The decision-making paradox !

online procurement software

The decision making in core functions i.e. Operations, Marketing and Finance is significantly different from the support function say IT, Digital.

In one of my previous roles, one rupee change in the sale price per unit meant Rs 16 crore impact in the bottom line and we would have very often marketing decision taken ( at least 4-5 times/ month) for an average Rs 10/ ( mostly reduction ) each time impacting adversely Rs 160 crore in the bottom line, at a time.

Similarly in the operations, one percent excess consumption, excess scrap, additional freight etc had several tens of crores of impact and decisions were taken ( or corrective action not taken) almost in real time, all the time.

While realising that the strategic initiatives have very large positive impact in the business somehow the decision-making process is so bureaucratic, so slow that the pain is endured while solution at a minuscule fraction of the cost exits, is under evaluation but never decided upon like any operational decisions as alluded to above.

Does it have anything to do with the status quo mindset of doing what is routine and anything new has a fear of unknown, however small the cost of doing it.

Fear of unknown is also exaggerated since similar initiatives may be delivering at hundreds of locations and are well proven.

Is it because that the initiatives are seen as costs ( in-fact most organisations brand them as cost centres) instead of investments with ROIs?

Also, the mindset of the functional owners of such strategic initiatives are one of service providers and not of one impacting the P&L which also contributes to the lack of ownership for such initiatives and hence soft peddling.

“The Invincible Company” which distinguishes the organisation as “Exploit” & “Explore” organise the parts separately with Explore organisation reporting to CEO with great outcomes eg Bosh, Ping An etc. Mind-space, resources, governance to strategic initiatives should be different from Operational issues which most leaders are adept at.

I urge decision makers to make the change from Cost centre to Investment with attractive ROIs on strategic initiatives and graduate to “Ever Flourishing Organisations“.