What Is The Biggest Benefit Of Decentralized Decision-making?

Knowledge workers themselves are best placed to make decisions about how to perform their piece of work.

—Peter F. Drucker

Principle #nine – Decentralize decision-making

Delivering value in the shortest sustainable lead time requires decentralized decision-making. It is a key tenet of Lean thinking. Any decision that must exist escalated to higher levels of authority introduces a delay. Also, escalated decisions can decrease quality due to the lack of local context, plus changes to the facts on which they were based that occur during the waiting period.

Conversely, decentralizing decision-making reduces delays, improves product development flow and throughput, and facilitates faster feedback and more innovative solutions. Higher levels of empowerment are an additional, tangible benefit.

Centralize Strategic Decisions

Of grade, not all decisions should be decentralized. Some decisions are strategic, have far-reaching bear on, and are exterior the scope, knowledge, or responsibilities of the teams. In addition, leaders are still accountable for outcomes. They likewise have the marketplace knowledge, longer-range perspectives, and understanding of the business organisation and financial landscape necessary to steer the enterprise.

Some decisions, and then, should be centralized. By and large, they share the post-obit characteristics:

Infrequent – Made infrequently, these decisions typically are not urgent, and deeper consideration is advisable (ex., product strategy, international expansion).
Long-lasting – In one case made, these decisions are unlikely to change at to the lowest degree in the short term (east.g., delivery to a standard technology platform, commitment to organizational realignment around Value Streams).
Provide meaning economies of scale – These choices deliver large and wide economic benefits (due east.one thousand., a mutual mode of working, standard development languages, standard tooling, offshoring).

Leadership is charged with making these types of decisions, supported past the input of those stakeholders who are affected past the results.

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 – The problems addressed by decentralized decisions are recurrent and mutual (e.g., Team and Program Excess prioritization, existent-time Agile Release Train [ART] scoping, response to defects and emerging issues).
Time-critical – Delaying these types of decisions comes with a high cost of delay (east.g., signal releases, customer emergencies, dependencies with other teams).
Require local data – These decisions demand specific local context, whether it be technology, system, or specific customer or market place touch (east.g., aircraft a release to a specific customer, resolve a meaning pattern trouble, cocky-organization of individuals and teams to an emerging challenge).

Decentralized decisions should be fabricated by the workers who have local context and detailed cognition of the technical complexities of the current situation.

A Lightweight Thinking Tool for Controlling

Understanding how decisions are made helps enable knowledge workers to arroyo the decision-making procedure with a clearer point of view. Leadership's responsibility is to plant the rules for controlling (including, for instance, the Economic Framework) then empower others to brand them. A elementary tool or exercise for thinking about whether decisions should exist centralized or decentralized is shown in Figure 1.

Figure 1. A simple determination-making framework and exercise

Leaders can exercise with this tool and start to get a ameliorate understanding of what types of decisions they need to make, and what decisions are ameliorate left to those they lead.

Last update: 10 February 2021

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