing the collective, collaborative intelligence of the Executive Team in making critical cross-organizational decisions. Furthermore, she is concerned that the dynamic stifles the growth and development of the other Executive leaders and puts too much responsibility for the enterprise-level leadership in her hands, only.
What keeps this dynamic in place, despite repeated attempts to shift it? Further exploration (aka “Mapping the Territory”) reveals some additional nuances. First, the CEO expresses these frustrations: “I’d rather fall prey to making an imperfect decision than the tyranny of taking too long” and “Critical issues/problems are raised, but not always with proposed solution or a process to come to a solution. This group can talk around and around an issue, without ever coming to a decision.” Second, it is unclear to the group when the CEO wants input from the group and when the CEO wants the group to make the decision. One member reflected, “It is unclear when she wants us to step up or step back. Sometimes she will step back. Is she disengaged or is creating space for us? Sometimes, after stepping back, she will suddenly jump in, make a decision, and move us to the next agenda item. That stings.” Third, given the track record of the CEO of “never being wrong,” there is risk aversion to being “off-sides” with the CEO, dampening rigorous debate. Furthermore, the CEO’s keen intellect and love of debate can make it feel “high stakes” to engage in rigorous dialogue. One team member described the dynamic this way, “She loves intellectual sparring. She is so smart. The stakes feel very high. You have to feel very passionately about something – and really know your stuff – for it to be worth stepping into the ring with her.”

Thus, the diagnostic exercise of “Mapping the Territory” helps leadership “see more” and paves the way for the intervention that will achieve the desired change, as well as the “change management” that is often necessary to sustain the change.

Seek Opening / Disrupt

In this case, excavation of the dynamic suggests a few targeted areas for intervention: clarifying of decision rights; adding structures and processes to support different preparation before Executive Team meetings, and improving the interpersonal dynamics of the team to support healthy opposition. Let’s take them in order, to see the opportunities to disrupt:

Clarifying Decision Rights:
A decision-rights framework can help the executive leaders “see” (and assign) different decision rights. This enhanced clarity helps establish clear roles and responsibilities in the context of making a specific decision. (My preferred decision rights framework is Monitor Deloitte’s, which outlines four distinct decision rights: make, ratify, input and notify. However, there are others, such as Bain’s RAPID and Jensen’s RACE, that work well). The specific framework matters less than these other factors:

Education of team members so they can identify when clarification of decision rights is needed to support progress.
A common language system based on a chosen decision-rights model, so team members have the vocabulary to quickly and efficiently address decision rights.
Identification of the few critically important decisions that are gumming up the works. Assigning decision rights to every decision is time consuming and unnecessary. Only invest in decisions where greater clarity will yield meaningful results (e.g., increased speed or quality of decisions, reduced frustration, enhanced relationships, etc.).
The interpersonal communication skills needed to clarify decision rights efficiently and effectively, in a way that enhances, rather than erodes critical relationships.

Thus, in this case, the Executive Team examined the “classes” of decisions it makes and used a decision rights model to reflect on which decisions the CEO should “make” (vs. “ratify”) and when the Executive Team (or specific members) should “make” a decision (vs. provide “input”). This clarity helped team members understand their role and how to best contribute. It also helped the CEO understand when to step forward and when to step back. Most importantly, if this became unclear (“Who is making this decision?”), the team had the language system and the cultural norms to raise and resolve this issue, in the moment.

Adding Structures and Processes to Support Different Preparation:
Clarifying decision rights also paved the way for improving preparation for decisions. When specific members understood they had the “make” right, they also knew they had the responsibility to frame the decision, identify the process and timing for making a decision, identify appropriate models or frameworks to support analysis, collect the relevant data, and communicate to critical stakeholders. This increased the burden of preparation before the Executive Team meetings and reduced the dynamic of the group engaging in unstructured conversation, with little progress toward a decision. This increased the CEO’s confidence in the team’s decision-making capability, and thus contributed to a virtuous cycle. The more competent the team became in framing and driving decision-making, the less the CEO stepped in abruptly. (This is a good example of how “doing better” can result in improved “connecting.”)

Improving Interpersonal Dynamics of the Team to Support Healthy Opposition:
Part of the dynamic on this Executive Team was a dearth of productive conflict. In this specific case, a few factors contributed to this dynamic:

The team had a very collegial culture where team members did not disagree with each other because they wanted to support each other. This is a common, but unproductive, dynamic on teams where relationships are friendly -- a “virtue gone awry.” While it is admirable to not want to undermine your colleagues, at the same time, an essential tenet of strong teamwork is the ability to engage routinely in “a robust exchange of strong ideas, loosely held.”
Most of the team members were conflict averse, with a low propensity for opposition. Moreover, they did not have the interpersonal communication skills they needed to skillfully disagree with one another in a way that strengthened (or least did not weaken) their relationships.
The intellectual prowess of the CEO coupled with the risk aversion of the team members further inhibited team members from engaging in routine healthy debate and disagreement.
The willingness of the CEO to make most decisions and the perception that she was “usually right” did not create much incentive for team members to engage in productive conflict.

The solution space here involved developing the interpersonal communication skills of the Executive Team. David Kantor’s Structural Dynamics and Chris Argyris’s / Action Design’s Productive Communications curriculums together provided the team with frameworks, skills, practice and self-reflection to help them “make object” and skillfully disrupt these dynamics that had been inhibiting their performance as a team. Learning and practicing these skills together not only helped their individual skill-building, but also contributed to important shifts in team culture and norms. Thus, they were able to see the importance of productive conflict to their performance, to increase their skillfulness of engagement, and to shift their mindset about disagreement. Instead of engaging in “respectful avoidance of disagreement” with peers, they showed their respect by engaging in a “robust exchange of strong ideas, loosely held.”

Experiment

Finding the thing that actually works to improve the critical outcomes takes experimentation. In the case of the Executive Team, the cocktail of clarified decision rights, enhanced processes and improved interpersonal dynamics had to be experimented with and refined. This required both individual and team-based learning and experimentation.

Individually, each Executive Team member, including the CEO, took responsibility for their own unique contribution to the team dynamics. The interpersonal communication skills training helped each leader “see” what aspects of their leadership footprint helped or hindered effective decision-making and team work. Each leader identified a handful of things they could work on that would help shift the dynamic. For example, the CEO realized that her impatience was part of the problem. In decisions where she had the “ratify” right (vs. make), if the team had done high quality preparation and was engaging in a “rigorous exchange of strong ideas, loosely held,” it might take longer than she’d prefer and she had to practice patience. The pay-off of a high-quality decision, commitment from the entire team, and development of her team as leaders in the process was worth this extra time. Each leader engaged in executive coaching to support their individual development. In the context of the coaching sessions (and the experimentation and practice that took place between sessions) each leader was able to shift their own behaviors, so they could lead more strongly, individually and together as a team.

Simultaneously, the team, as a whole, experimented together. Armed with a common language system from the decision rights framework and the interpersonal communications training, the team committed to using their meeting time as “real-time” practice arenas. If they sensed they were stuck, they would call a quick time out to step back and assess how they were stuck and what they needed to do to move forward effectively and efficiently. They recognized that their collective time together was extremely valuable and that “working smart” included real-time reflection and course correction on how they were working together.

Practice

Practice includes ongoing implementation, with assessment that supports adaptation and refinement over time. Practice, like experimentation, takes place at both the team and individual levels.

For this Executive Team, the primary challenge of continued practice was maintaining focus on these issues, even as many other priorities clamored for their attention. The Executive Team did two targeted things to support ongoing practice, assessment and refinement:

At the end of each meeting, they took five minutes to do a quick “plus/delta” assessment of the effectiveness (speed and quality) of their decision making. In the “plus” column, they brainstormed what they did well and would want to keep doing in the future. In the “delta” column, they identified what they would want to change, to better support quality decision-making. This practice helped them maintain their commitment to and focus on this skill-building, as well as continually refresh the specific things they wanted to maintain and shift.
Annually, they took (and discussed together) a self-assessment survey that helped them assess their overall decision-making effectiveness and their progress against the targeted areas for improvement: clarifying of decision rights; adding structures and processes to support better preparation before Executive Team meetings, and improving the interpersonal dynamics of the team to support healthy opposition. This annual reflection and discussion helped the team understand where they were making progress and where they still needed to practice. In addition, this annual reflection increased their accountability to each other and ongoing commitment to improvement in these critical areas.

With ongoing practice, reflection and refinement, this Executive Team was able to radically shift how it worked together to make the most important cross-organizational decisions. While it required an initial investment in diagnosing what was not working and intervening to skill-build and shift team norms, the team ultimately saved multiples of that in time and resources, over time, through more efficient and effective decision-making. Perhaps more importantly, they built invaluable individual and collective leadership capacity.

Thus, this example of “enhancing the performance of an organizational entity, including a targeted aspect of leadership (using decision-making as an exemplar)” illustrates how the Performance Prism, the five-step process of change, and the Neutral Witness can be employed to help leadership “see more,” “do more,” “connect more,” and “be more.” The diagnostic helped the Executive Team “see more” by illuminating decision-making as a key lever for change, the specific dynamics at play, and potential approaches that could shift those dynamics. The mix of employing a common decision rights language system, adding structures and processes to support stronger planning, and strengthening the team’s muscle for productive conflict enabled the Executive Team to “see more,” “do more,” and “connect more,” as they experimented with the new approaches. As the team experienced success with the new approaches, they reinforced them through practice. Increasingly, the members used their Neutral Witness to notice when they themselves were inadvertently contributing to less desirable outcomes or when the group was getting stuck. This increased presence supported high quality practice, by enabling team members to both identify and intervene on the dynamic real-time, to improve performance. Again, success begets success.