The typical company's senior executives spend less than three hours a month working together on strategic issues, and those hours are seldom well spent, says Michael C. Mankins in September's Harvard Business Review. Mankins, a San Francisco-based managing partner at consulting firm Marakon Associates, told Computerworld's Kathleen Melymuka what's wrong with team decision-making and how to fix it.
Do the techniques you advocate for executive committees apply equally to a CIO and his management team?
Yes. The best practice is for a company to have agendas at all levels, not just for executive teams. But the idea is to be aligned around making decisions that are somehow linked to the long-term value of the company. The CIO has a lot of decisions that impact the long-term value of the company directly, like "Do we outsource IT?" (and) "Which ERP system do we implement?" Those are decisions that have enormous impact on company value directly.
Just as important, effective agenda management depends on having high-quality information in executive hands, and the CIO has to get engaged in that process, so it's a dual role.
Why do management teams spend so little time on strategic issues?
The good reasons are that executives are obsessed with operating performance and spend a huge amount of time -- roughly half -- reviewing operating performance. Add leadership succession and employee issues, and it leaves little time for strategy. It's not an excuse, but it's a reason. The not-so-good reason is poor agenda-setting. You get a review of operational performance scheduled for the first half (of the meeting), and it takes up three quarters, and there are four more items to get done. The result is that strategy tends to be one of those that gets squeezed out.
How do management teams tend to set agendas?
Often, there is no individual responsible for setting agendas, so a secretary or administrative assistant does it. As a result, meetings tend to be poorly focused and misprioritized. There are three main ways agendas get set. (The first one is) "first in, first on," where the crises of the moment are phoned in just before the meeting and they go on the agenda. Second is historical precedent. Agendas at some very large companies are preset based on what was covered last year at that time: May is HR, June is the advertising campaign. Third, and probably a growing trend, is egalitarianism. Everyone gets time to speak.
What's wrong with that?
The result of all this is that it would be a coincidence if the most important issues got the most time, and so the effectiveness and efficiency of decision-making tends to go down. Invariably, the urgent crowds out the important. Trivial issues on top of mind tend to dominate. We found a bank where the executives spent more time on the holiday card than their entire strategy for Africa, where they had made large investments. Loud voices tend to dominate decision-making. There's no process for getting the top issues on the agenda and for making decisions when they do get on.
Why do management meetings fail to produce real decisions?
To make a decision, you have to have all the facts, you need real alternatives, you need to be asked to make a choice, and the choice needs to be embedded in some form of contract. Absent that, you fail to produce important decisions.
You recommend separating operational discussions from strategy meetings. Why?
They require different mind-sets. Operating reviews are all about "Did you deliver what you promised?" They're looking in a rearview mirror. Strategy is about creativity, a search for alternatives, a dialogue around what's possible. It's about raising eyes to the horizon, not holding noses to the grindstone. It's hard to have both mind-sets at the same time.
You talk about the need to focus on decision-making, not on discussion, but how does a management team actually do that?
First, you set the stage for what the meeting is all about. You make it clear which items on the agenda are actually for a decision. When you do that, people find creative ways to share information outside the meeting, so more time is focused on decision-making and action. Then you set common standards for decision-making: If you want to make a decision, you have to have facts around why an issue is on the agenda, alternatives that are weighted as to which will deliver the most value and why, and how to execute. If you don't have that, you can't make a decision.
How do you come up with good alternatives?
The issue needs to be stated in a way that doesn't prescribe a course of action but instead lends itself to alternatives. For IT execs, "How do we produce the highest-quality information at the lowest cost for Unit X?" That lends itself to alternatives. But, "Should we outsource IT?" does not. That's a bimodal decision: yes/no. In business, those questions get answered with, "It depends." But questions that lend themselves to alternatives lend themselves to choices. Frame issues so that they have to be resolved by looking at alternatives. You also need good information. Good facts lend themselves to the development of good alternatives. And you need the right state of mind -- that there's always a better alternative. Never say, "We've found the right strategy." There's always a better one; you just haven't thought of it yet.
What is a common decision language, and how important is it?
A lot of processes get bogged down because they don't know what the choice is based on: It might hurt our image; we won't be perceived as a technology leader. Those are interesting, but none is a choice criterion. Unless everyone has the same choice criteria in mind, it's really hard to get focused to produce the right information to help decisions get made. If you say all choices will be made based on their impact on the long-term value of the company, that's the ultimate choice criterion.
Why is it often hard to make a decision stick?
Many companies don't actually approve strategies, so the organization doesn't know that a decision has been made. Or it's made, but at so abstract a level that you can't do anything about it. Or you don't know who's accountable for doing what, so execution gets delayed. Or there's no consequence to not executing. You can attack all four causes: Improve your strategies, make them concrete, assign accountabilities clearly, embed them in performance contracts with individuals, and ensure consequences for failure to execute.