Despite the historical tendency for businesses to slow spending and weigh investment decisions more carefully during a recession, a study by the Economist Intelligence Unit, the business information arm of The Economist Group, publisher of The Economist, found that business decision-making is actually accelerating due to the recession. In today’s challenging business environment, the report states, success depends on more than market share, geographical penetration, or even proprietary technology―it relies on a firm’s ability to make rapid, effective decisions.
Nearly half (48%) of respondents to a global survey of more than 200 senior executives say that decision-making has quickened slightly (34%) or significantly (14%) over the past 12 months. This is the main finding of a new report, The intelligent enterprise: creating a culture of speedy and efficient decision-making. Furthermore, contrary to the popular belief that faster decision-making stems from flatter, more decentralized organizations, 38% of firms say their decision-making processes have become more centralized in the C-suite over the past 12 months. Only 16% said they shifted it to business units. “We are absolutely centralizing our decision-making processes,” said Angélique Wouters, chief digital officer at Boekhandels Groep Nederland (BGN), the largest book retailer in the Netherlands. “We have had to become faster because of competition and time-to-market pressure.”
Still, executives at most firms admit that their ability to make good decisions needs improvement: Only 3% describe their companies as “experts” in using business data to drive better decisions, and fewer than one-quarter (24%) rank their firms as “advanced practitioners”.
While survey respondents report that the information they receive to help them make decisions is adequate, the data show that most companies do not have formal information governance practices to ensure the consistency, integrity and accuracy of operating data. Only 16% say their firms have a dedicated information governance office in place; more than one in five (21%) have no formal policies or procedures for information governance whatsoever.
“Especially in trying economic times, when the swiftness of decision-making is critical, companies could put themselves at risk if they do not create effective governance policies to ensure that the data they rely on is accurate and timely,” says Debra D’Agostino, Deputy Director in the Americas, Industry and Management Research at the Economist Intelligence Unit.
As a result of the findings, the report recommends that executives consider the following:
- Remove decision-making bottlenecks by simplifying corporate structures and fostering the flow of information among departments.
- Emphasize that quality business decision-making requires accurate data, and help employees collate the quality of data they need. If resources or personnel are not sufficient to create a dedicated data governance function, then these issues need to be addressed within operational teams.
- Improve the quality of insights gleaned from the customer service and support function, particularly in a weakened economy when customer loyalty is paramount.
- Encourage the sharing of data across the organization, so that decisions take full account of all the information a business has on a particular issue. This helps improve the quality of decision-making and can also speed the process by reducing the need to revisit issues once new data comes to light.
About the Survey
In July and August 2009 the Economist Intelligence Unit conducted an online survey of 208 executives. Twenty-one percent were CEOs, presidents or managing directors, 45% held other C-level titles, and 23% were senior vice-presidents, vice-presidents or directors. Thirty-eight percent (38%) of respondents were located in North America, 27% in Western Europe and 23% in Asia-Pacific. Twenty-nine percent (29%) worked at companies with annual revenue of US $10B or more and 31% of respondents worked at companies with annual revenue of US $500M or less.