Even before COVID-19, we knew decision-making was top-of-mind for executives—it was the single most-read Insights topic in 2019.
“But only 19 percent of the companies we surveyed believed they did it well and many ‘happened’ upon their best practices,” explains Aaron De Smet, a senior partner in the Organization Practice. “If a business can make faster, better decisions, they become more resilient.”
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McKinsey_Website_Accessibility@mckinsey.comLeigh Weiss, Niranjana Rajagopal, Aaron De Smet
Indeed, it’s become clear that organizations that can make good decisions faster have more effectively navigated the turbulence of the pandemic.
For example, a big-box retail company took an 18-month plan for curb-side delivery and reduced it to two days for implementation. A luxury metropolitan hotel re-engineered itself into a barracks for health care workers, transforming laundry, check-in, meal service and security—in a week. Factories repurposed operations to produce personal protective equipment (PPE) in a matter of days.
“Also, many companies are undertaking digital transformations and agile working practices, both of which accelerate learning and decision-making,” Aaron says.
To support leaders and their organizations in developing this critical capability, experts from our Organization Practice worked with McKinsey Academy to create a simulation workshop.
“We wanted our clients to experience the insights we uncovered from our research and turn them into behaviors that could help them make fast, high-quality decisions,” explains Leigh Weiss, a senior expert who helped design the program. The workshop was developed as an in-person program, but the McKinsey team quickly turned it into a virtual program as the COVID-19 outbreak began to spread earlier this year.
A simulation can be a powerful learning experience because it involves practicing skills in a realistic context. “People step into a role, experience the emotions of a ‘persona,’ receive authentic feedback and experience consequences,” she outlines. “A well-designed simulation integrates periods of reflection, analysis, and intense activity, such as meeting a deadline.”
Early in the program, attendees jump into a role-playing scenario in which they have to make a critical decision quickly. Only about 10 percent get to the right decision.
“The ingrained habits and cultural mindsets of the team quickly surface,” observes Susan Zelenka, who produces the workshops. Participants often say the exercise, which reveals the common behaviors and dynamics that impede effective decision-making reminds them of what’s broken in their day-to-day interactions. "I felt immediately stressed; it was chaotic, everyone had different information and priorities, and no one knew who the decision-makers were," recalls one participant. "Frankly, it felt a lot like our decision meetings,” another remarked. “A lot of heated, unstructured discussion and in the end, nothing was decided.”
The McKinsey team thought a lot about the scenario itself. “It had to be a universal experience, cross-industry, and involving different roles in an organization," explains Leigh Weiss.
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McKinsey_Website_Accessibility@mckinsey.comIn the scenario, participants take on different roles to debate decisions related to parking crisis
The hypothetical dilemma? A high-profile company needs to quickly expand parking on their campus for employees coming back to work post-COVID. A garage had collapsed; employee security and productivity was jeopardized; and millions of dollars were on the table. And then a car accident happened.
Participants take on the roles of legal, HR, facilities, and financial department leads and debate the five options for the high-stakes decision.
"Within a day of finishing the first draft of the script, I went home and received a letter from the local high school about a flooded parking lot that was now closed. The next day, my colleague got an email that a decision had to be made about a parking issue in their co-op. We knew we had the right scenario," Leigh laughed.
A key part of the agenda covers reviewing the research, including insights such as the four kinds of decisions companies make, each with different success factors.
For ‘big bet’ decisions, such as an acquisition, the number one predictor of success is the quality of debate—it’s not about having all the data. "It should be understood up front that while everyone has a voice, only a few get a vote—this was an “ah ha” moment for me. It allows you to incorporate diverse perspectives without slowing down,” explains Niranjana Rajagopal, who helped to design and runs the workshops.
When it comes to more frequent and familiar ‘delegated decisions,’ it's important to coach your people through them, giving them the construct for how to make a decision, serving as a sounding board, but making sure not to take the reins back.
In frequent ‘cross-cutting’ decisions requiring collaboration across an organization, it’s critical to map out the process and clarify the decision rights and roles at each point.
Participants then run through the scenario again, applying the new insights, and see significantly improved results, both in reaching the right answer and in the process of getting there.
"COVID-19 has pushed decision-making to the edges rather than the center, and to the front line rather than the top of organizations. To respond faster, they have to equip people at all levels to make smart decisions—it can no longer be restricted to a few people at the center," says Aaron. "Once they realize it doesn’t have to take two months—when it can be a week—why would they go back?"