Mastering the new science of engineered management decision processes

Despite huge efforts to improve operational processes over the past 20 years, critically important management processes are left up to the discretion of each manager to define. Some are good, some are bad. It all depends on their experience. There are no standards.

But, management processes drive decision-quality and productivity, especially in the information age where group-dynamic is a lever of influence. Lacking good practices, organisations evolve their own sub-optimal management processes and rhythms for making and implementing decisions in critical operational areas like sales, finance and operations.

Typical symptoms of poor management processes include an increased number of meetings that onerously collect information for control, with little useful direction or feedback in return. Having more meetings reduces the speed and very often the quality of decision-making, and therefore collective agility.

As more ad-hoc meetings are called in response to problems, decisions are no longer taken at the right level in the organisation. Executive all-hands meetings might deliver quick action, but often the resulting decisions lack the required subject-matter expertise.  Conversely, people with the right expertise disengage and upward delegate responsibility – a sub-optimal outcome. Ad-hoc meetings are also inefficient.  Without proper planning and structure, they produce poor quality decisions.  This starts with the lack of a clear agenda. And, if minutes aren’t captured, decision rationale is lost, eliminating a means for holding people accountable for agreed actions in subsequent meetings.

Few firms or leaders systematically anticipate new or changing decision-process requirements. This is particularly important with a change of control to private equity ownership. And, even fewer put well-conceived management control processes in place to avoid the upward delegation trap.  Well-orchestrated Management Control Cycles (MCC) consist of a properly designed hierarchy of meetings with clearly understood frequencies, structured agendas and carefully selected attendees to optimise decision processes.  MCC meetings, ensure that issues are discussed by those closest to them, with the skills, competence and authority to make the right decisions.  Meeting-specific KPIs enable participants to quickly spot issues, identify root causes, and develop timely solutions.

Outstanding Management Control Cycles are built on three principles.  First, meetings are scoped such that attendees are accountable for the items discussed and resulting actions are logically allocated.  Second, the MCC only allows escalation of decisions for justified exceptions, when agreed actions are not delivering the expected results.  Third, the MCC’s rhythm of regular follow-up prevents issues from lingering or going undetected. Quick feedback loops validate actions and demonstrate oversight on issues before they are escalated.

Anchoring efficient management processes is not easy.  Managers sometimes need to un-learn bad practices they have carried since their early careers. Yet, best practice management processes can exist in each function. They can be implemented with a bottom-up approach, combining agreed procedures, KPIs, templates and rituals to shift management behaviour.  For private equity-backed portfolio companies looking to accelerate sales and profit growth, MCC’s are a powerful lever to shift performance and anchor a sustainable competitive advantage, that is: the ability to collectively make better decisions and execute them faster than the competition.

The answer lies in the human element of the organization. It’s about creating an environment where change isn’t just accepted but embraced and driven from within. This requires a fundamental shift in organizational culture and behaviour.

Imagine a company where every employee, from the C-suite to the frontline, approaches each day with a growth mindset. Where challenges are seen not as insurmountable obstacles, but as opportunities to learn and innovate. Where ideas flow freely across departments, unhindered by bureaucratic silos. Where decisions are made swiftly at all levels, powered by a sense of ownership and trust.

This isn’t a utopian fantasy. It’s a description of the kind of agile, resilient organization that thrives in volatile markets. And it’s achievable through focused effort and commitment.

The journey begins with leadership. Management teams must embody the behaviours they wish to see. If you want an agile organization, demonstrate agility in your own decision-making and actions. Foster an environment where team members feel empowered to take calculated risks and voice dissenting opinions without fear of retribution.

Invest in your people, even – especially – in uncertain times. This sends a powerful message about your commitment to long-term success and prepares the organization for future challenges.

Additionally, technology can be a powerful enabler of organizational agility, but it’s not a silver bullet. Implement tools that streamline workflows, boost efficiency, and facilitate rapid decision-making, but remember that technology is only as effective as the culture and processes that support it.

The path to resilience in today’s volatile markets doesn’t lie in battening down the hatches and hoping for the storm to pass. It’s about building an organization that can dance in the rain – one that’s agile, adaptive, and always ready to seize new opportunities.

By fostering these key behaviours and creating a culture of agility, leaders can position their companies not just to survive economic uncertainty, but to emerge stronger and more competitive than ever before.

In the high-stakes game of private equity, the ability to thrive amidst chaos could make all the difference between stellar returns and missed opportunities. As we navigate the turbulent waters of 2024 and beyond, one thing is clear: those who master the art of organizational agility will be the ones writing the success stories of tomorrow.