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Decision memos: how employees can inform critical business decisions.
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Nicolas is CEO of the AI inbound conversion platform Chili Piper that has thrived on a 100% remote work culture since its founding in 2016.
Good decision making is an art form that is scarce in many organizations. This is evident in a recent study from McKinsey, which indicated that only 20% of organizations “excel at decision making.” This suggests that 80% of companies falter in their decision-making capabilities. Traditionally, major decisions lie solely in the hands of an organization’s leadership, but I propose a different approach.
By democratizing decision-making through the use of “decision memos,” multiple groups of employees can help inform leaders’ choices, weigh options and offer countermeasures. Although it might seem counterintuitive or inefficient on the surface, the exact opposite is true. Decision memos have multiple advantages: They can help streamline decision making for leaders on the go and on their own time, foster transparency, reduce meeting time and eliminate presentation-heavy “meeting theater” scenarios. Because many companies today operate with hybrid or decentralized workforces, these benefits matter more to business health than ever before.
What exactly is a “decision memo,” and why is it useful?
A decision memo is a collaborative document or communication channel where employees can cooperatively solve organizational problems by channeling multiple perspectives into a shared feedback loop. As a problem-solving device, the decision memo creates a call to action from participating teams at all levels, demographics and backgrounds to create transparency and elevate employee voices to ensure various types of expertise are weighed ahead of business-critical choices.
Decision memos help ensure that voices from different geographies, cultures, genders and backgrounds are part of the process. This gives organizational leadership a holistic set of viewpoints to consider and provides a deeper understanding of a decision’s impact on a company’s workforce, especially those who work remotely. For example, researchers have found that many women find it difficult to speak up in video meetings. Decision memos, or a similar process, can level the playing field for underrepresented members of a team while weighing the pros and cons of a given decision, thanks to centralized feedback.
How can you make decision memos a success?
After establishing the value of a collective decision-making process on business growth, it’s important to understand implementation. What does the framework of a decision memo look like? When should a company use one? How should teams go about creating one? From start to finish, here’s what teams need to know when creating a decision memo document.
• Identify and explain the problem. By asking some qualifying questions, teams can affirm that an issue exists and identify a path for remedying it. For example, how is the business operating without a given technology? What issues is the organization facing if the status quo doesn’t change? What drove the search for a solution?
• Make the business case. Take a deeper dive to identify the benefits of a major decision because resources, funds and time must be allocated to it, and leadership will likely need convincing. Stakeholders should know whether decisions about buying new tech or fixing internal problems will provide value, such as increased revenue, time savings or new growth paths.
• ID all use cases. Make sure process-based changes or a tech-purchasing solution do more than solve a single problem. Teams should ask themselves what a given choice solves, what opportunities it creates and how it fits into daily workflow. Will it disrupt daily business operations or make them better?
• Optimize your options. Cast a wide net and narrow down what’s most effective. Is a given option better or worse than others?
• Know the roles. Teams collaborating on a decision memo should ultimately know their audience. Figure out who will manage the collaboration and drive it forward. The project manager should determine who will contribute; review; and add comments, edits and recommendations to the decision memo, as well as filter out content to guide a stakeholder to an effective decision.
• Know your stakeholder. Finally, make sure everyone knows which decision maker a memo is aimed at. Once recommendations have been streamlined to inform a problem-solving approach, send it to the individual empowered to make the choice based on the collective recommendation provided.
What’s the business impact?
Within my own organization, my team has experienced the positive impact of a decision memo system in a single implementation. The process helped us save more than $70,000 while guiding a technology purchase decision that streamlined our customer-facing interactions. In this case, our process for sourcing collective intelligence to solve a problem resulted in downstream cost-cutting and optimized efficiency.
The decision memo framework allows key stakeholders to make informed choices on their own time because leadership can review memos outside of business hours or during downtime if needed. This eliminates potential bottlenecks due to limited availability to conduct real-time meetings, for example.
I’ve found memos can also create a more efficient feedback loop for problem-solving because it draws on teams’ collective expertise (either direct or from books, podcasts or research). And most importantly, decision memos lay out potential success metrics, explanations and objectives. Coupled with comprehensive record-keeping of past decisions, business leaders get a fully realized picture of the pros and cons of a given choice, thus creating the opportunity to more carefully evaluate a new tool, product strategy, direction or decision. In the long run, the added reconnaissance can ultimately give leaders back the time they spend assessing the consequences of business-critical calls.
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PROBLEM STATEMENT
Learn everything you need to know to develop a Problem Statement by an Ex-McKinsey consultant . Includes best practices , examples, and a free problem statement template at the bottom.
“A problem well stated is a problem half solved.”
– Charles Kettering, Early 1900s American Inventor
I remember my first day on my first project at McKinsey, the partner got the team in a room for us to spend a few hours “defining the problem statement.” At first, I thought to myself, “man, what a dumb idea…this client is paying us millions of dollars, and we don’t even know what we are trying to solve?” But, as we started to debate the context of the client, the issues they faced, and the reasons why they brought us on, I started to appreciate defining the problem statement and the ability for the right problem statement to frame and focus problem solving .
What is a problem statement?
A problem statement is a clear description of the problem you are trying to solve and is typically most effectively stated as a question. Problem statements are subtly critical in effective problem solving. They have an uncanny ability in focusing the efforts of brainstorming , teamwork, and projects .
To understand this better, let’s go through some examples of how you can position a brainstorming session on various topics.
Beyond brainstorming, problem statements should be used at the beginning of any project to frame and focus on the problem. A good problem statement defines the “who” the problem involves, and defines the scope of the problem. Since problem statements guide much of the problem solving of a project, it is important not to be too narrow or broad with the problem statement.
How do you create an effective problem statement?
As stated before, every McKinsey project starts with the development of a problem statement. Once we landed on a strong problem statement, then we had to align the client with the problem statement. The easiest way for a project and team to get off track is if the team and the client are trying to solve different problems. A good problem statement aligns the expectations of the client with the team’s activities and output.
Here are the best practices when creating an effective problem statement:
Use the 5 Ws and one H
One of the most useful tools when developing a problem statement is the 5 Ws and one H, which is simply utilizing who, what, why, where, when, and how questions to frame the problem statement. Simply thinking through these questions as they relate to the problem can help you create a strong problem statement.
Ask the most crucial question, “What are we trying to solve?”
We’ve all been in those brainstorming sessions, meetings or on those projects, where you’re just scratching your head, as the conversation or directions are more like an Olympic ping-pong match going from one topic to the next. The most effective question that I’ve used in over a thousand meetings and conversations is simply “what are we trying to solve?” It cuts through the clutter, confusion, and misalignment, and quickly centers the focus and energy of everyone.
Frame the problem statement as a goal
Some of the best problem statements are simply goals formatted as questions. If you need to increase sales by 10%, a good problem statement is, “Within the next 12 months, what are the most effective options for the team to increase sales by 10%?”
Force the prioritization
Often, the most effective problem statements force the prioritization of issues and opportunities. Using phrases such as “the most important for the customer” or “the best way” will force prioritization.
DOWNLOAD THE PROBLEM STATEMENT POWERPOINT WORKSHEET
To get you going on defining a strong problem statement, download the free and editable Problem Statement PowerPoint Worksheet.
Correctly defining a problem statement at the beginning of a project or initiative will dramatically improve the success of the project or initiative. Problem statements help guide problem solving, analysis , hypotheses , and solutions.
Developing a problem statement is an iterative brainstorming process. Get the major stakeholders in a room for a few hours and start the process by having everyone write down what they think the problem is on index cards. Collect the index cards and post them on a whiteboard. You can either discuss each one or have the group pick the top 3 and then discuss them. You can use the Problem Statement Worksheet to further define the problem by answering the 5 Ws and 1 H. The key is to find the right problem statement all stakeholders feel strongly about, in that, if the problem statement were solved, the problem would be solved.
NEXT SECTION: HYPOTHESES
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