Construction principles of information professionals: (5) Decentralizing decision-making within the organization

Is this an information management topic or does it relate to business operations? Upon deeper consideration, my conclusion is that business operations are intertwined with information provision, making governance an information management subject as well!

Depending on the impact of a decision, its level of authority lies within the organization. For instance, a merger decision is typically a strategic one. However, what happens when decision-making authority is vested too high within the organization? In such cases, information about "minor" decisions must be passed on to the decision-making level, consuming time and carrying the risk of interpretational errors through multiple layers of summarization. The decision loses its context and may not hold the same significance at the higher level as it does where it originates. Moreover, this approach affects purpose and motivation, as illustrated beautifully in this animation: link.

Organizations that prioritize operational agility and rapid responses, such as the military, police, and those working according to agile principles, serve as prime examples of how decentralizing decision-making authority works. A clear objective, combined with a shared understanding of the situation and reporting to the coordinating central unit, yields the best results (similar to network-centric warfare, information-driven operations, or SAFe©). The central unit does not make operational decisions on the ground; instead, it monitors the objectives (commander's intent) based on feedback and adjusts accordingly. As operational information becomes available at the strategic and tactical levels, the temptation to micromanage may increase, but management must resist it. Tactical and strategic guidance belong to a second-order rule level, focused on adjusting objectives rather than dictating outcomes.

In organizations with many management layers, many witness the failure of the ultimate responsible line manager, who becomes overwhelmed with decisions they lack sufficient knowledge to make sound judgments about. Consequently, memorandum notes, minutes, and other formats are used to condense the issue or decision into a digestible narrative. This results in redundant information. The root cause of information overload often lies in control thinking, distrust, and the idea that managers should micromanage rather than delegate responsibilities to lower governance levels. By delegating decision-making authority as low as possible within the organization while clearly defining the desired outcomes and setting agreements on reporting or feedback to higher levels, an information structure with fewer redundancies and greater transparency emerges. All levels and decisions contribute transactional data, enabling management to steer outcomes using KPIs and foster better decision-making throughout the organization.

The success of Netflix exemplifies this principle and is well described in the book "No Rules Rules"[1]. The core of their success lies in a company culture that prioritizes people over procedures, emphasizes innovation over efficiency, and operates with minimal control. This culture, focused on achieving top performance through competent employees and providing context instead of control in leadership, allowed Netflix to grow and adapt to customer demands.

An organization that becomes stagnant due to decisions being restricted at the operational level is often seen in authority and hierarchy-based militaries like Russia or North Korea. However, the Anglo-Saxon management model is also susceptible to stalling due to inertia and passivity among executing employees.

A flawed mandate arrangement or decision-making authority not only impacts the success or bankruptcy of an organization but also directly affects the information requirements and, consequently, coordination meetings and control mechanisms. As an information management expert, you often find yourself in a unique position to identify and assess this impact, providing guidance on an effective governance design.

[1] "No Rules Rules" | ISBN: 9780753553664 | Author: Reed Hastings