Unlock growth through democratization
July 12, 2021
July 12, 2021
The disruption of the last year has shown that leaders need to make decisions in real time to stay ahead of the competition. They often have the data to do it, and 75% of leading companies are using data insights to adapt their operating model to meet shifting strategic priorities.i
But are they moving quickly enough? It would appear many are not. Sixty-three percent of executives have cited slow decision-making as a barrier to agility.ii
The impact of the pandemic has fundamentally reshaped markets and changed consumer behaviors. In this environment, organizational agility and resilience are arguably more important than ever, so now is the time to bring decision-making to the edges.
This means empowering your people to make critical business decisions using real-time data. It means giving employees more autonomy and accountability for outcomes and removing layers of time-consuming central approvals. It is a change in mindset from being beholden to central leadership approvals, to instead being beholden to data and the customer.
While the advantages are compelling, a recent Accenture C-suite survey showed that only 32% of CXOs believe they have the agility to make decisions at speed.iii I believe this must change soon or businesses will forgo opportunities to drive growth.
The events of this past year taught us that tough decisions often require extreme urgency—Hugh Johnston, Vice-Chairman and CFO of PepsiCo, knows this well. “One of the things we have learned is that empowering our front-line leaders and our regional operating executives…to make fast decisions locally…has enabled us to accelerate our growth.”
This idea is gaining traction—Accenture’s Business Futures report found that 71% of C-suite executives have already decentralized or are planning to decentralize decision-making. If localizing decisions and releasing centralized decision authority sounds frightening, recall that many decisions that formerly required approvals are now not just delegated or localized, they’re completely automated. Many of the companies I speak with are using predictive analytics to forecast sales, assess supply chain constraints and order inventory. No surprise then that 88% of executives we surveyed agreed that using more forward-looking data sets and analytic approaches to better predict future events will be core to their success.
Just as with these automated decisions, the key to managing the risk of removing centralized approvals is data and analytics.
Consider one global retailer. In the face of disruption from digital natives that could deliver direct-to-door at discount prices, the company created a hyper-localized pricing and marketing strategy. They established a centralized pricing team responsible for developing machine learning-driven pricing recommendations, but unlike traditional models where pricing thresholds are centrally managed and deviations must go up the chain for approvals, the approvals and decision rights resided with a team of product-specific experts and local leadership teams.
These local teams had final pricing approval and set the localized strategy using the advanced analytics outputs of a centralized team. This approach resulted in mid-single digit margin improvement and revenue uplift, and created a solution that is scalable, data-driven and highly customer-centric.
Successful decentralization is a delicate balancing act. It should be done in a controlled manner that empowers the edges of the organization but simultaneously maintains clear lines of communication and coordination with the center. This is necessary to ensure consistency with the corporate strategy, purpose and values — successful decision democratization requires knowing where, and how, to best delegate control.
Decision-making at the edges not only results in faster decisions that can be the difference between an opportunity captured or lost, it can drive better decisions.
We are helping clients begin this journey, starting with these actions that organizations should consider:
Show your leadership team you’re committed to empowering more autonomous teams by allowing those closer to the data and the customer to make decisions. Model the behavior, build trust throughout organization, make it part of your mission and core values—then design the teams, metrics, processes and policies to engrain the culture.
Decision-making at the edges not only results in faster decisions that can be the difference between an opportunity captured or lost, it can drive better decisions. By focusing on what customers want and need, not on internal hierarchies, organizations can create more targeted and profitable solutions. Will your business move to the edges and pave new pathways to growth? If you’re ready to empower the edges of your organization to make decisions with greater speed and agility, we’re here to help.
[i] Execution in Perpetual Motion, Accenture, 2019
[iii] Accenture CXO Survey 2021