Knowledge workers themselves are best placed to make decisions about how to perform their work.
—Peter F. Drucker
Principle #9 – Decentralize decision-making
Delivering value in the shortest sustainable lead time requires decentralized decision-making. Any decision that must be escalated to higher levels of authority introduces a delay in delivery. In addition, escalated decisions can decrease decision fidelity due to the lack of local context, plus changes to fact patterns that occur during the waiting period.
Simply, decentralized decision-making reduces delays, improves product development flow and throughput, and enables faster feedback and more innovative solutions. Higher levels of empowerment are an additional, material benefit.
Centralize Strategic Decisions
However, this is not to say, that all decisions should be decentralized. Some decisions are strategic, have far reaching impact and are largely outside of the purview of the teams. After all, leaders still have accountability for outcomes, and they have the market knowledge, longer-range perspectives, and understanding of the business and financial landscape necessary to steer the enterprise.
This leads us to an understanding that some decisions should be centralized. Generally these decisions have the following characteristics:
- Infrequent. These decisions aren’t made very often, and typically are not urgent. Deeper consideration is appropriate. (examples: product strategy, international commitments).
- Long Lasting. Once made, these decisions are unlikely to change. (Examples: commitment to a standard technology platform. Commit to organizational realignment around value streams.)
- Provide significant economies of scale. These decisions provide large and broad economic benefit. (Examples: a common way of working, standard development languages, standard tooling, offshoring)
Leadership is charged with making these types of decisions, supported by the input of those impacted by the decision.
Decentralize Everything Else
The vast majority of decisions do not reach the threshold of strategic importance. All other decisions should be decentralized. Characteristics of these types of decisions include:
- Frequent. These decisions are frequent and common. (examples: team and program backlog prioritization, real-time ART scoping, response to defects and emerging issues)
- Time critical. A delay in these types of decisions comes at a high cost of delay. (Examples: point releases, customer emergencies, dependencies with other teams)
- Require local information. These decisions need specific local context, whether it be technology, organization, or specific customer or market impact (Examples: ship/no ship release to a specific customer, resolve a significant design problem, self-organization of individuals and teams to an emerging challenge)
These decisions should be made by the workers who have better local context and detailed knowledge of the technical complexities of the current situation.
A lightweight thinking tool for decision making
Understanding how decisions are made is a key factor in empowering knowledge workers. Leadership’s responsibility is to establish the rules for decision making (including, for example, the economic framework), and then largely empower others to make them. A simple tool and exercise for thinking about whether decisions should be centralized or de-centralized is provided in Figure 1.
Last update: 15 August 2016