Use Values To Decentralize Decisions
Leading at Light Speed is a must-have leadership book by Eric Douglas highlighting the 10 Quantum Leaps to build trust, spark innovation, and create a high-performing organization.
Eric speaks of Using Core Values to Decentralize Decisions on pages 24-26 of Chapter One, Align the Core Values.
In practical terms, one of the greatest benefits of creating a framework of core values is that decision making can be decentralized. When people understand the core values, there is no need for top-down command and control. As an alternative, one can implement "values-based decision making.The return is extraordinary levels of innovation and performance~{"Extraordinary levels of innovation and performance were the result}~The results were extraordinary levels of innovation and performance~The end-product was incredibly high levels of innovation and team performance}.
Decentralized decision making leads to higher levels of creativity. Desiring to reduce the turnaround time for aircraft on the ground, Herb Kelleher and his management team at Southwest Airlines started early. Fifteen minutes was their goal. They got it down to ten. Kelleher describes watching in awe as the maintenance supervisors and frontline employees came up with innovation after innovation to meet what was seen as an impossible standard. Why did they succeed? Southwest had already established a culture of decentralized decision making and performance. Southwest's basic standards were, in fact, the exception to the rule in other companies.
The tension between centralization and decentralization tends to disappear when a values-based decision making is in place. Articulating a set of values is what one California state agency used to tie into performance measures. The result? With the need for centralized intervention lessened, more and more inovative and entrepreneurial ideas bloomed.
However, bureucracy and centralization tend to take over when core values are missing. One state agency insisted on a uniform hardware and software platform for every single employee, despite the obvious differences in end users’ needs. Customers complained that the agency wasn’t able to perform. To address the issues, a "black market" emerged, further creating internal tensions. Lacking an explicit framework, the de facto values continued to reign, with the press for uniformity trumping employee innovation, trust, and satisfaction.
One of the most powerful arguments for this first quantum leap is linking core values and decentralized decision making. CEO Ken Iverson took the reigns of Nucor, a manufacturer of steel products, in 1986. When they do, the results can be extraordinarys can be extraordinary, when this happens}.
As you align the core values, look around and see what remnants of older thinking you can get rid of. Ask yourself whether the following systems need to be retooled to make them consistent with your organization’s core values:
• Reporting systems – the organizational structure and hierarchy
• Executive perks
• Hiring practices and systems
• Training systems
• Compensation systems
• Performance review systems
• Internal communication systems
• Information technology systems
• Rules on information access and disclosure
Jim Collins tells the following story that serves as a good example of realignment. Nucor, a steel products manufacturing company, hired Ken Iverson in 1986 as its CEO. He inherited a stodgy corporate culture characterized by hostile relationships between management and rank and file. Executives enjoyed considerable perks. In fact, executive importance was determined by club memberships and access to the company’s executive dining room.
Iverson turned the culture around by doing three things:
1. He did away with titles
2. He did away with hierarchies
3. He did away with all executive perks
Until Iverson, Nucor appeared destined for oblivion. Nucor transformed its values, structure and corporate culture under the guiding hand of Iverson. The “we” versus “them” mentality evaporated – one of the hallmarks of a high-performing organization. He achieved a total shift in business focus and an extraordinary level of success. Nucor and its trade unions negotiated a highly successful profit-sharing arrangement. Foreign competition never frightened Nucor; rather, they embraced it. And when compared to one of its chief competitors, Bethlehem Steel, Nucor’s performance over a fifteen-year period was nothing short of amazing. Share value was increased twenty-fold over that of Bethlehem Steel.
The point is this: Once you’ve defined your core values, you’ll need time to bring the organization into alignment. That’s okay. Achieving light speed takes time.
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